Exploding Growth of CTV

Insights and Strategies for Maximizing Your CTV Strategy

Transcript Hello, and welcome to the Simpl.fi webinar series. I’m David McBee. Thanks for joining us each month for industry news, interviews, product rollouts and training on all things related to targeted advertising and connected TV. The Simpl.fi webinar series is available on demand with new episodes posted on the second Monday of each month at simpl.fi/webinars along with all of our previously recorded episodes. This month we’ll be talking about the explosive growth of ad-supported CTV and what impact that will have on advertisers this year. We’ll also discuss some of the benefits of advertising on CTV, best practices, and we’ll provide some actionable steps for maximizing your CTV strategies to achieve your business goals. Let’s get started. First, this is the only statistic specific to the entire CTV industry that I’m going to share with you. Because, if you’re viewing this webinar, you already know how many people have cut the cord, or never had a subscription to linear TV in the first place. The growth of CTV over the past few years has been astounding, but that is obvious. What maybe isn’t quite as obvious is the explosive adoption of ad supported Connected TV. So let’s talk about AVODs and FASTs. Of course, that conversation has to start with SVODs, or subscription-based video on demand services like these. Netflix introduced streaming services in 2007 and they’ve been a leader in the space ever since with over 225 million current subscribers worldwide. Disney+ and HBOmax also offer subscription based, ad free versions of their services. But 2022 was the year of change. Seeing the writing on the wall, all three of these popular SVODs launched AVODs, or ad-supported tiers of their services for less money than their ad-free versions. This put them onto the same playing field as apps like Paramount plus, hulu, YouTube tv and others. And then there are the FASTs, or free ad-supported TV services. Most of these come pre-loaded on Samsung and LG smart TVs and they are available via Roku, Amazon Fire and Apple TV. Like broadcast antenna TV, these services are 100% free if the viewer is willing to watch some ads. It’s at this point that I want to clarify that the quality of the content on FASTs is often the same or similar to what is available on the AVODs and SVODs. In fact, in January, Roku and Warner Bros Discovery agreed to bring some very popular content to The Roku Channel – shows like Westworld, The Bachelor, Cake Boss, Say Yes to the Dress, and more. The channels will arrive on The Roku Channel this spring. On top of new FAST channels, the deal will also usher in some 2,000 hours of on-demand library programming to The Roku Channel. Hundreds of TV series and movies from Warner Bros Discovery’s brand portfolio, including HBO, HBO Max, Discovery Channel, HGTV, Food Network, TLC, Warner Bros. Pictures, Warner Bros Television, and more, will now be available for audiences to stream for free on The Roku Channel. And then there’s Paramount’s free streaming service, Pluto TV. Here are just a handful of the channels available on Pluto, which happens to be the largest free streaming service in the world. Speaking of Pluto TV, during its most recent earnings call, Paramount said Pluto TV grew its global monthly active users (MAUs) to 43 million, up 80% year over year. In fact, Pluto TV is the most profitable free ad-supported streaming service in the US with revenues exceeding a billion dollars. And with a huge new marketing campaign running with Drew Barrymore as their spokesperson, more and more people will be discovering this popular FAST in 2023. It’s really not that surprising that services like Netflix and Disney+ are offering ad-supported versions of their services, or that FASTs like Pluto TV are having so much success when you consider that 80% of consumers use ad-supported models of TV. Or that 30% of consumers removed a paid CTV subscription in the 12 months leading up to October of 2022. In fact, 15% replaced a paid CTV subscription with a FAST. Even YouTube is getting in on the free streaming channel bandwagon by testing a new hub of free, ad-supported streaming channels, the latest in a series of moves by the company to expand its ambitions in video. Keep in mind that this in addition to their already fast-growing subscription-based YouTube TV. So why are the AVODs and FASTs gaining such ground? It really comes down to the fact that More CTV viewers, 64% in fact, prefer ads to paying more for a subscription service. And that… is great news for advertisers. Because as more people adopt AVODs and FASTs, the more opportunities advertisers have to reach them. The opportunity is so big, that US advertisers are expected to spend nearly 30 billion dollars on ad supported CTV this year. And that number is only expected to grow for the foreseeable future with a forecasted 38.83 billion in 2026. Let’s take a look at ad spending share by company starting in 2020 and going into 2024. As you can clearly see, leaders like Hulu and YouTube TV continue to lead, but do lose some share over time to the FASTs that we’ve previously discussed as well as the AVOD versions of Disney+ and Netflix who have recently gotten into the ad-supported space. I want to point out that this isn’t a statement of their quality, rather… eMarketer believes players like Hulu and YouTube face a shrinking share of CTV ad spend in the United States, not because they are getting weaker but because the market is getting stronger. Let’s shift gears a bit and talk about ways that advertisers can get into the ad-supported CTV space. There’s the private marketplace and the open exchange. Here are some things you may have heard about the private marketplace: advertisers will pay a premium price for these services. There are some restrictions to the targeting offered by the services. It is sometimes limited to basic demographics like age and gender, and contextual targeting based on what users watch, but more and more, publishers in the private marketplace are offering advanced targeting baked into their ad buys. There are also restrictions about ad content and minimum budget requirements for many of the services available in the private marketplace, but that’s kinda true in the open exchange too. Probably the biggest thing that lures advertisers to the private marketplace is that they can appear on popular services like Hulu, Paramount+, HBOmax, Warner Brothers Discovery and the like. It goes without saying that advertisers enjoy being associated with and appearing on such popular content and there is a level of comfort knowing their brand is associated with these household names. Additional pros are that the advertiser can bid on opportunities before they become available via the open exchange as well as the ability to unlock some publishers inventory that is only available via deal IDs such as NBCUniversal’s Bravo network or possibly even unlocking some of their targeting capabilities The other path is to purchase ad space via a DSP on the open exchange. CTV services here are sometimes lesser-known brands still making a name for themselves. Ad space here is often less expensive. There are very few, if any, limits to the targeting tactics that can be leveraged. There are still content restrictions, but they are often less rigid, and there are no minimum budget requirements. Some advertisers will avoid the open exchange, claiming that the big names like Hulu don’t sell inventory here or that they can’t place their ads on specific channels or shows. But they fail to realize that receiving opportunities to bid on via this route, does not mean bad or low-quality inventory just because inventory such as Hulu is not available. Rather it means: should the client not be focusing on certain publishers and their capabilities or inventory that might be reserved for deal IDs, they can achieve the same targeted approach in regards to reaching a hyper-relevant audience Bottom line, Advertising on specific content becomes less critical when targeting a hyper-relevant audience. But we’ll get more into that here in a bit. For now, let’s take a look at one of the most important things to consider when building a campaign – BUDGET – and how is comes into play when choosing between the two paths. A single ad impression delivered via the private marketplace is delivered to a single CTV device. Meanwhile, a single ad impression on the open exchange is also delivered to a single CTV device. Let’s look at 100,000 ads. Assuming delivery of approximately 10 ads per CTV, 100,000 ads will reach somewhere around 10,000 CTVs. The same 100,000 ads in the open exchange reaches the same number of CTVs A million ads would reach around a hundred thousand CTVs in the private marketplace while a million ads on the open exchange would also reach approximately one hundred thousand CTVs So, all things being equal, the same number of ads reaches about the same number of CTVs. But… things aren’t equal because as I stated a moment ago, ads placed via the open exchange are regularly less expensive. What I’m saying is that IF BUDGET is a key element in deciding to run ads via the private marketplace vs the open exchange, (and I know that isn’t always the case), but if it is, it’s worth noting that we’re seeing ads on the open exchange run approximately 34% less than ads in the private marketplace. So for the same budget, an ad campaign on the private marketplace could buy 1.34 million ads. Of course, it’s no surprise that advertisers associate popular content with greater reach. That’s how it has always been and still is with traditional or linear Television. For the linear TV buyer, an ad on popular content, like a prime-time show, is going to have greater reach than an ad that plays on a late-night rerun. Popularity of content directly impacts reach for advertisers buying broadcast or cable. This is the paradigm that made inclusion of this topic worthy of this conversation. But it’s just not the same with CTV. Because ads are purchased one at a time, a million ads on a popular show will reach the same number of viewers as a million ads on a less popular show, so if budget and reach are relevant to your goals, I simply ask you to keep this in mind Okay let’s shift gears just a bit. I mentioned a moment ago that we would discuss targeting. Targeting is a big reason that advertisers are excited about CTV and in fact, higher quality targeting data would influence 47% of marketers to increase CTV ad spend. This makes sense since the more relevant an ad is to the prospect, the more likely it is to drive conversions. Besides, relevant ads are popular with viewers, with more than half, 54%, having a positive impression of relevant ads. 35% feel neutral and only 11% dislike them. So what’s it take for advertisers to deliver relevant ads? Nearly every CTV provider offers some level of targeting based on the data that they have about their viewers. Most have their geography, age group, gender and some level data based on viewing habits. So… targeting south Chicago, or women, or adults over 30, or people who watch sports… those are pretty easy asks. For advertisers wanting to sell services to a specific location, or products that are relevant to a gender or age group, or that most of the general population uses (think Mac n cheese) these targeting options might be exactly what the doctor ordered. But for advertisers wanting to target a little more specifically, working with Simpli.fi opens up targeting tactics that can be leveraged to ensure ads are delivered to a hyper relevant audience. First, we can place a small piece of code on an advertiser’s website, and then, using our cross-device technology, show ads on the connected TVs that are in the same household as the device used to visit the advertiser’s site. This is true, bottom of the funnel targeting specifically designed to only show ads to people who have visited the advertiser’s website. These are usually great prospects or loyal customers. This tactic is really great for advertiser’s who have a niche product that would normally mean a lot of wasted ads if delivered on television. Next, we have the ability to place ads in front of individuals who are doing online research for specific products and/or services. This is perfect for advertisers who want to reach prospects who are in the market for what they sell. Think vacation packages for this one. Not everyone is planning or can afford a vacation. So advertising to men or women or even people who watch shows about travel means there will be a lot of wasted impressions. But what does everyone do before booking a vacation? ONLINE RESEARCH! That means that a cruise line can place ads in front of people who are looking to visit the Caribbean or Alaska. It means a company that rents homes can place ads in front of people who are searching for hotel alternatives. It means that ski resorts can place ads in front of people reading about or shopping for ski equipment or ski vacations. This tactic targets possibly the most relevant prospect since their online behavior specifically defines their interests and needs. Another targeting tactic that is popular is geo-fencing. By leveraging the location data of smartphones, we are able to place ads on the connected TVs in households where the prospect visited a specific location. This is ideal for Conquesting, AKA reaching prospects who are visiting competitor locations. Think True Value geo-fencing Ace, Lowe’s and Home Depot. Think Ulta geo-fencing Beauty Brands and Sephora. It doesn’t always have to be a competitor. A sporting goods store like Cabela’s or REI might want to reach their target audience by geo-fencing camping areas, national parks or other locations with a lot of outdoor recreation. Heck, geo-fencing is so specific that they could target a popular white water rafting route of a river in an effort to reach thrill seeking outdoorsmen and women. The list goes on. Target the football stadium to reach football fans. Target the college campus to reach students. Target boutiques and salons to reach individuals interested in beauty and fashion. Oh and by the way, Simpli.fi doesn’t use pre-packaged audience segments so we are able to deliver the ads very quickly based on the behavior. In fact, over 50% of our ads are delivered within 24 hours of when the person exhibits the behavior that made them a prospect. The other 50% of the ads are delivered with a day or two. And if it’s a product with a long buying cycle, we can retarget them each time they exhibit the defined behavior. The next targeting tactic is addressable geo-fencing. Like geo-fencing, the targeting uses location data, but in this case, it’s used to target addresses. And with an industry leading 90%+ match rate, this allows advertisers to activate their own first party data with very little waste. For advertisers who don’t have first party data, Simpli.fi can curate a list of addresses based on over 3000 demographic and psychographic profiles. Let’s look at how some advertisers could leverage this tactic. Home ownership is one of the demos we can reach. Ideal for a home security company, remodelers, electricians, lawn care companies – any advertiser who doesn’t want to waste their ads on renters, in favor of reaching home owners. But that’s just the beginning. We can target brand new home owners, or home owners who have been in their homes for 15+ years. The furniture store might like to reach the newbies while the remodelers and HVAC repair companies want to reach the older homes. Here’s an example of an imaginary audience I created for a swimming pool company. I imagined they would want to reach single family homes (no duplexes or apartments), with a home value greater than 250K, on a lot big enough for a pool, with a household income over 100K, and I even used a negative demo to ensure they don’t advertise to homes that already have a swimming pool. You can see from this screenshot, that there are nearly 14,000 homes in the Kansas City Metro that fit our criteria. This demo targeting tactic allows us to place CTV ads in the homes of people who have a specific education, are married or single, have kids, are empty nesters, are right out of college or are about to retire, … own a home, have a car loan, have a high household income or are in need of same day loan… … live in a single-family dwelling, an apartment or on a farm… The list goes on. I feel compelled to point out that, this being a Simpli.fi webinar, these targeting tactics I’ve just described are, of course, our in-house DSP specialties. But we’re certainly not limited to these tactics. Thanks to our relationships within the private marketplace, we can also leverage publisher-specific targeting tactics like… Deals Based on Content Object Data. Publishers can accommodate structuring unique deals with certain values that are passed in the bid stream today. Examples would be live sports or the ability to target specific networks. Post-Campaign Reporting with Additional Transparency: This can be unlocked for advertisers (who achieve certain minimum spends) to better highlight what genres, ratings, etc. their campaigns delivered on ACR (Automatic Content Recognition) Data: Private Marketplace deals gain us access to ACR data which allows us to take a competitor conquesting approach to identify “viewers of competitors’ ads” and then retarget them. For instance, we can identify viewers who received a McDonalds ad and then deliver them a Burger King ad. This data also allows buyers to identify and then retarget desired audiences as they stream other content. Examples might be “viewers of late-night TV” or “viewers who have watched Grey’s Anatomy”. 1PD (1st Party Data) via the Publisher: Utilize publishers’ first party data to reach the right audience. Some examples of publisher audience data might be “Hotel Travel Rewards Members” or “budget shoppers.” As you can see, there are a ton of different ways to target a relevant audience. We’ve come a long way from the days of targeting “women over 40” haven’t we? Reach out to your Simpli.fi account manager to help you determine the right target market for your CTV campaigns. Okay, let’s shift gears once again. While there are clear benefits to advertising on CTV in order to reach the audience that has migrated there, and to take advantage of the incredible audience targeting, many advertisers are discovering the value of attribution for an advertising medium that until recently has been incredible difficult to measure. But thanks to its digital nature, CTV is able to measure and report things that linear TV could only dream of. What can be measured? For one, a CTV campaign can report back to the advertiser how many ads were delivered. We’re not talking estimates based on ratings. We’re talking about actual ad delivery, one device at a time, one user at a time. Next, we can measure video completion rate, which, because CTV ads are mostly non-skippable, averages in the high 90% range. More importantly though, we can measure and report website visits on CTV campaigns. I know what you’re thinking, CTV ads can’t be clicked and only a small percentage of users is willing to scan a QR code on their TV, so how does that work? Hang in there a minute and I’ll explain. Because I also want to mention what is possibly the most exciting measurement of all – foot traffic attribution. And no, you don’t have to take your big screen off of the wall and carry it into a store for this to work. We’re able to measure both online and offline conversions thanks to cross-device matching. Our technology ingests millions of time stamped GPS coordinates from persistently used devices in the home. We identify and unify web connected devices in the home across a broad range of diverse signals. This graphic really doesn’t do the complexity of our cross-device graphic justice but it should give you an idea of some of the ways we identify users. First, let’s take a look at tracking online conversions It starts with an ad delivered on a CTV in the home. In most cases the viewer can’t click the ad or visit the advertiser’s website from their CTV, but because “second screening” has become such a normal behavior, they may be compelled to use one of their other devices to look for the advertiser’s product or service. When they find their way to the website (where we have placed a small piece of code called a pixel), their device is recognized as coming from the same household where the CTV ad was delivered. Voila – online attribution from a CTV campaign. In order to measure foot traffic, the advertiser places a geo-fence, known as a conversion zone, around their store or whatever area they are measuring foot traffic. (We’ve measured the polls for political campaigns for example.) An ad is delivered on a CTV. The smartphone in that home are cross-device matched to CTV. When that smartphone enters the advertiser’s store or conversion zone, we recognize that the visit comes from the same household where the CTV ad was delivered. And that’s foot traffic. For possibly the first time in history, advertisers can start having serious conversations about measurement and return on ad spend. We’re nearly done. Thanks for hanging in there with me. Before I let you go, I’d like to hit you up with a handful of best practices that you can use for your CTV campaigns. First, start by Defining your goals – Is yours a branding campaign or a performance campaign? Are you looking for brand lift, or are you wanting traffic to your website or store? Knowing this is an important first step to help you Focus on audience. If you’re selling a product to “everyone”, then audience and programming may not be that important. You probably want as much reach as you can get, or maybe brand association is important to you. If you’re selling to a specific audience, women for example, you’ll want to target content that is popular with women, or a demographic (i.e women over 30 with a HHI of $75K), female behavior (online shopping for women’s clothing), or even locations that women frequent (boutiques, salons, etc.). Don’t over target using too many tactics or demographics. We see this now and then. An advertiser gets excited about all the targeting tactics available and layers them on top of one another until the audience is so specific that we struggle to deliver impressions. We often recommend separate campaigns for separate tactics – a strategy that allows for testing and optimization, by the way. Or if you’re targeting demographics, think back to my swimming pools example and try not to layer more than a handful of demos to create your ideal audience. We didn’t really talk much about creative but it’s worth mentioning that you should Provide quality creative with a minimum bitrate of 20 megabits per second or higher. This will allow us the greatest opportunity to place your ads across multiple providers. Speaking of opportunity, we’ve also discovered that there is value in Submitting both :15 and :30 second formats – again, this opens up more inventory for us to deliver your campaign in full. Determine success metrics. I’ve saved this for the end because it ties back to our attribution conversation, but it really should be agreed upon in advance. If you know that you need a certain amount of traffic to your advertiser’s website or stores, have that conversation up front so that we can ensure that the campaign includes enough impressions, is targeting the correct audience, and has measurements in place to prove its success. Finally, Insist on transparent reporting. It’s vital that you understand how the measurements are gathered and how to read the reports so that you’re not overwhelmed or relying on “estimated” results. With that, I’ll let you get back to work. thank you all for joining us for the Simpl.fi webinar series. For more information on how Simpl.fi can help you achieve your goals in 2023, please reach out to your account manager or send an email to hi@simpl.fi. And visit simpli.fi/webinars for past episodes of the Simpl.fi webinar series. And make a note in your calendar to check out brand new episodes every second Monday of the month. I’m David McBee. Be awesome. And we’ll see you next time.

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