The television has become more than a screen to watch and stream movies and TV shows.
It’s become a conduit for advertisers and consumers to connect directly with each other in real time.
With legacy linear television viewership declining, advertisers are switching to the internet to reach new and old-school TV couch potatoes with targeted marketing and programming.
A connected TV (CTV) is a newer “smart” TV embedded with a software operating system that allows it to link directly to the internet, or an older TV hooked up to the Web through streaming devices such as Roku, Fire TV or Google Chromecast; gaming consoles; cable boxes; or even Blu-ray Disc players.
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The connected TV enables TV manufacturers such as Vizio, LG Electronics, Samsung, Sony/Google, TCL and Hisense to operate and market ad-supported streaming video content that can compete with a growing ecosystem of third-party ad-supported SVOD services, AVOD platforms and FAST channels.
With ad-supported content the new strategy embraced by media companies looking to generate profitability from their streaming business, CTV allows consumer electronics manufacturers to join the party.
Implementing strategies such as service bundling, content packages and promotional offers to bolster user retention and drive growth, the overarching goal among CTV players is advertising revenue and distribution.
CTV ad revenue is projected to double to $41.2 billion in 2028, from $20.5 billion in 2023, according to estimates from Pricewaterhouse-Coopers.
Retailers such as Walmart are testing “shoppable TV” advertising, making it possible for consumers to buy products directly from ads on television shows or streamed video content on a CTV.
“In the battle for ad dollars, CTV platforms are placing a strong emphasis on contextual and first-party data to target consumers with more-relevant ads, as well as leaning into creative ad optimization,” says Ally Appelbaum, VP of Enterprise Supply Partnerships at Nexxen, an advertising technology provider.
Targeting consumers directly underscores Walmart’s recent $2.3 billion purchase of Irvine, Calif.-based Vizio, one of the world’s leading manufacturers of TVs and a connected TV pioneer. The acquisition should help meld the huge discount retail chain’s online “Walmart Connect” platform with Vizio’s operating system to promote digital advertising, according to Seth Dallaire, EVP and chief revenue officer for Walmart U.S.
“We believe the combination of these two businesses will be impactful as we redefine the intersection of retail and entertainment,” Dallaire says.
Vizio’s TV ecosystem and proprietary ad-supported WatchFree+ streaming platform have generated more than 18 million active user accounts, up 400% since 2018. The company’s CTV platform business purports to have in excess of 500 direct advertiser relationships. The platform offers more than 300 channels, 15,000 on-demand titles, 10 curated channels programmed in-house, and expanded studio partnerships with Warner Bros. Discovery, Sony and Lionsgate, among others, in addition to paid services such as Netflix, Disney+ and Max, as well as free AVOD platforms such as Tubi and Pluto TV.
In August, WatchFree+ for the first time live-streamed The Women’s Cup Summer 2024 Soccer Tournament featuring professional teams and players from the U.S., South America, Europe, Asia and Africa not competing in the Paris Olympics.
“Bringing live sports to WatchFree+ is one way that we can … make world-class sports entertainment more accessible to everyone,” says Katherine Pond, group VP of platform content and partnerships at Vizio.
Proprietary Services
Consumer electronics companies, such as Vizio with its WatchFree+, are developing and bolstering their own proprietary streaming services to supplement paid services such as Netflix, Disney+, Max and others as well as established free ad-supported services such as Tubi and Pluto TV on their smart TVs.
South Korean CE giant Samsung has leaped into the CTV space with Samsung TV Plus, which features FAST and AVOD channels, and is the No. 1 free ad-supported app on Samsung smart TVs, according to the manufacturer, with more than 2,600 ad-supported linear channels available globally in 24 countries and more than 630 million active devices. The streaming platform is accessible on Samsung smart TVs beginning from 2016, Galaxy devices, Smart Monitors, Family Hub refrigerators, and the Web.
In May, Magnolia Pictures Home Entertainment announced a partnership with Samsung for access to the studio’s film catalog. CTV users will have access to more than 330 hours of ad-supported content across 160 titles. Magnolia movie titles available in the deal include the Academy Award-winning documentary Man on Wire, the Academy Award and Spirit Award-nominated Food Inc., the Oscar-nominated documentary RBG, Raoul Peck’s Academy Award-nominated and BAFTA-winning documentary I Am Not Your Negro, the BAFTA-nominated documentary Blackfish, and the Spirit Award and Gotham Award-nominated Support the Girls, among other content. Other titles include Lars Von Trier’s Melancholia, the actioner 13 Assassins, the “Ong Bak” trilogy and the space thriller Europa Report.
“As the home entertainment landscape continues to evolve … our partnership with Samsung allows Magnolia to build upon its growing presence in streaming and showcase an extensive library to a wider audience,” says Randy Wells, president of home entertainment at Magnolia Pictures.
Samsung also expanded a content deal with FilmRise, adding 600 hours of programming, including 19 TV series and more than 120 movies to up the platform’s portfolio of FilmRise content to 3,134 hours. Titles include “Heartland,” “Highway to Heaven,” “Hell’s Kitchen,” “Kitchen Nightmares” and “21 Jump Street,” among others.
LG Electronics in July announced the launch of “LG Channels Showcase.” The free ad-supported streaming platform features a range of studio films from Amazon MGM Studios, Lionsgate, Sony Pictures Entertainment and Shout! Studios.
The platform also features the series “LG Presents: The Rivalries,” featuring NCAA matchups in Division II and Division III sports. LG’s “Taste of Tennessee” series features author and host Matt Moore, joined by local Nashville restaurant owners and former NFL Tennessee Titans players.
China’s TCL has launched TCLtv+, rebranding its TCL Channel to include more programming as well as original AI content. The platform in July launched its first AI-powered sci-fi film short, Message in a Bot. TCLtv+ includes more than 330 FAST channels, as well as premium film and TV series.
The company also launched a content production studio dubbed “TCLtv+ Studios,” whose production team includes animators, VFX experts, AI engineers and writers to create episodic programming. A recent production included the AI generated short film Next Stop Paris, a romance that launched ahead of the Paris Olympics.
The company also has a content and technology pact with L.A.-based content/technology aggregator Cineverse, whose technology enables FAST channel operators to program and schedule their channels, while also providing programmatic ad and direct ad sales expertise.
Cineverse COO/CTO Tony Huidor says the TCL deal has helped expand the company’s FAST capabilities and upped backend support to OEM partners.
“We provide efficiencies and key backend support as TCL looks to scale and expand their position in the streaming entertainment ecosystem,” Huidor says.
Vizio’s WatchFree+ has also ventured into original programming with such shows as the lifestyle streaming series “@Home With Tori,” starring actress, author, and TV personality Tori Spelling.
Streamers Connecting With Ads
As streaming video platform choices grow, new TransUnion research found that while roughly two-thirds of households surveyed subscribed to two or more paid streaming services, about half of that group canceled or plan to cancel a service within the next year, citing cost and the availability of engaging content. As a result, CTV operators are focusing on AVOD and FAST options to attract price-sensitive viewers, while giving users data-driven personalization to seek out relevant content, as well as advertising tailored to their interests and behaviors. By leveraging user data, CTV platforms can create an environment where viewers feel recognized and understood, says Julie Clark, SVP of media and entertainment at TransUnion.
“CTV platforms have access to a wealth of data, enabling them to gain real insight into who’s watching what and when,” Clark says. “This data can power a recommendation engine that can take in several inputs — such as demographics, viewing times and device types — to serve up content that a user is most likely to watch.”
As consumers use the internet to access entertainment, the time spent consuming content on CTV is approaching parity with linear television.
New research from eMarketer found that time spent with CTVs by U.S. adults will top 2 hours and 3 minutes per day through 2024, compared with 2 hours and 48 minutes per day for linear TV.
The report suggests that as SVOD services such as Netflix, Peacock, Prime Video and Disney+ embrace ad-supported content, marketers are rethinking legacy TV advertising, focusing instead on the benefits CTV can have in reaching consumers through targeted content and advertising.
And consumers are responding.
Consumer research from Leichtman Research Group found that 87% of U.S. TV households have at least one internet-connected TV device, up from 80% in 2020. Overall, 46% of adults in U.S. TV households watch video daily on a connected TV, compared with 40% in 2020. Younger individuals are most likely to use connected-TV devices. About 62% of survey respondents between the ages 18 and 34 watch video on a TV via a connected device daily, compared with 54% among ages 35 to 54, and 24% among those 55 and older. The report found that 71% of TV households have at least one smart TV — up from 58% in 2020. About 50% of all TV sets in U.S. households are smart TVs, up from 39% in 2020.
Separate data from San Francisco-based AppsFlyer found 86% of consumers are willing to see ads on CTV, especially if they are relevant to them, but that 40% of viewers will stop watching CTV if there are too many ads. Most are willing to watch upwards of two ads per 30 minutes if the commercials are relevant.
Analyst Bruce Leichtman says there are now nearly 500 million connected-TV devices in the United States, up from 300 million in 2017.
“The percent of adults in the U.S. using CTV has significantly increased, growing from 25% to 46% in the past five years,” he says.
Connecting Through Entertainment
As the competition for viewer eyeballs heats up, CTV platforms are prioritizing exclusive content, upping licensed programming while implementing algorithms to reach viewers more effectively.
Take Roku, for example. The company is using its pioneering streaming video platform to engage with more than 80 million platform users is just the first step. The company says 120 million people access the platform on a daily basis.
In April, Roku announced a partnership with the NBA to launch the league’s first-ever NBA FAST channel, as well as the NBA Zone, showcasing games, highlights, documentaries, and original series.
“This partnership brings us a giant step further to make sports programming easy to find and engaging to watch,” says Joe Franzetta, head of sports at Roku.
Roku will also exclusively distribute more than 40 live NBA G League games on a national basis during the upcoming 2024-25 season.
Neala Gollomp, senior director of product management at Roku, says the company’s home screen has been revamped to help drive user engagement. The platform introduced a new personalized content row on the home screen that recommends relevant content based, in part, on their streaming habits.
Curated destinations on the home page include “All Things Food” and “All Things: Home” hubs, the NFL, NBA or MLB Zones, the Olympics Zone, and the Live TV Zone, among others.
“These one-stop-shop destinations offer our customers the ability to browse and discover new content within a genre they are specifically interested in,” Gollomp says.
Roku also updated its “What to Watch” zone with personalized recommendations, which includes a “Continue Watching” page and “Save List.” The platform added IMDb content ratings and made updates to its content detail pages to make them easier to use.
“We’re helping drive viewership to the most-popular streaming services across both SVOD and AVOD, including our own streaming service, The Roku Channel,” adds Gollomp. “Our platform offers reach and marketing capabilities that both SVOD and AVOD partners harness to drive audiences to their content, and we are able to promote our own programming with those marketing levers as well.”
Cablers Launch Connected Lifeline
With their legacy cable TV business in subscriber freefall, Comcast and rival cable operator Charter Communications joined forces to offer a line of connected Xumo TVs (manufactured by TCL) sold exclusively at Best Buy, in addition to offering their high-speed internet customers free access to the recently launched Xumo Stream Box joint venture.
The box includes access to third-party SVOD services, voice-activated content searching and uses both AI-driven personalization and an in-house editorial team for content recommendations. The device’s app includes 20-plus FAST channels. Additional features include a “currently playing” tile that shows what’s airing on the last channel the customer watched.
“[The box] helps simplify streaming,” says John Dixon, SVP of entertainment at Comcast.
Tracking CTV Data
With the proliferation of CTV usage, tracking user behavior via third-party sources remains a concern among some observers. To be sure, Nielsen is including The Roku Channel, Pluto TV and Tubi in its monthly TV consumption charts, but data on what viewers are actually watching is sometimes limited to the CTV operators.
“The problem … is that [viewership] is impossible to track, and there’s no way to see how offering free channels affects other paid services,” says Michael Pachter, media analyst with Wedbush Securities in Los Angeles.
TransUnion’s Clark says marketers, agencies and publishers are seeking alternative and complementary ways to track content performance across CTV. In some cases, the platforms themselves provide marketers access to usage data, allowing them to approach their ad campaigns by gaining visibility into metrics such as impressions, completion rates, watch time and ad interactions.
“Marketers can enhance this data with advanced measurement techniques like attention measurement via eye tracking or heat mapping to get a broader picture of how users interact with their TVs,” Clark says.
Marketers can also collaborate with third-party measurement partners who can connect signals from multiple different inputs — device manufacturers, streaming providers and CTV platforms — to provide a better view of a CTV viewer’s behavior.
“This gives marketers far more insight, enabling more effective and targeted campaigns,” she says.
Vikrant Mathur, co-founder of Future Today, a CTV ad platform, says the company employs a proprietary tracking system that provides insights into content performance and ad placements. The platform claims to offer comprehensive analytics that track viewer engagement, ad impressions and demographic data.
“We prioritize transparency and brand safety, allowing marketers to know exactly where their ads are being displayed,” Mathur says, which, he adds, includes reporting on ad-placement context, “competitive separation” and “frequency capping” to ensure optimal ad performance.
Nexxen’s Appelbaum says that with outside data sourced from traditional measurement firms such as Nielsen, CTV providers can offer content-level data that can be tracked using alternative methods. These include leveraging first-party data from CTV sources such as Roku. Automatic Content Recognition (ACR) data also is available, capturing viewership behaviors from devices and smart TVs.
“These methods all provide marketers with a deeper understanding and analysis of audience engagement with content,” she says.
In the end, CTV ad tracking remains a work in progress as industry efforts to supplement and eventually replace linear gather steam.
“CTV advertising is still in its early stages,” says Marc Finer, managing director of industry consultancy Communication Research.
“Until the entire OS-related user experience becomes more standardized and intuitive — particularly the process of searching, discovering and accessing content — there is bound to be lots of trials and errors encountered.”
