What do you need to know about video advertising right now?

Linear TV advertising is fading out and the uptake of Connected TV (CTV) is accelerating. On top of this, video ads are engaging, shareable, relatively affordable – and they have the highest clickthrough rate (CTR) of all digital formats (1.84%). For most marketers, there’s just one drawback…

How do you keep up with the constant changes and challenges – like navigating fragmentation and the seemingly endless choices over where to place your ads?

The biggest question is: What do you need to know right now in order to optimize – and future-proof your video advertising strategy?

This is exactly what Pixability’s Oliver Smith shared at our recent Digital Marketing Masterclass in LA. If you missed it, don’t worry. Here are Pixability’s 5 things you need to know about video advertising today…

1. Cord cutting is accelerating

Cord cutting is accelerating – and it’s happening quickly. A recent study by Pixability found that only 25% of U.S. consumers think they’ll have a cable subscription within a few years.

Currently, 41% of U.S. adults say they don’t subscribe to cable or satellite TV service. And of those that are subscribed, 67% of them plan to cut their subscription within the next few years. What does this mean for brands? If you’re predominantly focussed on TV advertising, you’ll need to rapidly rethink how you plan to reach your target audience. Which leads us on to…

2. CTV isn’t as fragmented as you think

With so many platforms, apps, devices – and the issue of regulating frequency across different publishers, big data is transforming how brands navigate the video ad space. But what if it’s not as fragmented as you think?

While it may seem like there are endless channels and platforms, the reality is that CTV reach is highly concentrated on two main channels in the US: YouTube and Hulu – and these two channels contribute around 70% of viewing hours across ad-supported CTV platforms.

3. YouTube is a major, ad-supported CTV platform

YouTube is a platform that bifurcates into two streams: mobile and CTV devices. In December 2021, YouTube reached over 135 million people in the US via connected TVs. (Nielsen). It's easy to see the opportunity for advertisers: CTV allows you to reach your target audiences at scale on their largest in-home device.

Compared to the rest of the ad-supported CTV market, YouTube is a particularly powerful platform. This is because brands are able to tap into the first party data and behavioral signals that Google brings to the table. And while the rest of the market grapples with cookie-deprecation, ACR data, and new regulations, on YouTube you can still run robust audience-targeted campaigns.

4. YouTube is safe, but is it suitable for you?

YouTube's popularity creates a big challenge for advertisers. The sheer scale of content published to it (500 hrs uploaded every minute) makes it difficult to identify the optimal channels for your campaign. As an advertiser you can feel confident that your campaign will run against brand-safe content; the reputational risk on the platform is very low and the Global Alliance for Responsible Media (GARM) has recently certified YouTube as 99% safe. However, suitability is a different issue.

The misclassification of content on YouTube means that you can easily burn media spend on content and audiences that are irrelevant to your campaign. For example, Creators who make content for kids have to self-certify. If they check the box to say their content is “made for kids”, they’ll make less money from ads. This is why you often see credit card ads running on your kids' favorite cartoon channels… it's not to do with the "co-viewing" opportunity!

5. Narrow targeting doesn’t work

Looking at all the campaigns on YouTube in the first half of 2021 by advertisers in 10 vertical industry categories, Pixability wanted to find out if there was a correlation between an advertiser’s industry and the content category that drove the best ad performance. In all 10 verticals, the content category you might predict would perform best, didn’t. Auto content performed below average for auto advertisers, and beauty content performed below average for beauty advertisers. What’s the takeaway?

While it can be tempting to align yourself with sector-specific content, this won’t always give you the best results. For example, if you're a beauty brand that doesn’t mean you have to focus your ads around beauty content. Remember: this is advertising, not sponsorship. Your audience is watching lots of different types of content, so it’s important to avoid over-reliance on contextual targeting and expand into other content areas.

While there are always challenges to overcome, the CTV and video advertising ecosystem presents a host of exciting opportunities for marketers. Apart from being able to reach new audiences at a fraction of the cost of linear TV, where you choose to spend your ad dollars will actually influence and shape this rapidly growing industry.

Want to learn more about video advertising and CTV? Click here to find out more about our virtual and in-person Digital Marketing Masterclasses.