CTV needs to show its ROI – here’s how it could do that

Patrick Johnson, global chief executive of Hybrid Theory, explores how the world of connected TV (CTV) can really start to show prospective advertisers just how well it works.

CTV is helping to make the living room television experience more immersive for at-home viewers – and a more data-rich investment for marketers. By 2026 it’s estimated that 1.1bn homes worldwide will own a smart TV, offering brands audiences at scale and a data-driven approach to advertising.

As brands use data to align their marketing touchpoints, CTV’s potential will be realized by allowing them to build awareness and also deliver outcomes. And it’s this ability to add a direct response element into CTV that will ensure its real ROI impact will be recognized.

Today, just like linear TV, CTV is still a brand play. For over 70% of marketers, awareness and views remain the critical measures of success. But performance KPIs are starting to gain traction, with nearly half of marketers citing engagement as a KPI. However, only a minority are actively using outcome-based metrics such as ROAS (Return on Advertising Spend).

Shifting toward performance

Part of this growing demand for performance metrics is being fueled by the new types of advertisers CTV is helping to surface – those for whom traditional linear television is too expensive. Today’s technology allows CRM data to be pushed into data management platforms and then extended into TV, so smaller direct-to-consumer (D2C) brands are taking advantage of digital targeting parameters that go beyond linear TV targeting capabilities. And in making CTV more like a digital device, it’s becoming an exciting and valuable environment for them.

As these performance-orientated advertisers enter the CTV market, they’re also looking to develop their direct response strategies. To support their needs, TV hardware manufacturers are starting to offer outcome-based ad buys: LG, for instance, recently announced plans to provide brands with a guaranteed level of performance from their CTV advertising. Backing this up with third-party verification – to deliver transparency and confidence to advertisers – this represents another opportunity for brands to focus on delivering ROI by using media that drives results.

At the same time, we’re also witnessing the resurgence of QR codes in this channel, buoyed by the high consumer familiarity they achieved during the pandemic. With 79% of people having their phone – or another device – in their hands during the ad breaks, using QR codes seems to make sense.

As a result, new dynamic QR codes designed for CTV are emerging, leading Insider Intelligence to anticipate that by 2025 the number of US smartphone users scanning a QR code will have risen to 99.5m. And when brands offer additional digital signals that can indicate engagement, interest and attention, CTV is further integrated into the consumer’s journey.

It is worth noting, however, that others are not so convinced this is the future. Some predict low hit rates as living rooms aren’t conducive to photographing the big screen. Indeed, a LinkedIn poll showed that while most think CTV ads will incorporate them, nearly half still believe something better is needed.

Integrating CTV into the channel mix

The ultimate death of third-party cookies means marketers must turn to trustworthy data sources and will have to rely more on collecting first-party user data. But it’s not just about first-party data. Activating this alongside second- and third-party audience data is critical to access audiences that linear TV can’t – and to reach them across all the screens they use.

There’s an increasing desire among marketers to shift from CTV as a separate medium to one that can be integrated into their omnichannel marketing strategy. Ultimately, marrying campaigns to multiple channels drives more effective campaigns, and the emergence of universal IDs offers real opportunities here.

By matching audiences to IDs and viewer data, consistent audiences can be built for cross-device targeting and measurement across mobile, desktop and CTV. And by closing this loop, omnichannel strategies will become more viable and attractive, which will in turn encourage greater investment in CTV advertising.

As marketers increasingly test and trust this data, CTV will become a channel that can drive ROAS – and it’s already showing signs of its value here. 78% of UK respondents to a recent study reported that they had taken tangible action as a result of viewing a CTV ad, including carrying out searches and even purchasing.

As CTV begins to be integrated into multi-channel environments, greater possibilities become available for brands to tap into data and build actionable audiences that can better inform campaign planning and drive more impactful targeted cross-screen advertising.

And as CTV and digital converge, more opportunities exist to shift its focus from being primarily a branding vehicle to one that can accommodate performance goals. Achieving this will enhance cross-screen strategies and unleash the ROI value of CTV.

Also published in: The Drum

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