Debunking 3 Misconceptions Keeping Midsize Advertisers From Investing In CTV

On TV & Video” is a column exploring opportunities and challenges in advanced TV and video. 

Today’s column is by Michael Wolk, Senior Director of Business Development at Goodway Group

Connected TV (CTV) is booming. Yet, many midsize advertisers and agencies are hesitant to participate. Some of them think CTV CPMs are too high and their budgets aren’t big enough to make an impact. Others believe there’s a shortage of premium inventory available and they must settle for longtail CTV inventory. Or they think they must make CTV a low-funnel acquisition channel to justify the spend. 

But here is where they are wrong. 

Unlike traditional TV advertising, where big brands have historically had a massive advantage, CTV has closed the gap between large and small brands. That is if technology and data are used correctly. 

Here are three misconceptions midsize advertisers should stop believing today.

Misconception #1: CTV CPMs are too high 

The tried-and-true planning and buying model has been flipped on its back. TV has always been a game of bulk buying and delivering massive gross rating points (GRPs) against demos. It also has a long track record of moving product. 

But CTV now offers the gift of greater precision. With advanced data, better targeting and more accountability, buyers can reach their desired audience more easily, and with less waste. Those who can effectively apply first- and third-party targeting enhanced with frequency capping can help make the most of every impression – without costs getting too high.  

If you’re a direct-to-consumer (D2C) or ecommerce brand, start with your privacy-compliant first-party data. Then, use modeling to discover incremental audiences. Model out the top-indexing networks, streaming devices and geographies to deploy your initial CTV budgets. 

In the world of CTV, regional buyers can apply geotargeting to almost all inventory. They can also apply specific geotargeting to entire commercial pods across Sling TV, DirecTV or any of the major multichannel video programming distributors or MVPDs. This is in stark contrast to linear TV, where they don’t have access to national broadcast inventory and have a much smaller inventory pool.

Brands without access to first-party data can still go beyond the traditional demographics to make impressions more impactful. Try identifying in-market audiences, heavy buyers in the category or other key signals to get in front of your most valuable audience.

From there, determine the right ratio of targeting to frequency control. Striking the right balance there will help even the most limited budgets go further while maximizing the impact on the biggest screen in the house.

Misconception #2: Few premium CTV options exist 

It’s natural to think you can either spend an entire CTV budget on a single network or settle for longer-tail aggregated inventory. If you do that, you’re missing out on premium content and quality incremental reach. 

Midsize brands typically see a handful of impressions on NBC or Hulu, but 90% of their impressions come from an aggregated SSP CTV deal or a single advertising-based video-on-demand (AVOD) partner such as Pluto, Tubi, etc. Pluto and Tubi are valuable components of a buy with quality content, but buyers may miss out on the accessibility of live events, live streaming, and additional premium network content without the right budget allocations.  

To ensure that your brand sees maximum ROI, take a waterfall approach to impressions. This is when you maximize your budget to reach every high-value impression, then expand to gain scale with any remaining budget. That way, you can prioritize the highest-quality inventory versus whatever is most available.

Misconception #3: CTV Must Be a Low-Funnel Acquisition Channel to Justify Spend 

Many companies have fallen into the trap of thinking that CTV can be measured with the same key performance indicators (KPIs) as display, social or even search. However, brands need to view CTV as a higher-funnel and high-impact channel with the added benefit of holding it more accountable – within reason. 

The industry has made so much progress since the days of purely managing GRPs. The key is finding the right balance of measurement that works for your brand and overall media mix. 

For example, brands should focus on the cost per unique valuable household reached. Or if they’re running linear TV, they should consider unique incremental reach. They may even opt to conduct incremental lift studies to examine the impact on performance channels such as display, search or social. The advantage of measuring incremental lift is that it allows brands to capture the efficiencies gained by better targeting and frequency within CTV, while still monitoring cost per action as a secondary metric.

CTV presents an exciting opportunity for the midmarket and emerging brands and agencies. Now is the time to lean in and make strategic investments, leaving common misconceptions behind. 

Follow Goodway Group (@goodwaygroup) and AdExchanger (@adexchanger) on Twitter.

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