The Future of Connected TV: What’s Next for Brands and Advertisers?

The world of television is undergoing a seismic shift, and if you’re a brand or marketer, it’s time to pay attention. EMARKETER forecasts that for the first time ever, more money will be allocated upfront to digital video than to primetime linear TV in 2024.

Digital upfront spending is set to soar by an additional $5.06 billion USD, driven by Amazon Prime Video’s new ad tier, the migration of live sports to streaming services, and the increasing role of social platforms like TikTok in securing upfront commitments. 

This transformation is reshaping advertising, positioning connected TV (CTV) at the forefront of this digital revolution. Understanding the history, rapid growth, and future trajectory of CTV is essential for anyone looking to stay ahead in advertising.

The History and Rapid Growth of Connected TV

CTV has undergone a remarkable evolution, transforming both content consumption and advertising. Its roots trace back to the 1990s with the Internet Protocol Television and the first TIVO recorders, but significant traction began in the early 2000s. A pivotal moment came with the launch of major streaming platforms: Netflix in 2007 and Hulu in 2008, which popularized on-demand content delivery and set the stage for CTV’s rapid adoption.

Over the past decade, traditional linear TV viewing has declined sharply, from 4:37 hours per day in 2012 to a projected 2:46 hours in 2024. This drop reflects a shift towards CTV, where viewing time has doubled over the last four years. This change in audience behaviour has driven substantial growth in CTV advertising. According to Statista, US CTV ad spending is projected to reach $27.47 billion USD by 2025, outpacing viewership growth and demonstrating strong advertiser interest in the platform.

Technological advancements have been integral to CTV’s evolution. Modern platforms now offer high-definition streaming, on-demand content, and smart device integration, enhancing user experience. These advancements have enabled advertisers to deliver highly-targeted content based on viewer demographics and behaviour, improving campaign effectiveness over traditional TV advertising.

Recent innovations in CTV include interactive features like shoppable ads and QR codes, which boost viewer engagement and open new advertising possibilities. Additionally, CTV’s digital nature allows for sophisticated measurement and analytics, enabling real-time budget allocation and continuous campaign optimization.

Connected TV Advertising vs Traditional TV Advertising

The comparison between CTV advertising and traditional TV advertising highlights several key differences that make CTV an exciting and distinct platform. 

Traditional linear TV is limited in its flexibility and targeting capabilities. With linear TV, advertisers cannot selectively target specific viewers; they must buy audiences in aggregate. This approach lacks the precision and personalization that modern advertisers seek.

In contrast, CTV offers unparalleled targeting capabilities. Advertisers can target individual users based on detailed audience insights and behavioural data. For instance, an advertiser can specifically target one person without necessarily targeting another, providing a level of precision that is unattainable with linear TV. This one-to-one targeting is a significant advantage of CTV, allowing for more effective and relevant advertising campaigns.

Additionally, CTV provides access to a range of premium content that is not available on linear TV. Platforms like Peacock and Paramount Plus offer exclusive content that can only be accessed through CTV devices. This exclusivity enhances the value of CTV as an advertising platform, as advertisers can reach audiences that are highly engaged with premium content.

Another major advantage of CTV over traditional TV is the ability to collect and utilize real-time data. CTV platforms can provide advertisers with detailed metrics on audience engagement, viewing habits, and ad performance. This data-driven approach allows for continuous optimization of advertising campaigns, ensuring that ads are delivered to the right audience at the right time.

Overall, CTV’s evolution is reshaping the advertising landscape, offering new opportunities for advertisers to reach and engage audiences in innovative ways. The combination of advanced targeting capabilities, access to premium content, and data-driven insights makes CTV a powerful platform for modern advertising. As consumer behaviour continues to evolve, the future of CTV looks promising, with continued growth and innovation expected in the years ahead.

The Evolution and Future of Connected TV

The evolution of CTV marks a significant shift from traditional linear TV, as viewership patterns transition from linear to digital platforms. This shift is not merely about convenience, but represents a broader change in how audiences consume media.

One key trend is the increasing issue of publishers playing many house ads. For example, viewers on platforms like Peacock may frequently see commercials from NBC, indicating a reliance on house ads due to insufficient programmatic demand or conflicts with competitive separation. This highlights a critical challenge for publishers: the need for a diverse and robust demand to avoid repetitive or redundant advertising.

At StackAdapt, we address this challenge by offering a diverse range of demand. With ads from thousands of brands being served through the platform, publishers are given a more varied advertising mix. This diversity is essential as CTV grows, improving the viewer experience by reducing repetitive ads and providing more relevant commercial content.

Another significant development in CTV is the improvement in signal fidelity. Signal fidelity refers to the accuracy and completeness of data used to identify users and their viewing behaviour. This is crucial in CTV advertising and measurement, as it directly affects the reliability of audience targeting and the accuracy of campaign performance metrics. Publishers are now more willing to pass genre and sublevel context about their content. This means that advertisers can target their ads more precisely based on the context of the content being viewed, leading to better engagement and effectiveness.

CTV offers a unique opportunity to engage audiences at scale in a premium environment. Unlike display and mobile advertising, where users may not be fully engaged, CTV viewers are generally more attentive and engaged with the content. This creates a highly-valuable environment for advertisers to reach their target audiences in a meaningful way. The ability to understand and target audiences more precisely further adds value to CTV as an advertising platform.

Access to CTV is also becoming more widespread. Historically, publishers like Paramount Plus were guarded about making CTV inventory available for programmatic buying. However, this is changing as publishers recognize the benefits of opening up their supply to programmatic demand. This shift has enabled buyers to access premium inventory from premium platforms, which was not possible just a few years ago. Disney, for example, has embraced this approach, making it one of the largest publishers in the CTV space due to its willingness to open up more supply for programmatic buying.

New and Emerging CTV Ad Formats

CTV advertisers are pioneering innovative formats to boost viewer engagement and achieve better results. Here are some key developments:

Interactive Ads

These allow direct engagement through features like:

• QR codes: Viewers scan codes to access extra content or make purchases.
• Shoppable ads: Purchase products directly within the ad.
• Pause screen ads: Ads are displayed when viewers pause a video, offering a non-intrusive ad experience.
• Choice-based ads: Viewers select the content they want to see, enhancing personalization.

Dynamic and Personalized Ads 

Data-driven ads tailored to individual viewers, increasing engagement significantly compared to standard pre-roll videos.

Picture-in-Picture (PiP) Ads

Allow viewers to continue watching their content while interacting with ads in a smaller window.

Interactive Overlays

Interactive elements on top of video content enhance engagement without interrupting the viewing experience.

Interactive CTV campaigns have shown engagement rates 4.6 times higher than mobile video and 10.3 times higher than desktop video, with a 600% lift in engagement compared to standard pre-roll ads. These innovative formats offer more personalized experiences and new ways for advertisers to connect with audiences, driving the future of CTV advertising.

Key Challenges for CTV Advertising

Advertisers face several challenges when venturing into CTV advertising. Here are some of the key obstacles and how StackAdapt can help overcome them:

Inventory Insights 

Gaining insights into available inventory is a significant challenge. StackAdapt connects clients with the right publishers, facilitating informed campaign decisions. Traditionally, advertisers haven’t interacted directly with publishers, but StackAdapt encourages this engagement through its DSP, ensuring advertisers understand the inventory they are investing in.

Avoiding Limited Targeting 

A common misconception is that there is limited supply in CTV, but that is not the case. Many advertisers focus on well-known platforms like Disney+ and Peacock, which can limit their reach. CTV offers a large digital landscape with numerous targeting options. Beyond Disney and NBC, advertisers can target Warner Brothers Discovery across HGTV, HBO Max, Paramount’s Pluto, Tubi, DirecTV, Sling, Sumo, Samsung Plus, and more. This diverse array of options ensures advertisers can reach their target audience across multiple apps and platforms, rather than being confined to a narrow selection.

Expanding Supply Enablement 

To maximize exposure to the desired audience, advertisers need to broaden their scope and consider the diverse range of TV publishers available. Audiences span multiple platforms, not just one app. By expanding targeting efforts, advertisers can capture a wider audience, which is most beneficial to their business.

StackAdapt helps advertisers by providing comprehensive inventory insights and fostering direct communication with publishers. This allows advertisers to explore the full range of CTV options, avoiding the limitations of sticking to a few popular platforms.

What’s Next for Connected TV Advertising?

The future of CTV advertising is poised to witness significant developments as it continues to grow and evolve. By 2028, CTV’s share of ad spend in the US will nearly equal that of linear TV, highlighting the ongoing shift in advertising strategies. 

This transition underscores the critical role of CTV in advertising campaigns, particularly as traditional TV ad inventory continues to shrink. While this reduction in available ad slots may lead to higher prices for CTV spots, the enhanced targeting and shopability features of CTV make it a worthwhile investment for advertisers​​.

Moreover, the integration of ad-supported streaming services is transforming the landscape. As consumers increasingly opt for cheaper, ad-supported streaming options, the volume of viewers exposed to CTV ads is rising. This trend is expected to drive further innovation in ad formats and targeting capabilities. For instance, shoppable TV, which allows viewers to purchase products directly through their television interface, is gaining traction. This convergence of retail media and CTV creates new opportunities for advertisers to engage consumers in more interactive and personalized ways​​.

As CTV matures, advertisers must navigate these evolving dynamics, leveraging advanced analytics and programmatic buying to optimize their campaigns. 

The future of CTV advertising will likely be characterized by a balance between the traditional strengths of linear TV and the innovative potential of digital platforms, ensuring comprehensive reach and impactful consumer engagement.

Add CTV to your media mix and access the best ad inventory in the market with StackAdapt. Request a demo today to get started.