Status Quo Moving Image – Significance, Areas of Application and Development of CTV

Due to digitalisation, the moving image has been in a state of flux for a long time. Supported by the migration of young target groups from linear TV to digital moving images, one format in particular has benefited from this change: Connected TV (CTV).

In our JOM-IMPULSE event on 16 February, Dustin Tschentscher, Member of the Executive Board of the JOM Group, and Joachim Agüeras Netz, Director Research at the market research institute MediaAnalyzer, therefore took a look at the current state of moving images. They looked at the importance, areas of application and development of CTV and, on the basis of study results, formulated recommendations as to which campaigns on which moving image channels achieve the corresponding advertising effects.

A brief explanation of the term: What is CTV?

Connected TV (CTV for short) is a TV set that is connected to the internet via the TV itself (Smart TV) or via a peripheral device (e.g. game consoles, set-top boxes, etc.). CTV enables the display of advertising in video streams on the big screen (e.g. Joyn or Amazon Freevee). CTV must be clearly distinguished from addressable TV (ATV), as the advertising environment for ATV is completely different: the commercials are played on linear TV. With CTV, on the other hand, the ads are played in the environment of video streams. We have summarised more about CTV in general and the difference to ATV in this blog article.

Where does the CTV hype come from?

Today, there is no way around CTV, and not only for advertisers. This is mainly due to three factors:

The number of internet-enabled TV sets has increased and will continue to increase.
The usage time of linear television is decreasing strongly, especially in the younger target groups. Already 36 per cent of 20 to 29 year-olds can only rarely or no longer be reached via linear TV.
Along with the two points mentioned, the offer in the video-on-demand sector is also steadily increasing.
In the meantime, various offer models have developed in the CTV sector, which can be roughly classified into three categories:

Ad-funded models (AVOD), which are financed by advertising.
Subscription-funded models (SVOD), in which a fee is charged but no advertising is played in return.
Hybrid models that offer users both of the above options.
A trend that can currently be observed is that many SVOD providers are opening up their platforms and moving towards hybrid models, as was recently the case with Netflix.

What does CTV mean for advertisers?

Advertisers can use CTV to reach target groups that are no longer on linear TV. Studies show that users are in a lean-back situation when consuming moving images (i.e. also on linear TV) and are demonstrably more receptive to advertising messages there. In the area of CTV, a view-through rate of over 95 percent can even be observed, which means that both the audiovisual component and the messages can be transported over the entire length of an advertising medium. In addition, the advertising blocks in the CTV segment are currently still significantly shorter than in the linear advertising block, which leads to higher advertising acceptance.

What targeting options does CTV offer?

Since CTV runs via internet-enabled TV sets through which data can be generated, it also allows advertisers some targeting options depending on the available data depth. Without own data or a cooperation partner with existing data, advertising can be played out via contextual targeting. There are several options here:

Publisher-based: Advertising spots are played on a specific publisher to reach their target group (e.g. on Crunchyroll to reach anime fans).
Genre- or channel-based: Commercials for children’s products are placed specifically in the children’s environment.
Theme-based: Advertisements are placed specifically in the environment of films and series on certain topics such as love or sports.
Another exciting approach is data targeting. Ideally, advertisers have their own data to target existing customers, for example. But publishers also have data that enables targeting by age, gender or affinity.

Another option is to use TV and streaming data from users to target viewers of specific formats.

This data can form the basis for the media strategy. Basically, different strategies can be pursued for the big screen:

Contact route logic: This makes it possible to track whether users have had prior contact with the linear TV spot in order to generate a second contact via the CTV spot if necessary.
Advertising pressure regulation: The advertising pressure of a TV campaign can be increased via CTV, e.g. by supplementing a TV spot with CTV spots in specific regions.
Data x CTV: Using first-party data from advertisers and matching this data via a household graph, users can be reached specifically on the big screen via CTV.

Are there differences in the advertising impact of the various moving image channels?

Linear moving images and digital moving images reach different target groups to some extent. In the current study “Advertising on Netflix and Co.” MediaAnalyzer therefore examines how the users of CTV and linear TV differ and how advertising works on the respective channels. For this purpose, 1,200 people were representatively interviewed. The respondents were first classified according to their affinity to one of four channels (ad-financed Netflix, Amazon Freevee, RTL and ProSieben) and were then randomly presented with eight commercials within this channel selection.

Who actually watches CTV and who watches linear TV?

The study shows that the share of people under 40 is higher among the streaming afficionados than among the private TV users. The share of households with children and the net household income are also higher than for private TV.

For streaming users, fun is the top priority and they describe themselves as open to new things. At the same time, however, they are also security- and price-oriented and act on the basis of facts.

The interviewees who tend to associate themselves with classic television say that they are very price-oriented. Only in second place is their need for entertainment. In general, they are more reserved and interested in information. As with streaming users, they are also security-oriented.

What do these findings mean for advertising?

The study shows that the needs of viewers differ from platform to platform. This should be taken into account when designing and placing advertising. On CTV, advertising should above all satisfy the need for fun and be unique. At the same time, it should also communicate the unique selling proposition of a brand or product.

On linear TV, on the other hand, the focus is on offer communication. This does not only mean price communication; in general, advertising should emphasise luxury less, but provide factual details to address the need for information.

Emotion tracking, in which the test persons give feedback during the consumption of the content and thus the spots can be measured to the second and displayed in emotion curves, additionally confirmed these findings of the study. After the test persons were shown different spots, it was shown that streaming users were more receptive to certain emotional sequences than users of linear television.

Does channel selection influence the communication of image KPIs?

The study also investigated whether there are differences in the effect on brand image between the channels and sectors examined. As an example, effects on the perception of modernity were examined. Here it was shown that the financial and automotive sectors benefited more than average from the CTV channel, while the food trade and the telecommunications sector benefited more than average from linear TV.

In terms of likeability, the streaming channels benefited from the food trade and the automotive industry. In linear TV, on the other hand, it was the telecommunications and pharmaceutical industries.

In terms of relevance effect, it was the food industry in particular that achieved the greatest effect via CTV. In linear TV, it was the telecommunications industry and food retailing.

When investigating the communication of brand benefits, it should be noted that research in this area is still in its infancy, especially with regard to the comparison of streaming and TV users. In addition, the result depends strongly on the specific brand and campaign. Basically, however, it can be said that there are differences in the communication of values depending on the industry and channel, so that only individual studies can prove the effect of a campaign afterwards.

What will happen in 2023?

For the CTV sector, it is foreseeable that the offer will continue to grow. For example, Amazon plans to further expand its “Amazon Freevee” offer and Disney+ has also announced a hybrid model for this year, which will open up a further target group and a further environment for advertisers. However, as the number of offerings increases, winners and losers will emerge so that offers are bundled and there is no need to negotiate with every provider.

As the market develops, the need for research in this area will also increase. Because from a research point of view, there is still a lot to be investigated. For example, in addition to the individual channels, the creative side could also be examined in order to measure the overall package of advertising impact and to see how it compares to the rest of the industry.

The subjects of the study would like to see topics such as sustainability and diversity play a role in advertising in the future, as well as wit and charm, without sacrificing product information.