Commentary

The CTV Ad Problem

by Dave Morgan , Featured Contributor, October 8, 2020

CTV is about as buzzy a buzzword as the ad industry has at the moment, referring broadly to Internet-delivered content and ads viewed through apps on connected TVs.

It’s buzzy because tons of people in the U.S. are watching streamed content through their connected TVs. Nielsen estimates put streamed viewing at almost 24% of all video viewed on TV.

It’s an ad problem, because the vast, vast majority of streamed viewing is on services with no or few ads. Netflix, Amazon Prime, Hulu, Disney+ and HBO Max are by far the biggest streaming services. But, of the dominant five, only Hulu carries ads, and only on part of its service, with a very light ad load relative to conventional TV.

That’s why, when you analyze Nielsen data to determine how much of the “ad viewing” on TV occurs in streaming services, you learn it’s only 3%-4%.

Yep, you’ve got that right: CTV might be 24% of content viewed on TV, but more than 95% of all U.S. TV audiences’ time viewing ads can only be accessed through linear TV programming.

Which presents a real problem for marketers. What do you tell your boss who says she’s heard that everyone is cutting the cord and watching streaming content, and wants you to move your TV ad budgets to streaming?

You might want streaming ads. You might have lots of money for streaming ads. But the math says that there is a very limited pool of them.

Of course, if you log into some of the programmatic systems these days, they seem to have plenty of “CTV” ad inventory to sell. How is that possible? Where do you suppose it comes from? How much can there really be?

Do you wonder why auditors and verification services are reporting so much digital ad fraud in CTV these days? Maybe it has something to do with the fact that while lots of content is viewed on streaming services, not so many ads are yet.

What do you think?

advertising, ctv, streaming, tv

6 comments about "The CTV Ad Problem".

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Tim Sullivan from Media Consulting, October 8, 2020 at 3:09 p.m.
Thanks for the reality check, Dave. Great example of going beyond the industry "headline" to reveal the true, non-airbrushed picture.
Reply

Ed Papazian from Media Dynamics Inc, October 8, 2020 at 3:48 p.m.

You are right, Dave, although Nielsen's definition of "streaming" includes YouTube, hence Nielsen contended that AVOD represents more than half of all streaming viewing. We have just completed a special analysis of this which our "TV Dimensions" and MDI Direct" subscribers will receive shortly, and you must start by correcting Nielsen's data on "streaming"---- it's only about 20% of all viewing, not 25% as some mistakenly believe the Nielsen report indicated. Also to be factored in is the fact that there is considerably less ad clutter on both AVOD and digital video platforms so, in terms of minutes of ad time, there are simply more GRPs available for advertisers per hour on "linear TV", assuming ad messages of equal length. Net, net, we get a somewhat lower percentage of ad viewing time on "linear TV" than you stated---but it dwarfs the combined total of AVOD and digital video. This, of course, may change over time as more and more AVOD services appear, but for now as well as the near future, AVOD is a fine add-on to "linear TV"---when appropriate---but it's not close to being the main venue.

Dave Morgan from Simulmedia replied, October 8, 2020 at 7:23 p.m.

Thanks Ed. Great insights!

adam waxman from Integrity Marketing Partners, October 9, 2020 at 10:58 a.m.

It may be time to consider going back to the good ole 1950's and 60's when brands directly "partnered" with, aka financed the production of TV programming, which included prominent in-show product placement, on-air mentions, "live" commercials by cast members and blatant entitled/presenting sponsorship of particular shows. This would allow for less commercials, shorter pods and still enable the monetization of the content.

Ed Papazian from Media Dynamics Inc, October 9, 2020 at 11:18 a.m.

Adam, in the 1950s advertisers and their agencies were well skilled in dealing with independent producers to create shows that they controlled and sponsored on TV---but these were mainly low cost game shows, variety shows, drama anthologies, etc. and the networks were content tom let the sponsors absorb all of the risks if they signed firm, non-cancellable, one-year contracts for specific time slots--with no audience guarantees. Now, the agency people who would be involved are basically time buyers, the major networks control all of their time slots and they would simply not accept a sponsored program from an advertiser---specials excepted----unless it had incredible credentials such as a super star and a well experienced producer at the helm. So you would have to try for exposure on one of the smaller cable channels---or a digital venue---and that would mean that very few people would see your show as well as its ads. To get reach, these days, you need to use combinations of channels and programs---not a single show or series. In olden times, a single hit on primetime TV would give you average telecast coverage of 25% and season long exposure to 50-75% of the population. Those days are long gone.

Andrew Budkofsky from Brand Further, October 13, 2020 at 3:23 p.m.

What I'm seeing is that the channels independent channels don't know how to sell ads to brands, so they're relying on exchanges to fill their inventory. Those exchanges tend to devalue the inventory, and take their pound of flesh, leaving the channels with very little revenue.