Why Ignoring CTV Risks Leaving Serious Revenue On The Table

Why Ignoring CTV Risks Leaving Serious Revenue On The Table

Advertising is set to define the next phase of streaming, yet advertisers still aren’t giving connected TV (CTV) the time of day – and their budgets are worse for it, argues Paul Sinkinson, Managing Director (Australia) of Analytic Partners in this article. 

The streaming wars have been raging over the past few years, pitting some of the world’s biggest media companies against each other in the race to win subscribers. Netflix, Amazon, Disney and Nine and Foxtel locally, are all embroiled in the same fight for attention and revenue. 

The verdict’s still out on who the winner will be, but it’s clear that if there’s been one loser from this fight, it’s been advertisers. But all of that is about to change, and the power is going to be in marketers’ hands. 

Let me explain. Subscription streaming services have been drawing viewers away from ad-supported channels in their drives in recent years. But it’s become clear subscriptions alone aren’t going to fund the billions it takes to create the standard of content global audiences have become accustomed to, and that means many are now introducing ad-supported subscription tiers.  

At the same time, TV broadcasters have been getting their houses in order and developing their own broadcast video on demand (BVOD) offerings.  

But, as Analytic Partners’ ROI Genome reveals, there are millions of dollars worth of lost sales opportunities being left on the table.  

Despite the fact that spending on CTV provides a 30% stronger return on investment than the same spend on other devices, investment is still very low.  

With those global giants introducing those ad-supported subscription tiers in the next few weeks it’s the perfect time to re-evaluate the importance of CTV in your media mix, and even consider making it a powerful tool in your arsenal. 

Thinking broadly is the key to embracing CTV 

Gone are the days when marketers had to wait months to see the results of their work. We’re now accustomed to being able to adjust campaigns in real time – and this is a difficult mindset to shift. 

One reason why advertisers haven’t taken up CTV in significant amounts is because of the perceived difficulty in measuring the impact of advertising on this channel. This is because many  

digital channels offer the perception of immediate impact, based on click-throughs or other tools. This makes traditional digital channels more appealing, as the spend can be justified and adjusted in real time.  

But judging CTV through this lens simplifies the advantages this channel can offer. In particular, Analytic Partners discovered that the lasting impact of video, such as TV, is twice as long as non-video media tools like radio.  

Video advertising is not only capable of impacting buying decisions in the short term (this week or next week) but also in the medium to long-term. Think next month and beyond.  

This doesn’t mean that brands should only pursue cheap and short video advertising. As with everything there’s a balance – and there’s still a place for longform video. In fact, research from Analytic Partners has shown that videos of six seconds generally see higher performance than 15 or 30 second videos. However, it’s videos that are longer than 60 and 90 seconds that have the highest impact. Videos in the middle, between 6 seconds and 60 seconds, are the ones that are least effective. 

So when implementing video advertising, understand that short and long-form videos are two vastly different forms of storytelling, each with their own benefits. The key to eliminating inefficiencies in your media mix is understanding how to make each form work towards your campaign goals. And that means smarter targeting and better measurement. 

Seizing the opportunity 

It’s all very well to say that brands should be using CTV and increasing their spend, but what would this actually look like for your company? 

There are brands that are currently dipping their toes into the CTV waters, but investment into streaming TV still averages just 7% of total advertising spend. But that 7% is creating a 30% higher ROI than for other marketing channels. It’s clear that investment will need to be adjusted for brands to make the most of this channel.

As a rule of thumb, Analytic Partners recommends that CTV and streaming video spending should account for at least 10% of total advertising spend, with a max of 30%. Figure out what works for your brand, and adjust when needed. 

And of course, any marketing spend needs careful consideration and implementation. In particular, high consideration brands with longer purchase decisions, such as luxury jewellery, designer clothes and cars, tend to see higher impact from CTV spend than brands with lower considerations.

Marketers should also resist the urge to bombard their audience – CTV dollars should not be concentrated on a single target, genre or streaming service. Instead, diversify where your CTV budget goes, and try to cap the frequency of your ad when possible. 

And while CTV has been drastically undervalued so far, it is still crucial that this channel be part of a complex marketing mix. Throwing your budget fully into the CTV bucket, in lieu of channels like linear TV, will be counterproductive. Think carefully about the audiences and geographic areas that linear TV still over-indexes in, and ensure to include this in your strategies.

With the streaming wars continuing to rage on the new front of advertising dollars it’s marketers who, if they play their cards right, will become the unexpected winners. 

All Sources: AP Australian Norms 2006-2022

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