March 11, 2021

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By Michael J. McDermott

Connected TV (CTV) may finally be living up to its billing, as it continues to patch into all age segments and surpass linear TV. The global pandemic has only accelerated that trend, so much so that it may have reached a tipping point, according to a new report from The Trade Desk, a demand-side platform (DSP) whose media partners include ABC, CBS, Fox, and Hulu. Fifteen percent of consumers have cut the cable cord since COVID-19’s arrival, leaving fewer than 78 million U.S. households with a cable subscription at the start of 2021, the report says. In contrast, advertisers can now reach more than 84 million households via connected streaming services for the first time.

Spurred by the rapid growth of smart TVs and devices like Roku and Amazon’s Firestick, a gradual displacement of linear TV viewers migrating to streaming content began about five years ago, says Nancy Lazkani, founder and CEO of Icon Media Direct, a brand response agency whose clients include Blue Cross Blue Shield, FanDuel, and Zulily. But since 2019, there has been explosive adoption in the market.

Indeed, the number of consumers who intend to ditch cable in 2021 is expected to grow 27 percent this year — almost double compared to 2020, according to The Trade Desk’s report. Combined CTV and over-the-top (OTT) ad revenue grew 17 percent through the first three quarters of 2020, while linear TV ad revenue fell 17 percent and overall media revenue dropped 14 percent.

“If you look just across the streaming landscape, every major media company is aligning itself for a future that is streamed,” says Tim Sims, chief revenue officer at The Trade Desk. “That creates quite a few reasons for consumers to adopt CTV.”

Crest of a Wave

The growing number of both cord-cutters and cord-nevers is a tide unlikely to turn, and it presents both new advertising opportunities and significant challenges for brand marketers.

Chief among the challenges may be why consumers are willing to watch ad-supported streaming services in the first place. According to “Press Play: CTV & Ads,” an IAS research study, nearly two-thirds of users polled said they do it because the want to save money; just 8 percent said they like watching ads.

However, the same IAS study found that 90 percent of people who switch to CTV from linear TV say there are features of CTV ads that they prefer compared to linear TV. That opens the door for marketers to connect with consumers in ways that are more relevant than traditional linear TV advertising. The caveat? The ads have to be more experiential and less interruptive.

“We’re seeing many brands leverage CTV to supplement their linear reach as cable subscriptions continue to decline,” says Jim Johnson, VP of account planning at, an ad tech company whose clients include BMW, Greenpeace, and Pizza Hut.

One popular tactic Johnson sees playing out is segmenting viewers into groups — one that has been exposed to CTV ads and one that hasn’t — and following up with both groups with additional messaging across multiple devices to understand CTV’s impact on awareness, favorability, and purchase intent. These efforts are amplified through household targeting, which offers a high degree of personalization based on location, previous shopping behavior, or the aforementioned previous ad exposure. “The AVOD (ad-supported video-on-demand) model has seen tremendous growth as consumers are slowly beginning to max out streaming subscriptions and their associated fees,” Johnson says. “So there’s certainly a ton of upside growth in that segment of the market for 2021.”

Getting In on the Act

CTV will continue to hold strong appeal for product placement, which has been around for years, of course, but requires a sharper strategy when it comes to streaming content. Global product placement revenues grew for 10 consecutive years through 2019, according to PQ Media. The COVID-19 outbreak halted that streak last year, but the custom media research organization predicts product placement revenues will surge 13.8 percent in 2021, and post compound annual growth of 9.8 percent through 2024.

Linear TV will remain the largest channel for product placement through that period, but digital platforms, especially OTT streaming services, will grow the fastest. “With over 70 million households still subscribing to the linear TV/cable package model, we don’t see CTV/OTT displacing it anytime soon,” says Patrick Quinn, president and CEO of PQ Media. “That said, advertising opportunities are limited since many streaming services are nonadvertising-based, with the only opportunities available being paid product placements.”

Quinn adds that product integration must not be forced, but flow into the arc of the story. “Hardly anyone does a random frame drop, called a cameo, anymore. It’s product integration or nothing,” he says.

Bill Durrant, founder and president of Exverus Media, a data-driven media agency whose clients include Premier Protein, MasterClass, and Suja, agrees that product placement is most effective when there is context in the storyline relevant to that product, especially to its unique selling proposition (USP). “There are times when economics might dictate a frame drop, but all things being equal, I’m always going to go for integration, context, and, ideally, USP,” he says.

Linear Still Holds Weight

While the streaming universe presents new advertising opportunities for brand marketers, including embedded e-commerce capabilities and the ability to serve ads during viewer-controlled pause breaks, ad spending is likely to remain consistent on linear channels, at least for now, according to Durrant.

“The No. 1 issue for marketers is reach,” he says. “Marketers know that reach grows brands, and the vast majority of video impressions available to advertisers are still found in linear TV.

“That’s going to change over the coming years, but brands need to be where consumers are right now,” Durrant continues. “Advertisers need to develop media plans that will drive results this year and next, but are flexible enough to adapt to coming changes in the streaming universe.”

Essential Item in Walmart’s Media Cart

Jill Toscano, VP of media at Walmart, talks about the marketing opportunities (and challenges) presented by connected TV.

Q. How is Walmart using streaming advertising within its overall media strategy?

Streaming video is an essential way for Walmart to reach an ever-growing cord-cutter customer segment. Sometimes we use it as a complement to our linear TV strategy for its ability to round out reach and drive awareness. But oftentimes, the combination of video storytelling with the ability to [target] based on location, affinity, and demographics helps us when we need to drive perception shift, reappraisal, and consideration.

Q. What are the biggest current challenges around streaming advertising?

The current streaming landscape is proliferating, with new players coming into the space every day, most recently Paramount+ and Discovery+. This proliferation is not just across content partners, but across the entire landscape with the growth of distribution, demand, and supply-side partners, which makes it a more complex terrain to navigate. From the network side of things, the partners that organize themselves around a holistic video approach — from strategy and planning to measurement and insights — will win.

Q. How are the measurement capabilities for streaming ads shaping up?

Third-party measurement of streaming services is nascent and partner-dependent. Broadly, there has not been a holistic solution for measuring success across network or distribution partners. Third-party measurement is often relegated to in-platform media metrics such as reach, frequency, CPM, and VCR (video completion rate). Third-party brand studies can be directionally insightful, however, they often only measure network performance in a vacuum.

— M.J.M.


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