What is CTV Traffic and How is it Generated?

We are living in the era of Connected TV (CTV). In 2022, CTV advertising spending in the United States reached $21.16 billion, accounting for 6.1% of all media ad expenditures. TVScientific forecasts that the growth rate for CTV ad spending will be between 14% and 27% this year.

Currently, over 87% of American households own at least one CTV device, capable of streaming video content over the internet, with the average viewer watching nearly six hours of content weekly. 

According to Tinuiti's research, the effectiveness of CTV advertising is particularly noteworthy. Standard pre-roll ads on CTV have a viewer completion rate of 94%, significantly higher than those on PCs and mobile devices. Additionally, approximately 23% of CTV viewers have made a purchase after viewing an ad, demonstrating a strong conversion rate compared to traditional TV. That represents a huge opportunity for advertisers.  

Whether you’re an advertiser, a publisher, or just a keen viewer, CTV is a hot topic. 

What is CTV traffic?

Connected TV traffic is a traffic generated by viewers streaming video content on streaming devices like smart TVs and streaming players. It's crucial due to its wide adoption, diverse audience, and engagement potential. 

In the context of advertising and digital marketing, CTV traffic particularly pertains to the engagement or interactions that advertisers receive on their advertisements broadcasted through these internet-connected TV platforms. CTV allows personalized, data-driven ads, access to premium content, and interactive formats, enabling advertisers to connect effectively with viewers.

CTV traffic includes various metrics such as the number of ad impressions, viewer completion rates of advertisements, click-through rates, and other engagement statistics that help advertisers understand how effectively their ads are reaching their target audience on CTV platforms. 

What does the CTV ecosystem look like?

The CTV ecosystem is a complex and multifaceted network that includes various stakeholders and technologies that work together to deliver streaming content directly to televisions over the internet. 

Let’s take a look at the key players: 

• Smart TV devices which have built-in internet capabilities (Samsung TV, LG TV, TCL TV).

• External streaming devices such as Roku, Amazon Fire Stick, Apple TV, and Google Chromecast.

• Broadcasters that produce and distribute streaming content. Major players include streaming services like Netflix, Hulu, Amazon Prime Video, Disney+, and a multitude of other niche platforms.

• Platforms and aggregators which aggregate content from various sources and provide it through a unified interface. Examples include Roku and Amazon Fire TV, which not only act as device manufacturers but also as platforms that host apps from multiple content providers.

• Mobile measurement partners accurately measure campaign performance and combat fraud. They play a crucial role in maintaining fair and safe practices within the industry.

• Analytics providers that measure viewership and engagement on CTV platforms (Nielsen, Comscore). This data is essential for content providers and advertisers to gauge the effectiveness of their content and advertisements.

• Supply-side platforms (SSPs). For example, GothamAds offers  software solutions that manage the advertising exchange from the publisher’s side — including selling ad space, optimizing deals, and measuring campaign performance. 

• Demand-side platforms (DSPs) are programmatic tools that facilitate ad purchases and manage inventory through a unified interface.

• Advertisers and publishers leverage the platform's ability to target specific demographics more precisely than traditional television, using advanced data analytics to tailor their marketing campaigns to the viewer's interests and viewing habits.

CTV monetization models

By understanding and leveraging the appropriate monetization model, you can maximize your revenue streams. Knowing the monetization models helps in tailoring content and its delivery to meet audience expectations, thereby enhancing engagement and satisfaction.

There are five primary monetization models that you should know about.

1. Subscription Video on Demand (SVOD)

This model involves charging viewers a recurring fee to access a library of content. Well-known examples include Netflix, Disney+, and Hulu. This model is popular for its stable revenue stream and ad-free viewing experience.

2. Advertising Video on Demand (AVOD)

Under this model, content is provided for free to the viewers, but it includes advertisements. Examples include YouTube, Pluto TV, and the ad-supported versions of Hulu or Peacock. AVOD can attract a large audience by offering free content supported by targeted advertising.

3. Transactional Video on Demand (TVOD)

TVOD requires viewers to pay for each piece of content they want to access, typically for rentals or permanent purchases. Apple iTunes and Amazon Prime Video are examples where users can buy or rent movies and TV shows.

4. Hybrid Models

Many services combine elements of SVOD, AVOD, and TVOD to cater to diverse consumer preferences and maximize revenue streams. For example, Amazon Prime Video offers subscription-based access along with the option to rent or buy additional content not covered under the subscription.

5. FAST (Free Ad-Supported Streaming TV)

Unlike subscription models that require viewers to pay a monthly fee, FAST offers free access to a curated selection of streaming content. This can include live channels and on-demand content, making it an attractive option for consumers who prefer not to commit to subscription fees.

The service is funded by advertisements that are inserted into the streaming content, similar to traditional broadcast television. These ads can be tailored to the viewer's demographics and viewing preferences, leveraging advanced targeting capabilities typical of digital advertising.

FAST services are typically accessible on a wide range of devices, including smart TVs, mobile devices, and digital media players. This accessibility helps in reaching a broad audience. 

How much does CTV traffic cost? 

The cost of CTV advertising can vary widely, primarily depending on factors such as the platform, ad format, target audience specificity, and overall demand for ad slots. Advertisers frequently pursue low-cost options on CTV, around $4-5, but this often means they buy a pig in a poke. Realistically, normal CTV traffic should cost more than $15-20. This cost reflects the high value placed on the targeting capabilities of CTV advertising, which allows advertisers to reach specific demographics more effectively than traditional TV advertising. These costs are typically higher than those for linear TV, where CPMs can vary but are often lower, reflecting the broader and less targeted reach of traditional TV ads​.

In essence, while CTV advertising offers a more precise targeting mechanism and potentially higher engagement rates, it comes at a premium cost compared to more traditional advertising channels. This makes it crucial for advertisers to carefully consider their strategy and budget allocation when planning CTV campaigns.

Key takeaways

1. Connected TV traffic is a traffic generated by viewers streaming video content on streaming devices like smart TVs and streaming players.
2. Over 87% of American households own at least one CTV device, capable of streaming video content over the internet, with the average viewer watching nearly six hours of content weekly.
3. Standard pre-roll ads on CTV have a viewer completion rate of 94%, significantly higher than those on PCs and mobile devices.
4. The CTV ecosystem is a complex and multifaceted network that includes smart TV devices, external streaming devices, broadcasters, platforms and aggregators which aggregate content, mobile measurement partners, analytics providers, SSPs, DSPs, advertisers and publishers. 
5. There are five primary monetization models that you should know about: 

• Subscription Video on Demand (SVOD);
• Advertising Video on Demand (AVOD);
• Transactional Video on Demand (TVOD);
• Hybrid Models;
• FAST (Free Ad-Supported Streaming TV).

6. Advertisers frequently pursue low-cost options on CTV, around $4-5, but this often means they buy a pig in a poke. Realistically, normal CTV traffic should cost between $10-15.