Dec. 19 2018 — In the advertising industry, ads for over-the-top video streaming to TVs either directly or via a device connected to the TV such as a streaming media player or a game console are referred to as connected TV ads. There has been an increasing number of streaming devices shipping worldwide, bringing more viewers to connected TV. Ad tech vendors have noted the opportunities provided by the growth in connected TV ad inventory and are expanding their own connected TV products and services for video providers and advertisers. Kagan expects U.S. connected TV ad tech vendor revenue in ad serving, demand side platforms, or DSPs, and supply side platforms, or SSPs, to grow from $129.1 million in 2017 to $654.4 million in 2022.
The growth in both ad-supported OTT video streaming services and their viewing has OTT providers and the advertising industry looking toward this segment as an important avenue to reach viewers. Unlike traditional TV, which has a finite amount of inventory, the more viewers the advertising OTT services reach, the greater the amount of ad inventory they have.
For advertisers, connected TV inventory brings the best parts of TV and digital advertising together with 100% viewability, 90% plus completion rate, reduced fraud and the ability to target audiences with 1:1 addressability. Brand or sales lifts from the viewing of an advertisement can also be determined by the advertiser. In addition to addressability, part of advertiser interest in connected TV comes from a desire to reach younger consumers who are more likely to use online video services.
However, some issues remain for connected TV. With the fragmentation of platforms and services, each has their own dataset on viewers that cannot always be compared exactly against another. There is also no industry agreement on a common measurement currency for connected TV to equalize the buying process so all know what they are buying. The large number of platforms offering connected TV inventory, none of which have the viewing hours equal to TV at this time, makes buying connected TV complex in determining with whom to work.
When it comes to the technology used for connected TV ad trading and insertion, the pieces are in place but the system is complex. When a provider directly sells an ad, there is a single call made to an ad server. However, with a programmatic marketplace there may be many hops out to programmatic platforms with which to contend. That adds to the latency of the stream and may result in no ad filling the spot or the viewer turning away from the program.
The benefits outweigh the concerns, so we expect the rising awareness of the opportunity in connected TV advertising to drive more usage of the technology to the benefit of advertising technology vendors.