Can CTV Be Used as a Performance Channel?

The rise of Connected TV has shaken up the advertising landscape. But for many media agencies accustomed to the world of Direct Response TV, the question remains: can CTV truly be a performance channel?

Traditionally, DRTV has relied on linear TV's reach, with seemingly cheap Cost-per-Thousand figures. The logic goes: a wider net catches more leads, right? While the upfront costs might be lower with linear TV, this approach often ignores a crucial factor – targeting.

Targeting Makes the Difference

CTV flips the script on targeting. With access to 3rd party data sources and in-market audience insights gleaned from search data giants like Amazon or Captify, CTV lets you reach viewers actively researching or showing purchase intent for products similar to yours. It's like fishing in a stocked pond versus a vast, unpredictable ocean.

Cost vs. Value: Beyond the CPM

Here's where things get interesting. We've conducted A/B tests with clients where CTV's CPMs can be 10-15x higher than linear TV. This might sound like a bad deal on the surface. However, our tests have shown a negligible difference in Return on Investment.

Why? Because with CTV, you're speaking directly to a pre-qualified audience. You might reach fewer viewers, but they're the right viewers. This translates to better engagement, higher conversion rates, and ultimately, a strong ROI comparable to, or even exceeding, linear TV.

Ad Load and Attention Metrics

CTV offers additional advantages that contribute to its performance potential. Firstly, ad loads are significantly smaller on CTV compared to linear TV. This means viewers are less likely to become fatigued by ad interruptions. Secondly, all ads on CTV are unskippable, ensuring that your message reaches every viewer. Finally, CTV content is often "appointment to view," meaning viewers actively choose to watch their preferred shows. This translates to higher levels of attention and engagement with your ads.

CTV and Linear TV: A Complementary Approach

We're not suggesting that linear TV or DRTV are ineffective. Far from it. Linear TV's reach and broad appeal make it a valuable component of many campaigns. However, CTV can add incremental reach and target a distinct audience that might be difficult to reach through linear TV alone.

By combining the power of linear TV and CTV, you can create a more comprehensive campaign that maximises reach, engagement, and ROI.

The Key Takeaway: Tailoring Your Approach

The effectiveness of CTV as a performance channel ultimately depends on your target audience and campaign goals.

  • Niche Audiences: CTV shines with niche audiences. You can reach them more efficiently than with linear TV's shotgun approach.

  • KPIs: Consider your KPIs. If maximising brand awareness is your priority, linear TV might be a valid choice. But for driving leads and sales, CTV can be a powerful tool.

Conclusion:

Don't be fooled by high CPMs in isolation. CTV delivers performance by focusing on the right audience, not just reaching the most people. This results in a targeted campaign that drives sales, increases basket value, and ultimately delivers a strong ROI. So next time you're crafting a performance-driven campaign, consider the power of CTV – it might just surprise you.


Leah Brophy