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  • Writer's picturePeter Fontana

How CTV Opens Up the Television Market for DTC Advertising

Social influencer recording a streaming DTC advertising.

The ad-supported streaming video presents many new and exciting opportunities for advertisers. This is especially true for brands that want to use direct-to-consumer (DTC) advertising.

Brands with smaller budgets that couldn’t afford ads on traditional linear television services can afford to advertise on streaming services and find those ads particularly effective. It’s all about how CTV opens up television advertising for smaller-budget DTC brands and the many ways these marketers can benefit from streaming video.

Key Takeaways

  • Connected TV (CTV) and over-the-top (OTT) streaming video services enable direct-to-consumer (DTC) brands to make a big splash with a small budget

  • CTV viewership is growing even as OTT services enable more targeted advertising campaigns

  • OTT services collect a wealth of data about viewers and ad effectiveness that helps improve ROI

  • Successful DTC brands treat CTV advertising like an extension of their social marketing activities

What Are CTV and OTT?

CTV stands for connected TV. It’s any television set that streams video programming over the Internet. This can be a smart TV with built-in streaming capabilities or any other set connected to a streaming media device, such as those from Roku and Amazon. Some CTVs get their streaming video from connected videogame consoles from Microsoft, Nintendo, and Sony.

The programming streamed to CTVs comes via over-the-top (OTT) streaming services. Some OTT services, such as Disney+ and Netflix, are subscription based (what the industry calls subscription video on demand, or SVOD), while a growing number of services (dubbed advertising-based video on demand, or AVOD) are supported by advertising.

It’s these free or lower-cost AVOD services that are fueling much of the current growth in both viewers and advertising revenue. Insider Intelligence/eMarketer projects that over half of all U.S. Internet users will watch ad-supported streaming content this year.

Why DTC Brands Are Moving From Linear to CTV/OTT

According to IAB’s 2023 Outlook Survey, ad spend on CTV/OTT services is expected to grow 14.4% this year. That’s in contrast to the projected 6.3% decrease in ad spend for linear TV.

DTC marketers are increasing their CTV/OTT advertising budgets.

Brands, especially smaller DTC brands, find CTV advertising attractive. Here’s why:

More Viewers

The first thing that brands find attractive about CTV is the growing number of viewers flocking to these streaming video services. With OTT viewership expected to top 250 million people by 2025, it’s a marketing channel that can’t be ignored.

The number of OTT viewers is expected to top 250 million by 2025.

More Targeted Opportunities

Even better than the quantity of CTV viewers, the quality of those viewers offers unique opportunities for targeted advertising. Unlike linear broadcast and cable television, which offer only a scattershot approach, CTV lets advertisers target specific viewers, much like a rifle shot.

OTT services collect voluminous amounts of data about their viewers. This helps advertisers focus their marketing campaigns better to create more effective and cost-effective ads.

More Measurable Results

Among the data that OTT services collect is detailed information about the effectiveness of the ads they run. In this way, OTT advertising is more like web-based advertising, in that you’ll be able to follow consumers from their viewing devices to their computers and mobile phones. You’ll know if a person saw your ad and then later went online to order your product. It’s the ideal scenario for DTC marketing.

More Flexibility

Finally, CTV advertising is programmatic advertising. This means you’re not locked into expensive ad campaigns with a select number of outlets. You choose what kinds of programming and viewers you want to target, and the programmatic technology will determine the best places to run your ads, all in real-time. This lets you change tactics midstream if you want, shifting your budgets towards those programs and services that are more effective.

CTV and OTT digital advertising explained.

How DTC Brands Can Profit from CTV Advertising

If you’re a DTC brand, even if you have a smaller budget, you can profit from shifting your ad spend from linear TV to CTV. Here are three strategies to consider.

Treat CTV Like Social

Many DTC brands are successful because they know how to effectively use the power of social media. Those social skills can help you get the most from CTV advertising.

It’s often effective for smaller brands to treat OTT like an extension of their social marketing campaigns. That means being small and scrappy rather than big and bombastic. Consider adopting a low-budget approach that’s:

  • Authentic

  • Direct

  • Product-focused

  • Relatable

  • Tongue-in-cheek

That means producing CTV ads that are more like Instagram ads than Super Bowl ads. It’s an affordable approach that lets even the smallest players effectively compete with the big guys.

Create Highly Targeted Campaigns

Whatever your CTV budget, you have access to the reams of data available from OTT services. You can benefit from the extremely individualized viewer data collected by OTT services, including:

  • Viewer age and gender

  • Geographic location

  • Viewing habits

  • Online behavior

  • Purchasing history

With this data in hand, you can create highly targeted campaigns, almost down to the individual viewer. With AVOD’s programmatic advertising technologies, you can pick and choose to whom you serve your ads and deliver personalized pitches to those potential customers. Your ads will be more effective with less waste, which means a higher return on your marketing investment.

Choose the Right OTT Partners

There’s a plethora of AVOD services available today, each with its own unique viewer characteristics. Some services are offshoots of subscription services but with ads, like the lower-priced tiers of Hulu, HBO Max, and Netflix. Other services, such as Freevee, Pluto TV, and The Roku Channel, offer a mix of older programming. You can choose which partners are best for your brand and then choose the right programming within those services.

Even better, choose a demand-side platform (DSP) that offers access to programming across multiple services. This way, you can choose both the content and viewers that best fit your brand strategy.

Optimize Your CTV Ad Spend

When it comes time to plan your CTV advertising campaigns, look for streaming services that utilize a solution that enables real-time ad decisioning. This helps advertisers reach more targeted audiences. It’s especially useful for DTC brands and those with smaller budgets who want to get the most from their CTV advertising budgets.

Contact Penthera today to learn more about CTV advertising for DTC brands.


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