CTV, smart TV, and OTT platforms are taking the world by storm, and advertisers are noticing.
CPMs for CTV ads are incredibly high and often surpass their website counterparts by more than 1,000%.
This is great news for CTV publishers, who can leverage CTV monetization as a major source of revenue.
But what’s driving advertisers to pay such a high premium for CTV ads? Let’s dive in.
Budget Migration from Linear TV
Many companies and brands that advertise on linear TV are migrating sizable portions of their budgets to CTV.
These advertisers are accustomed to paying very high rates for TV, where a 30-second spot can easily reach tens of thousands of dollars.
Therefore, CTV advertisers who are used to the costs of linear TV are not discouraged from spending high CPMs of $10, $20, or $25. While these prices are high for regular digital advertisers, they are more in line with linear TV advertising budgets.
Brand Awareness Campaigns Are Expensive
Since CTV ads cannot be clicked on, they are mainly used for building brand recognition.
This type of advertising typically requires a larger initial investment and higher costs compared to CPC (cost-per-click) campaigns on websites and mobile apps.
Additionally, CTV ad campaigns run on a per-impression basis. This makes it less likely for advertisers to discontinue a campaign prematurely.
In contrast, CPC campaigns offer more flexibility and allow advertisers to make adjustments in real time or even scrap the campaign if the results are poor.
If you’re a YouTube user without a premium account, you are all too familiar with the five-second countdown on preroll ads before the “Skip Ads” button becomes available. You also know that when you’re waiting for those five seconds to lapse, you’re not paying attention to the ad.
CTV ads, on the other hand, cannot be skipped.
This is incredibly valuable for advertisers, who are willing to pay top dollar to have users watch their full 15 or 30-second ad.
In digital advertising, viewability is a crucial factor and CTV ads deliver in this aspect.
Due to the full-screen and non-skippable nature of these ads, unless the viewer actively avoids the ad, there is a guarantee that he or she will see it.
The high viewability rate of CTV ads justifies the cost of high CPMs for these ads, as it ensures that the advertisement will be seen.
Targeting and Measurement Capabilities
Linear TV advertising is similar to casting a wide net into the ocean. There’s a possibility of catching fish, but it’s also possible that there are no fish present.
CTV advertising, on the other hand, offers more precision through targeting options such as demographics, location, viewing habits, and other metrics.
Although the measurement technology for CTV is still developing, advertisers already have more tools for tracking the success of their campaigns than on linear TV.
This allows for more accurate ad targeting and makes CTV advertising a valuable asset for advertisers.
More Focused Users
In linear TV, most commercial ad breaks range from two to three minutes long. For users, this is a signal to get up, grab some food, or go to the bathroom.
On the other hand, CTV ads are typically shorter. This means that users are less likely to leave the room or distract themselves from the ad.
This makes CTV advertising more effective and cost-efficient to advertisers.
Key Takeaway for Publishers
CTV advertisers are willing to pay very high CPMs, which is a great opportunity for CTV publishers.
To capitalize on this, publishers should aim to create a CTV monetization strategy that generates the maximum competition possible, as more competition leads to higher revenue.
Adnimation is one of the few companies in the world that has access to Google’s product to monetize CTV channels and OTT content. This enables our partnering publishers to access Google’s vast video ad inventory.
Contact us to learn how you can take full advantage of these high CPMs and maximize your CTV ad revenue.