Why OTT & CTV Advertising Is Essential for 2023

2023 will certainly be interesting in how marketers decide to launch brand awareness and engagement to produce the most return on investment.

Moving forward, advertisers must prioritize methods that deliver results and offer the flexibility to adapt quickly.

Gaining the best insights into campaign impact is a crucial differentiator for marketers to consider for the new year.

When choosing the appropriate media to meet or expand your customer base, consider how TV audiences have switched from linear programming to digital streaming.

With most TV audiences streaming across several devices, investing in connected TV (CTV) & over-the-top (OTT) advertising helps you reach these viewers with premium inventory and brand-safe environments.

Also, integrating programmatic technology into the media mix goes the extra step as it offers the ability to identify and reach the same viewer as they move between different devices. In addition, it can pause, optimize, or even cancel the activity at a moment’s notice.

A nimble marketing approach will be essential as advertisers adapt campaign messaging based on budget allocations for various mediums.

Take a deeper dive into all the moving pieces of the OTT and CTV landscape, and discover all the benefits they cover for your 2023 marketing strategy.

Data for Targeting and Measurement

More than ever, data-driven marketing is leading the way in connecting ad dollars to campaign results. Plus, the use of data for targeting and measurement will only increase alongside evolving digital capabilities.

With most of the attention regarding CTV around apps and inventory, there’s a real opportunity to stand out by applying data to identify the right audience and households for targeting.

Strategies to quantify the impact of targeted CTV ads, like after-ad website visits, are guiding campaigns to ensure ad dollars are invested proficiently.

When laying out budget and ROI considerations, brands can apply data insights to ad creative goals by sorting results based on particular ads and tactics.

Overall, targeting and measurement technology advancements have already proved invaluable to marketing.

Here are some recent figures that support OTT and CTV advertising as a long-term solution:

• CTV ad spend will likely exceed $21 billion this year and reach $26 billion in 2023

• By the end of 2023, OTT video ad spending is expected to be near $10 billion, accounting for 3.4% of all digital ad spending and 10.2% of total video spending

• CTV advertising budgets look to edge out linear TV in 2024, having climbed from one-tenth of TV ad spend to exactly half

Traditional TV has been a staple of marketing campaigns for a long time, and CTV’s fast rise reveals a turning point on the horizon for advertising budgets.

Advertisers recognize the impact of the television ad, but as the definition of the TV screen shifts, marketing efforts follow too. CTV currently supplies performance-based metrics to measure from the top of the funnel to conversions.

Programmatic and the Automation of Advertising

Reaching and delivering your message to target audiences at scale is automated through programmatic technology.

When added to CTV or OTT, this software automates the real-time bidding process and will inherently play a vital role in any strategic media plan.

Here are some of the capabilities and strategies of programmatic CTV and OTT advertising:

• Omnichannel marketing strategies and cross-device targeting and tracking, messaging the same audience across devices

• First-party data activation and lookalike audience modeling based on these audience segments

• Hyper targeting capabilities with the added ability to retarget based on location, website visitors, and already-engaged audiences

• Linear TV extension (LTVE) to bridge the transition between linear and digital television

• Advanced retargeting layers ad exposure from CTV & OTT to laptops, tablets, and mobile devices

Why Advertisers are Investing in Programmatic Capabilities

Programmatic ad-buying instantly adapts to any change in audience behavior and sets the stage for OTT and CTV advertising to have its biggest year to date.

Especially when you look back at this time last year, 92% of households were reachable through programmatic advertising in Q1 of 2022.

Most importantly, programmatic capabilities target specific demographics throughout the digital environment in the same campaign.

Experienced programmatic providers like ourselves ensure this automation is customized to your audience's needs, so they are messaged on their favorite streaming service.

Here’s how industry experts are forecasting trends for the new year:

• By 2023, programmatic digital display advertising spending will increase 33% from the previous year and is expected to reach 142 billion

• 2023 overall ad spend projections expect to see 5.9% growth YoY, with CTV leading all other digital channels at +14.4%

• Every digital channel is expected to see ad spend growth in 2023, while spending on traditional media channels such as linear TV will decline YoY

To remain competitive in a fragmented market, marketers utilize solutions that streamline the ad-buying process and offer campaign measurement across CTV options.

With that in mind, the availability of real-time reporting of campaign performance, A/B testing, and sophisticated audience targeting can all fit under the programmatic umbrella.

Ad-Supported Streaming Surge Among TV Audiences

Content is central to streaming services and their audiences. However, to retain subscribers, many of the major providers have turned to advertisements to lessen subscription costs.

As a result, ad-supported video-on-demand (AVOD) consumption has been growing faster than subscription-based services. Ultimately, this proves that audiences are satisfied with watching commercials in exchange for more content.

Furthermore, the total growth of audiences streaming TV has surpassed cable and satellite viewership.

Most importantly, using OTT and CTV advertising to reach these viewers presents customized solutions for each campaign:

• By 2023, more than half of all US internet users will be watching content via AVOD streaming services, and that figure will rise to 55.8% in 2026

• In 2026, AVOD viewers will reach 174 million, with 68.6% of them consisting of OTT video services users

• Free ad-supported streaming TV (FAST) has expanded significantly, making up 29.2% of the US population in 2022, up from 9.3% in 2018

A slow and steady decline in paid cable subscriptions has accompanied these developments.

The quick adoption rate of AVOD and FAST channels has expanded targeting strategies by adding more audience segments to find niche viewers who are the ideal consumer for your campaign.

As audience churn fluctuates, with viewers cycling through different streaming platforms, you need to be able to reach them wherever they are.

Sustained Growth and Evolution of OTT & CTV

As we move forward, third-party tracking cookies are nearing the end. However, new emerging technologies within OTT and CTV are strengthening marketing for a cookieless future and beyond.

Also, as 2023 marketing plans are being made, ad budgets will be scrutinized. Marketers will need to know how ad dollars translate to performance and results. 

New data-driven marketing capabilities let OTT and CTV advertisers optimize ad spend by ensuring that only viewers interested in their products or services are messaged.

The evolution of this industry means OTT and CTV offer long-term solutions and short-term flexibility. Having a nimbler strategy means advertisers can make adjustments month to month based on factors affecting ad purchase decisions:

• Next year, 230 million people in the US will use CTV, about 67.8% of the population, and by the end of 2026, it will be 70%

• Marketers are meeting TV viewers where they are, which is why CTV ad spend has grown by more than 50% each year since 2018

• In 2023, CTV will account for 16.5% of all display ad spend

• OTT video service users are projected to accumulate 255 million users by 2026

Diversifying advertising strategies for the upcoming growth of CTV is crucial. 

Instead of targeting entirely to one streaming platform, follow target audiences across devices regardless of the show with programmatic OTT and CTV advertising.

Clients must find their core customers and design ad delivery and measurement that is catered to their needs.

By partnering with Strategus, advertisers received an experience programmatic OTT/CTV campaign manager dating back to 2015. As we continue to introduce the latest innovations in this technology, we also bring ad operations proficiency to any 2023 marketing strategy.

Our managed services deliver value for agencies and clients to put them at the forefront of these digital capabilities.

Contact us today to see how OTT & CTV can work for your brand.