The terms linear and advanced TV are thrown around a lot these days, and you may be wondering: What’s the difference? And how do VOD, OTT, and CTV factor into things? We’re here to help you understand these acronyms, and more importantly, how they contribute to the current state of television and affect advertising on the platform.
What Is Linear TV?
Linear/ Live TV is the traditional means of watching TV, in which a viewer watches a TV program on the channel it’s presented on at its scheduled time.
For example, if you watch “Blue Bloods” on CBS at 10pm ET on Friday when it premieres, that is considered a linear TV viewing experience.
What Is On-Demand TV?
You are probably familiar with on-demand TV, but here’s how it comes into play. On-demand is also known as non-linear TV, and refers to viewers selecting and watching content whenever they wish.
For example, if you watch “Blue Bloods” on your cable’s video on-demand (VOD) — or you DVR the “Blue Bloods” Friday night episode and watch it later — that is considered on-demand. If you watch “Blue Bloods” season one from several years ago on Hulu, that is also on-demand.
What Is Advanced TV?
Advanced TV is essentially all non-traditional TV. It’s the umbrella term encompassing OTT/ connected TV and addressable TV.
Connected TV, or CTV, refers to any TV that can be connected to the internet and access content beyond what is available via the normal offering from a cable provider. It also refers to devices that use a television as a display and can connect to the internet to access content. A smart TV is a television set with integrated internet — regular televisions can also be made “smart” through set-top boxes that enable advanced functions.
OTT is the term used for the delivery of TV and film content via the internet, without requiring users to subscribe to a traditional cable or satellite pay-TV service like a Comcast or Time Warner Cable. OTT leverages apps to stream video content to a TV using both on-demand and linear/live content. Examples of OTT devices are Apple TV, Roku, and Amazon Fire TV.
Subscription Video On-Demand Services
SVoD refers to services that give users unlimited access to a wide range of programs for a monthly flat rate. Examples include Hulu, Netflix, Amazon Prime Video, Sling TV, and YouTube Red.
What Is Addressable TV?
Addressable TV allows advertisers to purchase audiences, using household level profiling and segmentation to deliver different TV ads tailored to different households watching the same program. The software sits inside the DVR (set top box), allowing the network provider to serve custom ads to the households. Network providers include Comcast, Dish, DirecTV/ AT&T, Cablevision, and Verizon.
The Current State of Television Advertising
Now that you know what these various TV terms mean, you’re probably wondering how they all affect and contribute to the state of television advertising today. While connected TV advertising makes up only a small portion of overall TV advertising, it is projected to grow significantly in the coming years as audiences continue to adopt digital streaming as their primary method of watching TV.
As per eMarketer, a study by Videology and Advertiser Perceptions revealed that 29% of US advertisers and agency decision makers planned to increase their OTT/ connected TV ad spending in 2018, compared with only 6% who said they would decrease it. Respondents viewed data-enabled TV and addressable TV favorably as well, in terms of expected spend. However, when it came to linear TV, respondents had a more negative outlook — only 12% said they would increase their spend, with 21% saying they would decrease it.
With reports from eMarketer that the number of connected TV users in the US this year will hit 182.6 million, up 8.1% from 2017, it’s clear that the demand for this type of viewing experience is increasing. While advertisers currently face some challenges adopting connected TV given fragmentation among platforms and other factors, consumers are undeniably embracing OTT, so it seems only a matter of time before ad spending catches up. TDG Research indicates this change may happen sooner rather than later, with advertiser spend in OTT expected to hit $40 billion by 2020 — nearly half of the $85 billion in projected total TV ad revenue.
As advertisers align with this market trend and reallocate budget to connected TV, they need to think about how best to maximize that investment to prove ROI. Targeting the right audiences and measuring the impact of connected TV advertising through attribution will be critical for success. To learn more about how best to target audiences and measure OTT advertising, stay tuned for the next installment in our TV series.