This is how streaming content on the Internet is changing the world of advertising

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For the first time, the medium of television advertising receives targeting and measurement capabilities that were previously limited to the digital world. The CTV revolution allows advertisers to show ads to specific households or people based on their interests and behaviors and even based on demographic characteristics.

The television and content industry has experienced a revolution in the last decade, with more and more companies entering the world of content streaming over the Internet. The big bang that took place in the field, also known as connected television or CTV, allowed the streaming services, alongside media and content companies all over the world, to bypass the television and cable networks that dominated the market - and reach viewers directly at home on their platforms. Along with the changing content consumption habits, the CTV revolution is also changing the world of advertising and media, creating countless new opportunities for advertisers. 

The revolution would not have been possible without smart TVs, which have entered homes in Israel and around the world in recent years, and make it possible to enjoy a variety of streaming services, from Netflix, Hulu, Disney+ and others, to traditional TV channels launching digital offerings, such as Keshet's 12+ and FreeTV, and Peacock of NBCUniversal.

The streaming platforms (also known as OTT -  Over-the-Top) along with a variety of other content services, create an experience that puts the viewer in the center - and allows him to choose what to watch and when. In addition, it is important to remember that the content viewing experience today is not limited only to the smart TVs at home, it’s by our side also on our other devices all day long - on smartphones, tablets, and personal computers.

The CTV revolution is wider than just connecting consumers with the content they love. For the first time, the traditional medium television can offer targeting options and measurement capabilities that were previously only available in the digital world - which represents a massive revolution for advertisers!

This allows advertisers to present ads to specific households or people based on their interests and behaviors, as well as based on demographic characteristics - similar to the advanced segmentation capabilities that exist in digital advertising platforms such as Google and META.

In the coming year, about two-thirds of the US population will watch CTV content, with numbers estimated to reach 230 million viewers, up from about 196 million in 2019, (according to the research firm eMarketer). By the end of 2023, the number of households not paying for traditional TV providers will exceed the number of those who do pay for the first time.

This revolution that CTV is creating is not only limited to the world of content consumption but is also changing the advertising industry fundametnally. 

Until today only advertisers who were active on social networks and digital channels were able to benefit from accurate targeting and measurement. But now for the first time, the traditional medium of television is being modernized and able to take advantage of these capabilities too.

What advantages does the CTV give to advertisers?

  • Targeted and personalized advertising: CTV makes it possible to show ads to specific households or individuals based on their interests and behaviors, which can be more effective than traditional advertising based on broad audiences.
  • Better measurement of campaigns: the advanced technology allows for more accurate measurement of advertising in order to understand the effectiveness of campaigns. Advertisers receive accurate data in terms of the number of people who watched the campaign and understand the success accordingly - did brand awareness increase, did the ad motivate them to make online purchases, order services, download apps, or fill in a form? This data can be used to optimize campaigns in real-time and improve their accuracy.
  • Immediate analysis of the campaign results: based on the data collected, campaigns can be optimized making them more efficient and performance-oriented. Optimizing is more important than ever, as companies are facing an economic slowdown and a growing need to move from growth to maximum efficiency and effectiveness.
  • Immersive and interactive advertising experience: The advertising experience on a big TV screen is much more immersive than on a smartphone screen. On some CTV platforms advertisers can use interactive elements, such as questionnaires and surveys, to engage viewers and collect valuable data about their preferences and behavior.
  • Attract young audiences: CTV allows advertisers to reach younger generations. While Millennials and Generation Z watch less and less linear television they lead the viewing of CTV and streaming.

The scope of OTT advertising in the US during 2023 alone will be approximately $10 billion, which is 3.4% of all digital advertising spending, and 10.2% of total video ad spending. This estimate includes advertising on streaming services on all devices with paid subscription services ( Subscription services such as Netflix, Hulu, HBO Max and Paramount+.)
It is important to note that this data refer only to streaming services that stream premium quality content and does not include advertising on free streaming and content services such as Pluto TV, the Roku channel, and watching YouTube on the smart TV.

Looking at the entire CTV market, significant volumes of approximately 27 billion dollars will already be reached in 2023. According to the latest forecast of dentsu for 2023, the CTV market is expected to continue with significant double-digit growth of over 20.2%.

According to another forecast by the research company eMarketer, the scope of advertising on CTV in the US in 2026  will amount to approximately 44 billion dollars, representing 41.2% of the total expenditure on television advertising. This represents a significant shift in the global advertising industry.

When will this revolution take place in Israel?

Similar to other trends in advertising and television in the past, it is expected that Israel will experience that same with a slight delay. The main reason lies in the fact that most of the new streaming services, such as Disney+, HBO and Netflix, come from the US and were launched in Israel at a later point. The same is true for the launch of advertising on these platforms. However, the first ones who can join the revolution, are Israeli export companies,  mainly high-tech companies in the field of SaaS, gaming, cyber and others, that aim at advertising in the global markets.

Read the original Hebrew articles on Calcalist