January 18, 2022

Digital Marketing Education

Latest news and events

Why streaming is the future of advertising

Streaming has taken the world by storm, and fast. Chances are you likely have a subscription to Netflix, Hulu, Disney+, Amazon Prime Video, Peacock or HBO Max by now—if not all of the above.

For brands, the swift ascent of streaming via connected TV (CTV) to become one of the most popular mediums for entertainment has presented advertisers with something of a gold mine. Certainly brands are viewing CTV advertising as an essential move—CTV ad spending will reach $14.4 billion by the end of 2021, 59.9% higher than the year before, and will hit $29.5 billion by 2024, according to eMarketer.

Earlier in November, Ad Age Next: Streaming hosted a series of conversations with major media companies and streaming services about the state of the streaming industry and where it’s heading next. Ad Age Studio 30 Contributing Editor Natalie Zfat had the chance to discuss the future of CTV advertising with Serge Matta, president of LG Ads Solutions, formerly known as Alphonso Inc., a TV data firm in which LG Electronics bought a majority stake this past year. LG Ads Solutions has worked with an impressive host of brands to expand its reach beyond linear TV and traditional cable to the far-reaching audience base of CTV. 

CTV metrics are key

Matta notes that there is a difference in demographics between linear and CTV audiences, with CTV viewers trending younger. In addition, there’s a significant portion of the streaming population that gets entertainment only through streaming subscriptions. Matta makes it clear there’s a major opportunity to leverage the attention and commitment of these streaming-only viewers. 

“The beautiful thing about CTV is that you can actually go to finite audiences based on their viewing patterns, all in a privacy-friendly manner,” Matta says. He adds that, with automatic content recognition (ACR) technology on CTV, platforms like LG Ads Solutions —with a network of 20 million households and 120 million smart TVs installed globally—are able to build out audiences based on what people’s streaming behaviors are, what shows they’re fans of and even what they’re watching when they hop over to linear TV,  something that brands simply couldn’t capture with linear data alone. 

The rise in programmatic buying

When asked about how brands can leverage this data through a mid-funnel target, Matta cites the rapid growth of programmatic buying in the CTV landscape. Some brands, in fact, use programmatic exclusively in their CTV advertising strategy, the greatest advantage being that it is easily scalable and measurable. 

This trend took off rapidly, even faster than Matta and his colleagues anticipated, he says. That’s backed by an eMarketer projection that 7 in 10 CTV ad dollars will be transacted or fulfilled programmatically in 2021, which equates to more than $10 billion.

When it comes to the outcomes of CTV advertising, “The privacy piece is really critical,” Matta emphasizes. The privacy laws are rapidly evolving as data-capture technology becomes more sophisticated, so it will be critical for advertisers to be on the ball about privacy limitations on a global scale, he says.

“The key is to make this opt-in, and that’s what we’ve done here,” Matta adds. “And if people want to opt out, you must immediately delete all of their records.” 

The next chapter of CTV

CTV has all of the foundational elements to be effective as an advertising strategy—the reach, the immediacy and the scalability. The obstacle in traditional digital advertising is often cutting through the clutter of competing ad space and volume. With CTV, Matta notes that its greatest asset is 100% viewability. 

Industries of all kinds are taking notice and taking swift action. Even cruise lines are turning up the dial on CTV ad spend as the winter cruise season approaches. Using the same creative, brands are seeing a bigger impact on a more global scale.

So what’s next? For LG Ads Solutions, it’s refining the outcomes. 

As of now, CTV data can capture important metrics including impressions and clicks, and is also currently used to decipher if, after viewing an ad on their CTV platform, consumers were inspired to do something like visit a store, restaurant or movie theater. Matta foresees that the industry will someday be able to paint an even clearer picture of the consumer response.

More consolidated, comprehensive data is the next piece of the puzzle in positioning CTV advertising to become a dominant medium in digital advertising. 

“Overall, the brands that are leveraging CTV are seeing immense return on ad spend,” says Matta. “And there are no signs of it slowing down.”