Marketers must be ready for the next chapter in advertising: The rise of connected TV
Connected TV combines a mass consumer audience with better targeting and measurement, and marketers need to devote budget to it now to start understanding and reaping its benefits.
As we look to 2021 with a small degree of optimism, it seems clear that the past 10 months will have a huge effect on the advertising industry this year and for many more to come.
The advertising sector was hit hard by the uncertainty that 2020 brought, with a decline of 4.4%. While admittedly this is not as dire as many feared back in the spring, it is still a setback for an industry accustomed to year-on-year growth.
While this downturn is typical of what we have seen in previous recessions, what is so unique about 2020 is how the altered behaviour of people has had an effect on how advertising spend has been distributed.
As whole countries went into lockdown, with the closure of public spaces, traditional above-the-line (ATL) channels such as cinemas, billboards or underground stations suddenly decreased dramatically in their appeal. In response, marketers quickly realised they needed to pivot and reach the customers where they were: at home.
On top of this, with the reduction of advertising budgets, there was increased scrutiny of the resources spent, with an added pressure to gain measurable results and ROI metrics, and a heightened necessity to validate expenditure.
In spite of these challenges, TV has demonstrated its resilience and sustainable opportunities for advertisers, and as consumer behaviour evolves, the corresponding ad spend will continue to offer TV a boost.
As connected TV carves out its own place in advertising strategies, the role of marketers will also shift more rapidly – especially the remit of the CMO.
In some ways, TV has been the last stronghold for ATL advertising this year, with millions of people being forced to stay home and watch TV instead of going outside. In fact, Ofcom found that during the first lockdown, screen time surged so much that people in the UK spent on average 40% of their day watching TV and video services. Totalling almost 45 hours a week, this was a rise of almost a third on the previous year.
This has important implications for TV marketing, not least because the strategies and technologies of TV are also undergoing a transformation. TV has for decades been the leading channel for ATL advertising, where brands focus on general messaging, generating brand awareness and curating creative campaigns that span countries and generations. However, the rise of connected TV (CTV) is underscoring the importance of addressability, targeting and measurement.
TV is currently undergoing an evolution and it is bringing significant change to the way advertising in the space operates.
This change involves various strands. Unlike linear TV, there is the possibility of doing robust test-versus-control lift measurement, linking viewing data with outcome data such as sales across households. CTV also has the potential to be a hugely measurable and addressable channel, which will undoubtedly affect how we approach it, moving away from the broad reach vehicle approach we usually see with TV and into a more personalised, data-driven strategy.
As it brings all these elements together, CTV has evolved to be its own entity – not quite fitting neatly into the digital or linear TV space.
While this is hugely exciting, we still have some way to go before CTV dominates television advertising in the UK. However, its rising prominence and popularity is further moving marketing towards below-the-line (BTL) advertising spend – such as social media campaigns, digital newsletters and targeting online advertising – again chipping away at traditional forms of advertising.
What does the future of CTV mean for the wider marketing ecosystem?
As CTV carves out its own place in advertising strategies, the role of marketers will also shift more rapidly – especially the remit of the CMO.
The way people digest media has shifted rapidly and the ability for brands to connect and diversify their messaging and strategies to keep up with this is crucial. Keeping a finger on the pulse of what people are talking about and wanting from brands has never been more important in a year when so much happened in so little time.
This has resulted in a shift in focus, priorities and desired skills from marketers. Whilst CMOs are now mastering the digital channels, the introduction and growth of CTV and digital out-of-home means that they must now reassess omnichannel media spend and begin to make substantial investment in CTV, if they haven’t already. The relatively high costs of inventory might not be attractive in the short term, but they should not dissuade CMOs from increasing spending now, as increased investment up-front will translate into increased ROI down the line.
It will be crucial for all good CMOs to capitalise on this positive and unavoidable shift towards CTV. To do so, CMOs first need to take the plunge and factor CTV into their annual marketing budget going forward – committing an initial 10% of 2021 budget allocation, for example, would ensure that CTV is given the resources and attention required in order to reap its benefits.
The next step will be to harness the targeting and measurement capabilities available in CTV and apply the learnings into placement and audience to create a holistic view of their total video investment. There is also value in acting with immediacy. Embracing CTV early will ensure CMOs can fine-tune their campaigns in this emerging channel before their competitors do, creating an invaluable advantage as the potential of CTV continues to expand.
LiveRamp is the leading data connectivity platform for the safe and effective use of data. We enable companies and their partners to better connect, control and activate data to transform customer experiences and generate valuable business outcomes. For more information, visit www.LiveRamp.uk.
Steve Martin is managing director, International Data at LiveRamp.