What is CTV ad monetization and how does it work?

Dec 21, 2020

Alt for the picture: ctv-ad-monetization

Connected TV is at the peak of its popularity, especially since the COVID-19 pandemic has obliged ever more users to switch to digital TV, abandoning linear television services.. Forced to spend most of their time at home, people have been binging  TV series and shows using connected TV devices and their favorite platforms. The amount of spending on advertising campaigns on these platforms is also growing as well, and both content creators and CTV platforms are benefiting from the opportunities provided by connected TV campaigns in advertising . CTV ad spending is expected to reach $10.81 billion by 2021. But how exactly does ad monetization work?

There are two main ways of how CTV channels can be monetized – subscription fees and advertising. 

SVOD is the subscription-based model. Regular users pay for a subscription to the channel. Subscriptions allow for generating greater revenue per viewer, but in order for the model to take off, the channel needs to first build a loyal viewer base. A loyal viewer will pay for subscription renewals, or pay for an annual subscription. Since there’s a lot of free video content, the channel must provide something exclusive to convince viewers to  pay to watch it.

AVOD is the advertising-based model. It’s meant for a wider audience, and implies video commercials appearing within the channel. The ads can be shown before (pre-roll), during (mid-roll), or after the video content (post-roll), and can take different forms:banner images, sponsorships, informational commercials, etc.

However, there is another method of monetization – TVOD, a transactional-based model. This allows for revenue generation even from occasional viewers, reducing reliance on regular subscribers. 

How can a CTV platform increase monetization for advertising?

Here are a couple of more ways platforms can earn money by cooperating with the publishers and content creators.

1. Selling inventory

The platform may sell some of the publishers’ inventory every time the viewers watch ad-supported content. This kind of cooperation is more transparent and convenient than earning money per view.

2. Subscriptions

If new users subscribe to paid services through the CTV platform, the platform receives a slice of the revenue generated.

3. Providing access to audience data

In 2018 Roku created a marketplace where OTT publishers could access  user data in order to help them sell their inventory within the platform. 

5. Paid placements

The platform displays recommendations for viewers, some of which can be paid suggestions sponsored by creators who want to promote their content.

Advantages of CTV monetization for content creators and platforms

The first reason to get involved with CTV ads monetization is the rapidly growing popularity of connected TV. The audience is getting wider – over 1 billion streaming devices and CTVs are used by households all over the globe, and during the quarantine, more and more viewers cut the cord and switched to streaming and connected TV.85% of users who have already subscribed to CTV platforms are willing to continue their memberships. 

But there are also other advantages of advertising monetization within the CTV environment both for content creators and platforms.

Precise targeting

Thanks to detailed analytics and advanced measurement, CTV ads are always relevant and are strictly delivered to their target audience. The ability to adjust advertising campaigns also helps keep them effective throughout the whole user journey.

High viewability and engagement

98% of CTV ads are fully viewed not only because some of them can’t be skipped, but also because the viewer is anticipating what’s next and is waiting for their video to continue. These ads more resemble commercial breaks, making it easier to watch the ad till the end than to press the button to skip the ad, which of course increases engagement. 

Premium quality

CTV commercials are often top quality productions, andget premium video placements. They are more eye-catching than regular online ads and, as mentioned, engage more of the viewer’s attention. This increases the advertising campaign’s chances of success. You may increase your brand awareness immensely also taking into account the fact that advertising may be cross-device.

How to get started with CTV monetization

Once your channel has subscribers and regular content updates, it’s time to define ad monetization strategy and start generating revenue. 

You will need a specific technology for advertising support. For example, you can get ready-made code from the ad networks like Google Ads or make use of custom monetization solutions. However, the following ad monetization methods are the most common. 

1. Ad networks

A Video Advertising Network provides a simple way to start making money with a CTV channel. Just sign up with a VANs and integrate its code into the channel. The network places ads within the channel’s content, and the owner gets a share of the revenue.

2. Direct ads

It is possible to create a custom ad server to take control over the ads displayed on the channel. In this case, it’s possible to cooperate with advertisers to negotiate desired prices and conditions. 

3. Sponsors

Some companies pay for their ads to be shown within your content. This is one of the best ad monetization methods because a channel owner can earn good revenue with minimum effort, since it isn’t necessary to do anything but just display sponsored ads.

Trending content for CTV monetization in 2020

In order to boost traffic monetization, video content creators should stick to simple but effective tips. The first one is to stay trendy and keep up with the formats that attract viewers the most. Here are some of the popular video formats for successful ads monetization in 2020.

Series

These never get old. Any idea may be turned into a new series of content that keeps viewers interested. If implemented properly, this tip will surely turn occasional viewers into loyal ones.

DIYs and Lifehacks

Everyone likes videos that show how to do something. In 2020 this trend gained special significance,  because the quarantine made it more likely that people will need more DIY ideas or instructions on how to accomplish certain tasks on their own. 

Reviews

An evergreen trend that is always interesting and valuable, especially considering the explosion of e-commerce as brick and mortar stores closed down or operated on reduced hours.

360 degrees

360-degree video content is similar to a review, but even more encompassing. The author not only demonstrates something to the viewers but also makes them feel like they are present there in the video. It’s a great way to show locations or events from the inside, as if the viewers see it with their own eyes.

Apart from using the right video formats to improve an ad monetization strategy, it’s also necessary to remember a few principles for generating more revenue. The following tips will help every video content creator attract new viewers and keep loyal ones engaged:

  • it is said that a marketer has only 10 seconds to win the attention of the viewer, so try to use this time as effectively as possible; don’t make your subscribers or new viewers scroll the feed further until they watch your video 
  • be inspiring and try to share useful information that can educate your audience – viewers will then value the time they spent on learning something (and there is a big chance they will come back for more)
  • don’t be afraid to be creative – make your videos not only visually appealing but innovative as well.

Takeaways

CTV advertising is a great way to generate revenue for both video content creators and CTV platforms. The number of viewers who choose streaming services and videos on demand over traditional TV is growing fast, advertising strategies are being improved and the amount of ad spend is rising each quarter. CTV advertising campaigns are usually relatively inexpensive considering the high quality of the ads, the precise targeting, and the revenue advertisers earn, alongside increased brand awareness. The only thing left to do is to implement the effective ad monetization strategies the CTV industry offers both content creators and platform owners.