Over the past year, content publishers have changed how they promote their content. Given the longevity of the COVID-19 pandemic, which continues to rage on in many countries, these changes are becoming permanent. In addition, advertiser demand for video impressions has always outstripped supply. So, it’s only continuing to grow as consumers use streaming video technology in large numbers.
This holds especially true for connected television (CTV), and more of those impressions have been made available programmatically. The pandemic has supercharged consumer behavior: for example, according to eMarketer, CTV ad spend will experience its greatest growth in years in 2021, jumping 40.1% to $11.36 billion in the US. What’s more, almost 60% of CTV inventory will be bought programmatically in 2021.
60% of CTV Inventory Will Be Bought Programmatically
Thanks to increased uptake during the pandemic, CTV-based content is becoming as popular with boomers as it is with younger generations. In addition, CTV viewers tend to be younger and more affluent, with 86% of Millennials and Generation Z watching CTV regularly. As a result, more channels are appearing, and new apps are appearing, making it a good time for video publishers and producers to move into CTV.
You Cannot Have Your Cake and Eat It
The rise of CTV and the opportunity it offers should be taken into context with the decline in 3rd party cookies. In January of last year, Google announced that it would be phasing out its support for Chrome-based third-party cookies within two years. And where this internet giant goes, the rest of the industry must follow – whether it wants to or not. This has been compounded by the increase in data privacy legislation in many parts of the world, like the European Union’s General Data Protection Regulation.
The demise of third-party cookies — a challenge
The demise of third-party cookies represents a significant challenge for advertisers who have been able to run tailor-made content for their targeted audience based on information collected by cookies. CTV-based ads, which target consumers via their televisions rather than their computers, offer a substitute, allowing advertisers to still collect actionable information to base their campaigns on, like viewing preferences, without compromising the viewer’s data privacy.
An Astronaut, a Doctor, or a Vlogger: Who Are CTV Content Owners?
CTV’s rise was preceded by the explosion in vlogging and other forms of video content published on sites like YouTube. Ask elementary school kids about what they want to be when they grow up. One of the most common responses might be ‘influencer,’ focusing on having their own video channel or joining a channel aggregator.
As the social media savvy discovered how to turn video platform sites into a lucrative opportunity, the same innovators will find that CTV offers a similarly promising environment.
A channel focused on kids’ entertainment content with 25 million subscribers on YouTube, Ryan’s World acted as a pioneer by joining Roku in 2019. The big guns of the industry, represented by CTV platforms like Apple TV and Amazon Fire, are creating their own market space.
The space works by giving access to individual content creators while also offering special services like live sports streaming. Many already produce their own films and TV series, while also hosting channels focused on travel, health & beauty, cooking, gaming – the list goes on.
How do you compare YouTube and CTV?
It may be inappropriate to compare YouTube and CTV as ecosystems in general. But still, according to VlogBox research, there’re publishers from animation and vlogging verticals that report CPM reaching $8 on CTV channels.
Advertising models
In addition, CTV offers a number of different advertising models for content creators to choose from, including subscription video on demand (SVOD), transactional video on demand (TVOD), and advertising-based video on demand (AVOD). These give content creators and businesses more operational flexibility.
Gaming Verticals
Gaming as a vertical has also shown a great breakthrough in terms of the development of the advertising environment. According to Samsung Ads, gamers spend approximately 2 hrs playing daily in the UK, Germany, France, Italy, Spain. With watching advanced TV, gaming verticals cover over 80% — which means the audience is barely reachable on traditional TV.
This is why connected TV seems to be a promising field, from advanced targeting, home page advertising, to precise analytics and new formats.
Breaking into SPO and DPO
Successful content creation cannot succeed without a strategy that will help it become successful, which is why it’s important to understand supply path optimization/demand path optimization (SPO/DPO).
SPO refers to how impressions are gathered to enable creators to identify what single supply-side platform (SSPs) or demand-side platforms (DSPs) they should be focusing on. DPOs, on the other hand, show how impressions are bought rather than sold.
The former highlights the ad tech vendors that are selling, the latter the vendors that are actually bidding on ads.
SSPs were the original model, representing a single platform publisher would work with, and DSPs then emerged to facilitate multiple ad exchange and data exchange accounts. However, overhead costs caused DSPs to become more expensive, so they focused back on SPO to determine SSP access to their data, in turn causing SSPs to focus back on DPO.
As SPO/DPO is predicated on bidding, the slightest change in price can make all the difference. However, only 20% of industry players have an SPO/DPO strategy. By focusing on quality rather than quantity, looking for unique demand, and experimenting, marketers can build their own innovative approach.
The same companies often own DSPs and their own exchange, they have an interest in limiting control on bids.
So make sure you’re working on SPO in a way you can control. Also, consider broadening the number of SSPs and DSPs you look at, as a number of publishers may not make their full catalog available.
In other words, it pays to shop around. Finally, remember that each organization has its own key metrics, so consider in your strategy whether you want to focus on reach, cost, win rate, etc.
While SPO/DPO are mirrored terms working similarly to one another while retaining their individual character, they are growing closer. As a result, according to some experts, the industry can continue to use SPO/DPO as it has done, or instead, focus on setting up a collective approach.
This would include creating an infrastructure that would allow advertisers and publishers to easily connect, target, and transact in one overarching structure, creating a hybrid system that publishers and advertisers alike would benefit from. The potential merging of SPO and DPO represents an opportunity for creators and advertisers alike to achieve what they want in tandem, rather than working in parallel.
Remember, as of 2021, over 50% of American adults regularly watch content streamed via CTV platforms for an average of two hours per session, across three devices.
That is over 150 million pairs of eyes watching your content or being targeted by your ads. This market is only continuing to grow, even among generations that are less associated with technological uptake. The market’s trajectory is only heading upwards, so to all the budding vloggers, animation studios, movie resellers, and edutainment content creators out there.
Image Credit: august de richelieu; pexels; thank you!
Alex Zakrevsky
Alex Zakrevsky. COO at VlogBox, CTV/OTT app development, distribution, and monetization platform. Product lover, advanced TV enthusiast, see the future in quality and digital.
