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The $40.9B Shift to CTV Advertising Marketers Can’t Afford to Ignore

Advertising

Connected TV (CTV) advertising is experiencing explosive growth, with analysts forecasting ad spending to soar to $40.9 billion by 2027, nearly double the $24.6 billion spent in 2023. As more and more audiences consume their information and entertainment via internet-connected devices like apps, smart TVs, streaming services, and gaming systems, the way marketers connect with viewers is changing. To make the most of this major shift, brands need to embrace data-driven strategies and focus on best practices in the market.

Data-Focused Advertising and the Emergence of Retail Media Networks

Powered by first-party data, Retail Media Networks (RMNs) are at the forefront of this growth. As privacy regulations tighten and some companies move away from third-party cookies, the importance of first-party data has reached meteoric heights. These ad platforms successfully use consumer data to deliver highly targeted ads and measure their effectiveness through closed-loop attribution.

Major players like Walmart Connect, Amazon Ads, Roundel by Target, and Best Buy Media Network are partnering with CTV platforms to offer advertisers premium inventory and hyper-targeted, data-powered ads. This collaboration between RMNs and CTV platforms provides an effective way for marketers to target the right audience and optimize their spending.

Here are four tips to help you take full advantage of the shift in CTV advertising:

1. Use First-Party Data for Precise Ad Targeting

First-party data is a treasure trove for marketers. It’s derived directly from customers, like purchase history, browsing behavior, and engagement metrics. By tapping into this data, marketers can target audiences with precision, focusing on shopping behaviors and attributes to guarantee that ads reach the right people. For instance, a retail chain using first-party data to understand seasonal purchasing trends can tailor its CTV ads to promote relevant products, increasing sales during critical shopping periods.

Walmart Connect, successfully draws from shopper data across its vast network of stores and online platforms to create relevant, timely ad campaigns. Similarly, Amazon Ads relies on its extensive purchase history and browsing data to offer targeting options that significantly boost campaign effectiveness. A study by BCG highlights the power of this approach, showing that for grocery retailers, using first-party data for personalized marketing can improve revenue and profit by 3% to 5%.

2. Implement Closed-Loop Attribution to Measure Campaign Effectiveness

Closed-loop attribution lets marketers connect ad exposure data with purchase data, providing a clear view of their campaigns’ performance.
This method helps identify which ads perform best and the strategies that are driving sales.

Roundel by Target is an excellent example of a solution that combines loyalty program data with CTV platforms to see to it that ads reach the right audience and maximize ROI. By analyzing which ads lead to purchases, Target can continually refine and optimize its campaigns, making its advertising efforts more efficient and effective.

More marketers are turning to this approach. A Nielsen report shows that global marketers now allocate 40%-59% of their budgets to CTV. They are looking for precise measurement and accountability, like closed-loop attribution, to justify ad spending and refine strategies.

3. Optimize Campaigns with Data-Driven Planning

By analyzing first-party purchase data and using closed-loop attribution, marketers can understand what ads work best and optimize their strategies accordingly.  Brands can use data insights to continuously learn about their customers and refine their messaging and content. For instance, a campaign that targets health-conscious consumers based on purchasing behavior can fine tune its promotion of different organic products based on purchasing behavior.

Retail media networks that use first-party data for optimization often see impressive results, including estimated revenue growth of 11% to 12% and profit margins exceeding 40%. A great way to take this a step further is by incorporating Data-Driven Linear (DDL) advertising. This approach helps traditional TV buyers apply advanced data sets, including first-party data, across their planning, activation, and measurement workflows. DDL can be a vital step for TV buyers moving from panel-based ad measurement to more targeted strategies. By doing so, traditional TV advertisers can significantly boost their targeting capabilities, leading to more effective and optimized campaigns.

4. Overcome Challenges of Scaling and Automating First-Party Data

Scaling and automating first-party data across all media types, including traditional broadcast and cable or linear TV, remains challenging. Marketers need to develop strategies to efficiently manage and integrate this data for seamless execution across different platforms.

Linear TV lacks the digital feedback loop that CTV offers, making it harder to apply first-party data effectively. Deploying a Customer Data Platform (CDP) can help brands streamline collecting, managing, and analyzing first-party data as a foundation for all their marketing strategies. Partnering with RMNs offers marketers the essential tools and expertise needed to deliver consistent and personalized experiences across multiple channels, thereby enhancing scale and results.

Make the Most of the CTV Advertising Revolution

As consumers continue to shift their attention to digital platforms, marketers must follow suit with customer-centric, data-driven strategies. The integration of CTV and RMNs, which use first-party customer data, offers smart and effective advertising strategies by focusing on precise ad targeting, closed-loop attribution, data-driven planning while overcoming scalability challenges. This approach maximizes ROI and ensures that campaigns are relevant and effective in reaching the right audience.

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ABOUT THE AUTHOR

Peter Ibarra,Head of Media and AdTech Solutions at Amperity

Peter is currently serving as the Head of Advertising Solution for Amperity, developing product strategy across digital media, Retail Media Networks, second-party data collaboration, adtech partnerships, and post-cookie first-party activation. Prior to joining Amperity, Peter served as the Director of Strategic Initiatives at Dstillery, where he oversaw the development of strategic partnerships and managed new data and marketplace integrations for Dstillery’s audience products.

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