Connected TV has altered the video advertising landscape for brands and retailers, combining digital’s extensive performance metrics with the brand awareness that television ads have always offered.
As the channel matures, brands and retailers are ramping up their investment in CTV in pursuit of improved ad relevance, precise audience targeting and engaging creative formats. According to a new Modern Retail, Digiday and MNTN survey, 76% of respondents reported that CTV was moderately to very significant to their advertising mix in 2023.
“The early adoption days of CTV are clearly over,” said Ali Haeri, vice president of marketing at MNTN. “If you’re not on CTV already, every day that goes by is a little more ground lost to competitors. We can honestly say that these last two years have legitimized and elevated the platform into the premier performance marketing channel that it always promised to become.”
CTV unlocks new performance marketing and targeting opportunities for retail advertisers
While 55% of survey respondents cited increased brand awareness as a primary goal of CTV advertising, retail advertisers are also starting to see the value of CTV as a performance channel. Respondents also cited improved ad relevance (40%) and precise audience targeting (39%) as top goals for streaming ads.
For instance, as Modern Retail recently reported, health and wellness brand Ritual recently launched its first CTV campaign to specifically reach a target audience of people in the life stage of trying to conceive. Meanwhile, with its first CTV campaign, the prebiotic soda brand Poppi targets people who have avoided soda out of health concerns. These examples reinforce how advertisers, specifically at DTC brands, leverage CTV’s targeting capabilities to reach very specific shoppers.
As advertisers prepare for the loss of third-party cookies and the subsequent impact on audience data, CTV’s targeting capabilities are poised to become even more essential.
More than half (51%) of respondents are using first-party data — such as retailers’ CRM or email data — to reach target audiences on CTV. Other common tactics include geolocation, interest-based and contextual targeting. As Ritual founder Kat Schnieder told Modern Retail, “With this channel, we’re able to get really specific on who we’re targeting.”
Engaging CTV ad formats help retail advertisers meet brand and performance goals
The acceleration and evolution of CTV also allow retail marketers to experiment with ad formats unavailable on linear TV.
Forty-two percent of respondents leverage interactive ad creative as part of their CTV strategies, followed by shoppable video with QR codes (34%) and ad selectors that allow viewer choice (27%). Less common formats include ads with mobile integrations (20%) and carousels featuring product, image or video galleries (20%).
These engaging CTV ad formats also support marketers’ brand and performance goals on the channel. More than half of respondents (54%) cited brand awareness as the most valuable metric when measuring CTV ad performance, followed by website conversions and revenue (48%).
This finding echoes what Ritual’s Schneider told Modern Retail: “Our primary success measure for this campaign is ad recall. We want to connect with consumers in the ‘trying to conceive’ life stage in a meaningful way.”
MNTN’s Haeri has also noticed a convergence of KPIs regarding CTV campaigns.
“Brand marketers are now using the same signals that performance marketers use to influence their creative decisions and understand the impact of their top-funnel ideas,” he said. “CTV campaigns can be activated as a performance marketing channel with a direct response mindset, while still driving awareness — allowing brands to target the audiences most likely to convert.”
As advertisers ramp up their CTV investments, more turn to AI for optimization
In 2024, 45% of survey respondents plan to allocate 41% or more of their budgets to CTV campaigns and strategies. Additionally, 46% expect CTV to drive more than 40% of their advertising revenue next year.
“Advertisers have had years to wrap their minds around the channel,” Haeri said.
“Now they’re investing more, thinking creatively and using recent technological leaps on the platform to adopt key tools like affinity-based targeting, audience segment reporting, incrementality reporting and AI to optimize ad performance and boost ROAS.”
As Haeri noted, artificial intelligence is expected to play a continued role in CTV campaigns in 2024, particularly when optimizing and analyzing campaigns.
“Programmatic solutions use algorithmic tools to automate the buying and selling of digital ad space, including CTV ads,” said Haeri. “AI tools also allow advertisers to create rules for how, when and where ads are launched instead of placing ads manually. This gives retailers an advantage over counterparts that aren’t leveraging this technology.
“AI is also going to change how creative is made and how we approach it,” he said. “This will continue the ad democratization that we’ve seen take hold in CTV; now compelling, emotionally charged, and inspirational ads aren’t just for blue-chip brands with big budgets; anyone with the right strategies, tools and creativity can do it.”
Sponsored by: MNTN