Ask any demand-side platform today what it’s focusing on, and you will hear one thing for sure: Connected TV.

CTV was designed to replicate traditional 15- or 30-second TV commercials on smart TV, gaming consoles or devices like Roku, Apple TV, Google Chromecast and Amazon Fire TV. It’s not new, but it has gained popularity recently as DSPs like The Trade Desk and Tremor Video aggressively sell agencies their CTV offerings.

For instance, The Trade Desk just introduced an audience targeting and attribution tool for CTV on Sept. 21 and hosted CTV training sessions for some agencies last week, according to agency executives. Meanwhile, Tremor Video has worked on CTV solutions over the past year to become a one-stop shop for cross-screen media buys, said Lauren Wiener, CEO for Tremor Video.

A connected TV ad looks exactly like a traditional TV commercial. Credit: Tremor Video

Ad tech’s focus on CTV makes sense, given that the number of households in the U.S. subscribing to linear TV packages is estimated to decline from around 99 million this year to 95 million in 2020, according to eMarketer. And media agencies are sold on CTV. Greg Anderson, managing director for GroupM-owned Xaxis, and Michael Kopeikin, vp and digital group director for Spark Foundry (previously Mediavest Spark), said they are seeing client demand for CTV and inventory growing over the past few months. From a performance standpoint, Kolin Kleveno, vp of programmatic for agency 360i, said 15- and 30-second videos running in a CTV environment can achieve a 90 percent completion rate. Such high viewability could lead to a cost per complete view of less than 3 cents, said Kleveno. (But some executives said the CPM of a CTV ad can reach $40.)

But they, along with three other agency executives interviewed for this article, think targeting and measurement in CTV must improve for wider adoption.

On desktop, advertisers and vendors can target and track people with cookies. But CTV environments are cookieless, meaning that most targeting is at the household level, by connecting device IDs with IP addresses, rather than the individual level, agency executives said.

“Household-level targeting means that you and your neighbor may see two different ads from the same brand,” said Anderson.

Kopeikin said since cookies don’t exist in CTV, vendors his agency works with usually collect the IP addresses and time stamps for all CTV impressions and send the information to Nielsen once it reaches statistical significance. Nielsen then matches the IP addresses to homes in its panel and uses the time stamps to identify which family member was using the TV at that given time, without disclosing personally identifiable information.

But CTV ad targeting can’t get too granular at this point. For instance, a beauty brand may be able to target 20- to 40-year-old women with an annual household income of $100,000, but it would be difficult for the brand to add another targeting parameter, like women who also spend lot on makeup.

“The more targeting layers you put, the less scalable you become,” said Anderson.

Dan Davies, svp and director of media sciences for agency MullenLowe’s Mediahub, agreed that scale is a hurdle, saying ad targeting almost doesn’t exist in CTV because there isn’t enough inventory. For instance, if a streaming network has 2 million subscribed households and an advertiser wants to select a specific audience from that, it would leave the advertisers too little audience, he said.

Eli Chapman, vp and managing director of media for agency R/GA, said he likes CTV but thinks measurement needs to improve. Completion rate can be used as a proxy for viewability if everyone agrees the inventory can be assumed to be viewable, but those are media metrics and not necessarily tied to successful business outcomes, he said. Another agency executive, speaking on condition of anonymity, said his team pays CTV ads on a cost-per-complete-view basis in some cases, but there’s no set standard on viewability, and third-party verification is nascent in CTV.

“I’d like to see more companies working on better measurement by matching together IP addresses of households with data captured on website conversions,” said Chapman. “This would be great for e-commerce companies and advertisers driving consumers to their websites.”

Although CTV targeting and measurement need to improve, Kopeikin said he thinks connected TV ads can still be relevant and efficient. “With CTV, you are not blanketing people with mass reach,” he said. “But for us, CTV is just an extension to linear TV at the moment — it is not a replacement.”

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