CTV Advertising Rates

This explains Connected TV (CTV) advertising rates. Learn how CTV ads work and why they can seem expensive initially and yet be valuable as a targeting tool to reduce the Cost-Per-Completed-View (CPCV) of a TV spot.

CTV emerged due to technological advancements in streaming technology and the widespread availability of high-speed Internet connections. These trends increased the phenomena of audience fragmentation and “cord-cutting” as consumers discovered alternatives to broadcast and cable TV systems. Broadcast television audiences decreased significantly along with a decline in cable TV subscribers.

There has been rapid CTV usage growth as viewers move to streaming services to access television content. Statista reports Connected TV advertising platforms captured an annual spend of just over $8 billion in 2020. The projections are that CTV ad growth will reach more than $11 billion in 2021 and nearly $20 billion by the end of 2024.

To understand “What is CTV?” it is helpful to learn about the differences between linear TV, OTT, and CTV.

Here are the definitions of the terms:

Linear TV

Linear television is the traditional television programming of over-the-air broadcasting or television programming received from a cable or satellite TV provider.

OTT definition

Over-the-top (OTT) television is a delivery mechanism that bypasses traditional media outlets, such as ABC, CBS, NBC, CNN, etc. OTT services include streaming and video-on-demand (VOD) providers, such as Netflix, Disney Plus, Hulu, Amazon Prime Video, and HBO Max.

CTV definition

Connected television (CTV) is a category of all devices, including TVs, smart TVs, and gaming consoles that connect to the Internet to access video content. Connected TV examples include Amazon Fire TV, Apple TV, Chromecast, Roku, and PlayStation.

Here are the steps for a CTV advertising campaign:

• Content: Produce a video ad for a CTV campaign.
• Audience: Target the audience by choosing campaign parameters.
• Budget: Set the budget.
• Launch: Upload the ad content to a CTV ad delivery platform and set a campaign start date.
• Track: Monitor key performance indicators.

The CTV advertising rates from Connected TV advertising companies are more costly than linear television impressions. The median Cost-Per-Thousand (CPM) for broadcast/cable linear television ads is $10 to $15 CPM. The CPM for YouTube videos is $20 to $25. The CPM for CTV ads is $35 to $65.

The justification for the much higher CTV ad cost is the value of the targeting that produces better cost performance, which results in a less-expensive Cost-Per-Completed-View (CPCV). Consumers completely view up to 95% of the CTV ads.

Advertisers who run a CPCV programmatic campaign only pay for a view when the ad plays a certain amount of time, such as for the full video or 30 seconds of the advertisement. Viewers who skip an ad or only watch a part of it do not count.

There is an overlap between CTV and OTT. CTV includes smart televisions with a built-in Internet connection, regular televisions using an external connection device, and gaming consoles with a built-in Internet connection.

OTT is programming watched through a device that is not a television set (smartphone, tablet, laptop, or desktop). If a consumer uses a CTV device, such as an Amazon Fire Stick or Chromecast, to stream video content from a smartphone, tablet, laptop, or desktop to a television set, this is considered OTT.

The average cost of TV commercial production for a CTV/OTT TV commercial spot depends on the complexity of production, talent costs, the length of the commercial spot, and post-production efforts.

There are hundreds of OTT platforms, but a few best OTT advertising platforms dominate the market. These include Netflix, Amazon Prime, Hulu, HBO Now and Starzz. The largest, Netflix, has over 150 million subscribers.

As big as these numbers are, only about half of the US population uses these services. That’s a number that will grow and a market that will become more desirable.

There is a wide range of costs for TV commercial spots, from the low-end cost of a do-it-yourself (DIY) commercial spot to a high-end celebrity-hosted commercial spot suitable for Super Bowl promotions. A DIY spot can cost as low as $1,000 for a 30-second spot. The median cost of around $20,000 for a professionally produced commercial spot increases to upwards of many millions if major celebrity talent is involved.

Short-form commercial spots of 15, 30, or 60 seconds cost around the same. It might be surprising to note that the cost of producing a 30-minute infomercial with a live audience, and greater post-production efforts (editing), is only around $75,000. This is not that much more than the cost of a high-quality 60-second commercial spot.

The three most-used types of CTV/OTT ads are:

In-Stream Video Ads

These ads are an integrated part of the streaming video. The viewer is not given the option to skip them. They are usually either 15 or 30 seconds long. They can play before, during, or after a specific program. It is easy to repurpose existing commercial TV ads for reuse in this type of CTV ad campaign.

Interactive Pre-Roll Ads

These ads run before the programming content. They have the special feature of allowing a viewer to click through the ad to visit a landing web page. For example, a movie trailer can have a click-through option to buy or rent the full movie.

Home Screen Placement Ads

These are stagnant ads that sit on the home screen. They are short videos with a call-to-action, such as “learn more about ___.”

OTT advertising companies include programmatic platforms, OTT platforms, and OTT publishers. Some programmatic platforms are Tremor Video, Simpli.fi, dataxu, and clearstream. Examples of OTT platforms are Amazon FireTV, Samsung, and ROKU. OTT publishers include DirecTV, Hulu, Pluto, and Sling.

The average cost for a 30-second commercial TV spot depends on where it is running and how large the audience is, whose members will see the spot. The CTV advertising definition covers a wide variety of devices, and the content can come from many sources.

Here is a comparison of the average CPMs for a 30-second commercial spot:

• Local TV Spots: $5 to $35 CPM
• National TV/Cable TV Spots: $20 CPM
• YouTube: $10 CPM
• Hulu: $30 CPM
• CTV: $35 to $65 CPM

CTV advertising companies report that these rates fluctuate based on demand and are negotiable, especially if you do a large pre-buy of advertising time. Ad buyers can often get a much better deal by working through an agency, such as Keynes. Keynes has a solution that drops the CPMs by over one-third and still keeps the ad performance high. Consult with Keynes to understand more about this process for connected advertising and how to conduct effective CTV measurement.

Many businesses want to track CTV activity to other performance measures such as offline activity, in-store foot traffic, CTV consumer complaints, and overall sales.

Here are some of the more useful CTV measurement reports:

Incremental Reach

This is a measurement of the added reach directly caused by a CTV ad campaign’s effectiveness. It is critical to realize that some target audience members can only be reached through CTV efforts and may not be reachable through other ways, such as linear TV ads.

Time/Location/Device

This measurement helps understand the impact of CTV advertising based on the time of day, the viewer’s location, and the device used to view the ad.

TV Tune-In

This measurement determines if the CTV campaign improves viewership when its use is to increase the audience for a television show, broadcast event, or live-streaming event.

Foot Traffic

This measurement determines any increase in foot traffic, driven by the CTV campaign, to a physical location such as a store, destination, or dealership.

Connected TV advertising statistics show strong trends from 2018 to 2020. Here are some of the key characteristics of this expanding market for CTV advertising:

Pricing Trends

Pricing remains high for CTV ads when compared to the rate card for the linear TV ad prices 2020 commanded. CTV ad pricing is on par with local TV advertising costs. CTV ads continue to maintain prices and, in some cases, increase in the face of an overall downturn in advertising. This was due to increased CTV users who were accessing the CTV content from home. The pricing trend is going up when one compares the TV ad pricing chart 2018 to the TV ad pricing chart 2019 to the TV ad pricing chart 2020.

Demographics

CTV ads work well when targeting a younger demographic (under 35 years old) on gaming platforms. In America, all CTV consumers’ median age is 45, and CTV media use is evenly spread across all age groups. The Connected TV demographics show that the CTV audience is a vast majority (70%) of Caucasians. The other ethnicities are 18% Hispanic, 6% African-American, 2% Asian, and 4% other/mixed.

Revenue

Television advertising revenue statistics predict that in 2021, CTV ad revenues are expected to account for over half of all TV ad revenues. This is an increase following the TV advertising revenue trends from the TV advertising statistics 2020.

Advertiser Spend

TV advertising spending statistics show that there was an overall reduction in advertising spending caused by the pandemic. Connected TV advertising trends did not follow the rest of the advertising trends. The CTV advertising spend grew in 2020 from Connected TV advertising 2019 levels. It grew by $2 billion over the 2019 Connected TV advertising spend of $6 billion. It is expected to grow another $3 billion to reach $11 billion annually by the end of 2021 for the Connected TV advertising market size.

CTV advertisement is becoming more important to all advertisers. All CTV and OTT advertising options should be explored by working with a team who has the best interest of your brand when setting up TV ad campaigns for the next launch dates in 2021 and beyond. Contact Keynes to find out more.