“On TV & Video” is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is by Polar CCO Matt Crenshaw.
As of 2020, there are 10 million unique advertisers on Facebook. That means 10 million advertisers are already building ad creatives to target audiences on the social platform.
Compare that to CTV, one of the fastest-growing sectors of digital advertising. While year-over-year growth for CTV advertising is rising, it’s still only a tiny drop in the larger digital bucket.
How tiny a drop? Just 120,000 unique advertisers, or about 1%.
Both search and social achieved scale by moving beyond top-tier advertisers. They became massive by opening up auction-based pricing for a much larger pool of mid-market advertisers. For CTV to fulfill its potential, it needs to follow a similar path.
With supply and demand in place, creative challenges remain
The low participation rate of advertisers on CTV isn’t a question of value or interest. The benefits of CTV for awareness-based and performance-based campaigns are well documented.
But to get mid-market advertisers onto CTV, three things need to happen.
First, the supply needs to be available. This is increasing with the rise of free ad-supported TV (known as FAST) and AVOD, fueled by greater viewership. Second, ad serving technology needs to be in place via a DSP. That’s where programmatic shines.
So, if there’s no issue with supply and demand, why is only 1% of the addressable market spending on CTV?
The third challenge, yet to be solved, lies with the creative. We need to take a look at the actual CTV ads and how they are designed.
Moving beyond traditional TV commercials
Advertisers need to reconceptualize what it means to develop an ad for CTV. Traditional linear TV gave us the concept of a commercial: high production value, packaged for a lean back experience.
But viewing habits have changed since those early couch-potato days. In the time that TV led to CTV, social has become the de facto way that we interact with digital screens.
For mid-market advertisers, their first taste of television advertising will come through CTV at a time when social is core to any digital experience. These advertisers will need to look to social media, not TV commercials, for creative inspiration.
The rise of creative automation
For CTV-first advertisers, the shift away from traditional TV commercials isn’t just a creative imperative. It’s an economic one. For 99% of brands, TV commercials are just too expensive to produce.
Smaller brands don’t have the budget, time, or interest to create brand new spots for CTV. They’ll want to repurpose organic posts and social ads, where the creative work is done and a base level of performance can be expected.
But can the content that brands create for social media realistically scale across the CTV universe?
There are obvious logistical challenges to overcome. Most notably, social ads have been designed for smartphones (vertical screens) and don’t render neatly onto CTV (horizontal screens).
For social advertising, Facebook designed new ad formats and gave mid-market advertisers the tools to build ads directly on their platform. With CTV, the supply side is too fragmented for any one platform, streaming service, or device manufacturer to do what Facebook did.
Ad tech providers will be called upon to fill this gap with creative automation tools. These tools need to enable mid-market brands to produce a CTV ad in a matter of minutes, not weeks or months. If a CTV advertiser is spending $5,000 to target a niche audience, can they really afford to spend $50,000 building the creative?
We need to get to the point where mid-market brands are paying less than $500 for the development of a quality CTV ad.
As creative automation improves and production costs go down, campaign performance will improve. Brands will be able to pull in assets from social media with the click of a button, assemble multiple versions to test and tailor them to serve their campaign goal.
Performance solves the supply bottleneck
Today, CTV faces a supply bottleneck. This is due to performance uncertainty. But unlike TV commercials, where results can be difficult to measure, CTV ad performance will soon be much easier to gauge.
As attribution improves, results will become clearer. As results become clearer, testing cycles will shorten. Ultimately, more brands will learn what works on CTV. That’s when they’ll start to bid higher and win more inventory.
Once we see the first mid-market advertisers break into CTV, creative automation will accelerate, delivering new templates, optimization techniques and AI capabilities to onboard millions of buyers. That shouldn’t sound too futuristic – it’s exactly how search and social advertising have evolved.
Follow AdExchanger (@adexchanger) on Twitter.
