Cost Still Perceived As Key Impediment For CTV

With the level of focus on connected TV, it’s important to remember that it’s still a young medium, the terrain is continually changing, and marketers’ levels of participation and knowledge vary widely.

No surprise then, that in surveys and on panels, marketers’ expressed enthusiasm for CTV is inevitably tempered by concerns about various shortcomings.

A new report based on a comprehensive survey with a select group of North American marketers found that while most think that CTV and other data-driven TV methods of advertising will indeed become critical in reaching brand audiences over the next two to five years, core concerns persist.

Cadent, TV[R]EV and Brand Innovators surveyed 64 marketers between June and August 2020, with 59% reporting that their companies had or were running CTV ads. Of those, 28% reported CTV budgets in the $1 million to $5 million range, and 18% reported “experimental” budgets under $500,000.

Respondents were told that for purposes of the survey, CTV would be defined as TV that’s received via the internet, either through apps on smart TVs, external OTT devices like Roku, or gaming consoles like Xbox.

The respondent numbers are small, but their input is interesting for directional purposes.

Among the top reasons for advertising on CTV: ability to reach targeted/addressable audiences, access to sophisticated targeting abilities, and wide audience reach. (See below for more on that last point.)

Notably, one of the most-cited reasons for choosing CTV was “lighter ad loads keep audiences more engaged.”

Yet, only about a quarter of the respondents indicated, in a separate question, that they would be willing to pay more for a platform with a considerably lighter ad load.

A third of respondents cited cost/too expensive as the key limitation to CTV advertising, although only slightly smaller numbers cited difficulty of buying CTV at scale and difficulty of measurement as key challenges.

Fully a third of respondents said they were unsure about the key disadvantages of CTV.

On the cost front, some respondents did indicate that CTV and addressable TV are actually “well-priced” compared with traditional linear, according to the report, which cites this comment from one: “Traditional TV rates are not adjusting to audience decline. This makes their products not as valuable to advertisers like us.”

And even some of those who cited cost as holding them back from using CTV agreed that as CTV usage grows and more brands get involved, the industry will develop more low-cost ways for advertisers to run ads on TV.

Frequency was an issue that came up often in the qualitative section of the study. One respondent noted that viewers shouldn’t see the same commercial every break, adding that there’s work to be done regarding measurement, "especially as it relates to incrementality.”

Despite the complaints about scaling, and the above-mentioned citing of “wide audience” reach as a CTV benefit, a “fair number” of respondents said that the primary value of CTV is to reach “younger audiences and cord cutters.”

Indeed, although SpotX reported last summer that the actual average age of CTV viewers is 45, and 29% are 55 and over, use of CTV to reach audiences not reachable through linear’s broader reach is, as we know, a very commonly reported strategy.

The report includes some excerpts from interviews with three prominent marketers.

Jay Altschuler VP, Media Transformation at Petco, notes that more than a quarter of all TV viewing time is now spent on a CTV device, and that more streaming services are offering an ad-supported tier, which bodes well for significant growth in streaming advertising.

“Where CTV shines in comparison to linear video is that it allows marketers to reach a more specific audience versus the broad demo approach of a linear buy,” Altschuler observes. “CTV also allows greater insight into a viewer’s engagement with our ad, which we don’t get with linear TV. CTV provides a platform for Petco to create a more personalized experience for our pet parents. We have a rich source of first-party data at Petco, which allows us to provide marketing solutions customized to what a pet parent wants and needs.”

However, he also points out that “the pace of growth in advertising commitment will likely be tempered by the ability to prove the impact CTV advertising has on business outcomes.”

Does he view it as worthwhile to spend more money for an ad that’s in a smaller pod or show with a small ad load?

That depends on “how it impacts a person’s experience,” Altschuler says. “That’s our north star at Petco — what’s best for our customer is what’s best for our business, and we ask our media partners for the same… Marketers will need evidence that the shorter ad loads are providing an actual benefit, such as better retention or action, to justify the cost premium before they commit their media dollars.”

On the same question, Kevin Hamilton, head of brand marketing, media and PR for Avocados from Mexico, notes that while paying more for less clutter “seems to make sense at first glance, I would want to see data that backs up the idea that ads that are in a smaller pod automatically get better results. Same for lower ad loads. I’ve seen stats that talk about how placement — where your ad is in the pod and in the show itself — can have an impact, and we look at that when we run our Super Bowl ads.”

Brad Feinberg, North American vice president of media and consumer engagement, Molson Coors, says the answer to that question “is different for each brand, so it’s incumbent on the brands to deliver the metrics to determine if the value proposition is right.”

1 comment about "Cost Still Perceived As Key Impediment For CTV".
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  1. Ed Papazian from Media Dynamics Inc, March 12, 2021 at 5:45 p.m.

    I must say that I'm surprised that the CTV time sellers haven't at least explored some way to document the ad  exposure and, more important, the message registration / purchase intention lift benefit of commercials in breaks that are about half the "linear TV" norm regarding ad clutter. The fastest way to get a handle on this is to conduct a number of properly designed ad message and sales point and purchace intent recall studies for a fair crossection of brands when their ads appear in normally cluttered "linear TV' breaks and less cluttered CTV breaks. Just asking viewers in general about this isn't acceptable---you need specific commercials for specific brands measured objectively in both situations.

    The basic problem is that such a study may not support the higher CPMs of CTV. If the CTV CPM premium is, say, 100% and the recall lift is only 25-35% then you've got a  problem and the study is buried. But if the ad impact lift is at least the same as the CPM difference---or close to it--- then you can argue that CTV is also targeting better so that, too must be considered. In any event, to only way to move forward is to find out what the  facts are---using a reputable research company with much experience in this area.

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