As advertising has become increasingly obsessed with “outcomes,” nearly every channel has been re-cast as a performance channel. CTV is no exception.
Now, “Performance CTV” has emerged as a convenient shorthand that oversimplifies how television actually drives value.
As innocent and aspirational as it may seem, there are numerous flaws with the term “Performance CTV.” The focus on performance all but guarantees that campaign results will be misinterpreted in a way that causes more harm than good:
- TV has always performed, including in driving short-term impact (see spike metrics), especially from people who are already in market. It’s misleading to say that short-term performance is somehow in the exclusive domain of CTV.
- A lot of performance, especially but not exclusively on CTV, is driven by remarketing tactics. Remarketing is not inherently bad, but it has limited scale and is often non-incremental, especially for bringing in new customers.
- A focus on performance, like a focus on outcomes, almost always translates into measuring impact over a single point of time, most often within a relatively short time period (<30 days). This means that longer-term impact is not only ignored but also often sacrificed to maximize short-term impact.
Full Funnel TV: A stronger alternative
Instead of promoting a misleading term in “Performance CTV,” let’s consider why “Full Funnel CTV” is a much more appropriate name.
As decades of marketing science research have shown, and as I have previously written, most ads have short- and long-term impact. To recognize the full value of their advertising, buyers must factor in this duality, measuring impact over a period of time (as demonstrated in Profit Ability 2).
This way, marketers can skip obsessing over short-term lift at the expense of longer-term effectiveness, which is often more difficult to measure.
The past decade is littered with examples of brands that swallowed the performance bug: Airbnb, Adidas, P&G, Uber, Chase, LEGO and others experienced the “performance penalty,” realizing that an over-reliance on short-term, performance-driven advertising (clicks, conversions and paid social) eroded their long-term brand equity and increased acquisition costs. These companies shifted back to investing more in brand building, emotional storytelling, and long-term brand equity. Some, like Nike, have paid a tremendous price for that mistake only to then revert to a more balanced approach to maximize long and short-term objectives in parallel.
And these lessons were learned on classic digital media (desktop and web), which theoretically are able to drive and measure short-term performance even better than CTV. We would be foolish to think we won’t face those same challenges on CTV.
Exceptions to the rule
There are some scenarios that would justify an explicit focus on Performance CTV because they are exclusively focused on driving and measuring short-term impact.
For example, SMBs that are not focused on brand building or enterprise marketers that need to temporarily prioritize short-term sales should absolutely consider “Performance CTV.”
Still, two crucial challenges will make it difficult to scale this channel/tactic:
- Performance CTV won’t perform with the same efficiency (aka CPA) as search and social, which typically have more user-level intent/affinity data, are more easily clickable and trackable and can more easily deliver a last-touch conversion. CTV performance will be especially difficult for SMBs to prove, and even more so for those without ecommerce capabilities that can help them track CPA and incremental impact.
- It will be difficult for Performance CTV campaigns to compete for the same scarce CTV supply against Full Funnel CTV campaigns that are measuring and valuing ads in both the short and long terms.
Some marketers, large and small, will find pockets of success with Performance CTV, reaching in-market audiences at the right moment without undermining long-term growth or profitability. But those wins will be the exception, not the rule. At scale, buyers will continue to face serious challenges in proving that investments in scarce, premium CTV inventory are truly incremental.
“On TV & Video” is a column exploring opportunities and challenges in advanced TV and video.
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