The ad break is back, and even Elon Musk is tuning in

Thought the TV ad break was dead? Greatly exaggerated. It has simply moved house.

ITV recently blamed a severe decline in TV advertising for a drop in profits. Instead, marketers are banking on the reach of connected television (CTV), technology that enables viewers to stream content on a television set.

So, what does the rise of CTV mean for brands, and will it deliver a new ad break experience that will stop viewers heading for the kettle?

Brands are spending big on CTV

CTV, which includes smart TVs, game consoles and gadgets such as Google’s Chromecast or Apple TV, is one of the fastest-growing advertising channels in the UK. Spending is forecast to almost double from £1.17bn in 2021 to £2.31bn in 2026.

Not wanting to miss out, Elon Musk’s X is going head-to-head with YouTube with the launch of a streaming platform on Amazon and Samsung smart TVs. Another US giant, Walmart, is also backing the boom. In February, it agreed to a $2.3bn bid for smart TV maker Vizio, which will boost the retailer’s fast-growing media arm with streaming inventory (ad slots) and audience data.

Where consumers go, advertisers follow

As TV viewing habits change, advertisers are following the money. Since streaming services hit UK shores, their convenience and choice have been luring viewers away from traditional broadcast television – known as linear TV – in which programs are aired in a set order and time. The pandemic accelerated the switch, and recent Ofcom data shows that linear TV is even losing over-64s, its most steadfast audience.

Advertising is fueling the growth of streaming and vice versa. Providers, including Netflix, now offer free ad-supported streaming services. Viewers are also flocking to a growing number of free, ad-supported television (FAST) channels, which tend to specialise in a single genre — ITVX, for example, has FAST channels dedicated to reality TV and Midsomer Murders.

Filling the attention deficit

Brands used to be worried about viewers using an ad break to make a quick cuppa. Today, they are equally concerned about them reaching for their smartphone, or worse still, opting to ‘skip this ad’.

In a multi-device world, adverts across all platforms are vying for consumer attention. Capturing this (and measuring how well you’ve done so) requires audience data. CTV’s access to audience information, such as demographics, location and interests, gives it a clear advantage over linear TV.

Rather than playing an ad for baking powder in the Corrie ad break and hoping some of the audience is interested, CTV can serve it to a 30-something homemaker who has time to bake and enjoys cooking shows. Likewise, a regional car dealership can advertise to viewers within a five-mile radius.

Challenges for brands

Brands are attracted by CTV’s ability to reach more consumers with personalized ads. However, the (relatively) new advertising channel comes with challenges, the biggest of which is measuring the performance of advertising campaigns.

Linear TV has a relatively small pool of broadcasters and standard (though comparatively weak) methods of measuring an advert’s success. In comparison, CTV has rich data, but it is spread across thousands of device manufacturers and streaming providers, all of which use slightly different metrics. To evaluate the effectiveness of an advertising campaign, brands must collate and sort information from multiple sources.

Another drawback of CTV advertising is the risk to brand safety, the danger an ad might get played next to extremist or violent content. This has been a well-publicized challenge for YouTube and X (in its small screen version).

Will CTV make the ad break better?

Classic adverts, from the Guinness surfer to the Milky Bar Kid, are fond memories for those who grew up pre-on-demand. Amid the nostalgia, it is easy to forget the tedium of sitting through the other 95% of so-so commercials.

As CTV solves its measurement and brand safety problems (there are a number of companies working on it), this tedium should be a thing of the past as viewers are served adverts that are relevant to their interests.

Could the ad break be heading for a second golden age? Brands are betting on it, and so is Musk.