CTV Advertising’s Biggest Challenges and How to Solve Them 

Connected TV (CTV) advertising is on the rise — businesses are starting to use CTV advertising more and more to promote their brands. According to eMarketer, CTV ad spend reached $24 billion in 2023 and is predicted to exceed $40 billion by 2027. But what exactly is fueling this growth?

At its core, CTV advertising displays ads on TVs connected to the internet. These smart TVs give viewers access to popular streaming platforms like Netflix, Amazon Prime, and Hulu. What’s really driving marketers to CTV advertising is the precise targeting abilities of digital CTV ads, to reach the right audience in a more effective way.

Video Advertising in the Streaming Era

Viewers now have a wide range of streaming options, including both ad-supported and premium ad-free services. Many platforms offer both types of packages. This variety has led to a rapid increase in CTV adoption over the last few years, coinciding with a decline in traditional linear TV viewership.

A report from Hub Entertainment Research found that smart TV ownership increased in Q1 2024 to nearly 8 in 10 households as consumers replaced old TVs and embraced streaming video. In addition, 62% of TV households are now streaming weekly on smart TVs which is up significantly from 47% in 2021.

The shift to CTV benefits marketers, as CTV platforms provide detailed user data — such as viewing habits and demographics — allowing for more precise audience targeting.

The Benefits of CTV Advertising 

CTV advertising offers several clear benefits over traditional TV advertising. These include:

1. Popularity: Consumers worldwide have switched to Smart TVs and prefer CTV content over TV subscription packages. Younger audiences (Millennials and Gen Z) especially prefer content produced by CTV giants like Netflix and Amazon Prime. The highly competitive field also means great offers on packages and regular content catering to younger audiences.
2. Higher ROAS: Most CTV ads cannot be skipped and require audiences to sit through them if they want to continue watching their content and most people are willing to sit through these ads in return for cheaper packages or free content. This gives advertisers a much higher return on ad spend as compared to traditional TV advertising.
3. Better Audience Targeting: Marketers and advertisers can target more relevant audiences due to the information available to them via CTV,  including consumer demographics, interests, preferences, and household-level targeting. While traditional TV ads are generally limited to brand awareness campaigns due to their broader audiences, CTV ads can go further down the funnel with the potential for viewers to take action with their internet connection.
4. The Power of IoT (Internet of Things): The future of Connected devices could see huge technological leaps in the coming years with the possibility of being able to click on ads via mobile remotes. Additionally, CTV — when combined with smart home technology like Alexa or Google Home devices — could lead to a level of integration never experienced before.

The Challenges of CTV Advertising

CTV still does not have a universal measurement currency. With multiple apps and websites and varying measurements from platform to platform, there is no standardized way for advertisers to measure their audience size and makeup. Without a universal identifier, such as cookies or device IDs, it prevents advertisers from investing their ad spend in CTV advertising.

Let’s look at the challenges that advertisers face when it comes to CTV Advertising:

• Standardized Identifiers: The most challenging problem is the lack of standardized identifiers. Marketers and advertisers cannot be sure if their ads are being shown to the relevant audience or apply frequency caps to ensure viewers do not see the same ad multiple times. The lack of identifiers also makes it difficult to determine the accuracy of audience curation and targeting. While the platform does have the right audience sets, there is no certainty of being able to reach the right viewer.
• Metrics and Transparency: Without accurate measurement metrics, advertisers and marketers face difficulty with targeting and attribution. This also means ROAS cannot be measured accurately making it difficult for marketers to justify ad-spend. Another issue is the lack of transparency as the platforms cannot give accurate data without identifiers.

Azira’s Solution for CTV Advertising

To replace third-party cookies and device IDs, brands can leverage alternative identifiers for performance and reach measurement. At Azira, our proprietary algorithm connects CTVs with associated household devices based on proximity, frequency, and co-location duration, enabling precise household-level targeting and measurement.

A household comprises mobile phones, tablets, and CTVs owned by its members. Using these identifiers, advertisers can link CTVs to mobile devices for accurate targeting without relying on cookies or device IDs. This technology also integrates real-world data for deeper audience insights.