We’re in the midst of yet another massive change in the digital advertising industry and I’m not talking about cookies, iOS14 or ad targeting. I’m talking about the massive ad budget shift to connected TV (CTV) advertising we’re all witnessing.
Over the past two decades there have been three significant digital advertising methods that have reshaped the advertising industry: pay-per-click, real-time bidding, and CTV advertising. But unlike the first two events, CTV advertising will develop much more rapidly than search or display as they had to be proven.
Advertising on TV is a format widely accepted by advertisers (and has been for 80 years) and as TV shifted from a box to a smart device, and content changed from linear to streaming/on demand the audience has grown exponentially.
Currently, 63% of all TV viewing is already done on streaming services, which equates to 90 million+ ad-supported CTV viewing households.
For the last 25 years, I've worked for and co-founded startups in digital and marketplace platforms including paid search, programmatic, and now CTV. As marketers of all sizes look toward the brave world of CTV advertising, there are lessons they can take with them from their experiences in digital advertising -- particularly search. Here are some lessons I've learned along the way that can save any marketer millions of dollars.
Follow the money
Understand exactly where your money goes and what percentage of your CTV budget goes to working media.
Ask for and only work with 100% transparency. There are lots of leading CTV sales houses claiming to be "platforms" that collect 30%-50% margins in non-transparent ways.
The easiest way to solve this is to have them disclose the actual costs of media and/or data, along with their take rate. If they won't disclose, you have your answer. If they disclose and have been "taking some liberties" with your money, you also have your answer and need to find a new, more reputable partner.
Warning: if the answer is too complicated, it's a smokescreen. The truth here is radically simple, so you should be able to “trust but verify” by drawing out the supply path with a clearly defined percentage of revenue for each link in the value chain.
Embrace the Scientific Method
Rather than committing $175,000 to a CTV buy before seeing any results — a legacy of linear TV buying that I refer to as the "bet it all on black" method — I encourage marketers to approach CTV using the Scientific Method applied to advertising. That is Test, Learn, Iterate and only then Scale.
If you have ever marketed on Facebook or Search, this approach will sound familiar. Similarly, in CTV, you can start with a few hundred dollars per day and quickly adjust the creative, targeting or other variables to dial in ROAS.
Then, once you have dialed in ROAS, incrementally scale your campaign — carefully maintaining positive ROAS — against the 200 million consumers that are viewing CTV programming today. This is actually not that difficult if you really think about it, as long as you have access to the right tools, platforms and the right data.
Work with platforms, not networks disguised as platforms
This is closely related to the first point, but understand the fundamental difference between a "network" and a "platform." Networks operate on an opaque "buy low, sell high" basis. Platforms operate on a fully disclosed fee structure.
Generally speaking, arbitrage networks are prevalent in new "wild west" categories like CTV and get squeezed out over time by platforms offering total transparency and control.
We've all seen this movie play out over and over. The only way to work with a network is if you are OK with paying a CPA regardless of the network's margin — that assumes the media risk is on them.
With all the changes occurring across digital and traditional media, marketers should anchor themselves in a clear plan, centered on collecting the data that will guide their marketing teams to drive profitable CTV outcomes at scale.
CTV delivers massive reach with the advanced targeting capabilities to connect with your ideal audience, has trackable ad exposure with 1:1 attribution measured through household IP addresses, facilitates “hands on” media buying with no minimum advertising spend, and has the ability to track the measurable “Halo Effect” across channels within a household and across channels.
When it comes to performance CTV advertising, the only question marketers need to ask is “Why the hell am I not doing it?”