Connected TV advertising has emerged as one of the most powerful channels for reaching today's streaming-first audiences. As viewers continue to cut the cord and embrace on-demand content, advertisers are following suit, shifting budgets from traditional linear TV to the precision and measurability of CTV. With U.S. CTV ad spending projected to reach approximately $38 billion in 2026, up roughly 14% year over year, it's essential for marketers to understand how to leverage this channel effectively.​

What Is CTV Advertising? An Overview

Connected TV (CTV) advertising refers to video ads delivered through internet-connected television devices, including smart TVs, streaming boxes like Roku and Amazon Fire TV, gaming consoles, and streaming sticks. Unlike traditional linear TV that broadcasts the same ad to all viewers simultaneously, CTV enables advertisers to serve targeted, data-driven video ads to specific households watching streaming content.

The distinction between CTV and related terms matters for strategic planning. While CTV specifically refers to ads shown on television screens, Over-the-Top (OTT) is a broader term encompassing video ads delivered over the internet across any device, including smartphones, tablets, laptops, and TVs. Think of CTV as a premium subset of OTT, restricted to the big-screen TV environment where co-viewing is common, engagement is higher, and completion rates approach 97%.

The CTV landscape is expanding rapidly. Over 70.7% of the U.S. population will use CTV in 2025, with U.S. adults projected to spend an average of 131.5 minutes per day on connected TV. As of September 2024, streaming captured 47.3% of all U.S. TV viewing, surpassing both cable (27%) and broadcast (20%). This audience shift has created massive inventory for advertisers seeking to reach cord-cutters and streaming-first households.

How CTV Advertising Works

Understanding the mechanics of CTV advertising helps marketers build more effective campaigns and maximize their return on investment.

How Ad Delivery Works

CTV advertising uses programmatic technology to automate ad buying and delivery. Over 90% of CTV advertising is already transacted programmatically, enabling real-time bidding and precise audience targeting at scale.​

When a viewer begins streaming content, their device sends a bid request containing anonymized household data to a demand-side platform (DSP). Advertisers define their target audience criteria, such as demographics, interests, viewing behaviors, geographic location, and more, within the DSP. The platform's algorithm instantly evaluates whether the viewer matches the advertiser's parameters and automatically bids on suitable ad placements. If the bid wins, the ad is served to that specific household within milliseconds, appearing before, during, or after their streaming content.

This programmatic infrastructure enables dynamic ad insertion, allowing different households watching the same content to see different ads based on their individual profiles.

Targeting Options

CTV advertising's targeting capabilities far exceed traditional linear TV's broad demographic approach. 

CTV’s demographic targeting enables advertisers to reach specific age groups, genders, household income levels, educational levels, and family compositions. Geographic targeting goes beyond traditional DMA-level targeting to focus on specific zip codes, cities, or even radius targeting around physical store locations. Behavioral and interest-based targeting leverages viewing history, content preferences, and engagement patterns to identify relevant audiences. Advertisers can target households based on specific interests, such as cooking, sports, home improvement, or travel. First-party data integrations enable brands to upload their own customer lists (CRM data, email subscribers, past purchasers) to reach existing customers or exclude them. This data can be matched to CTV households through privacy-compliant identity resolution. Retargeting capabilities allow advertisers to serve CTV ads to households that have previously visited their website, engaged with their brand on social media, or interacted with other digital touchpoints. Account-based marketing (ABM) targeting enables B2B advertisers to reach specific companies or decision-makers based on firmographic data such as industry, company size, and job title.​

What Makes CTV Content Effective

Creating effective CTV advertising requires understanding the unique viewing environment. Unlike mobile ads viewed in seconds while multitasking, CTV ads appear on large screens in living rooms where viewers are actively engaged.

Strong opening hooks are critical. Advertisers should aim to grab attention within the first six seconds with bold visuals, clear branding, and compelling messaging. Since many CTV ads are non-skippable, the first few seconds determine whether viewers stay engaged or mentally check out.

Audio quality matters significantly in the living room environment. Clear voice-overs, professional production values, and attention to sound mixing ensure the message comes through on TV speakers.​ Optimized visual clarity for TV screens also improves performance. Text should be large enough to read from across the room, and designs should use high contrast and clean layouts.

Clear calls-to-action drive results. Whether encouraging viewers to visit a website, use a specific URL, scan a QR code, or remember a brand name, CTAs should remain consistent throughout the ad. Displaying URLs throughout the entire spot (rather than just at the end) significantly improves recall and action.​

Interactive elements like QR codes have proven highly effective on CTV. Studies show that 76% of consumers would scan a QR code in a relevant TV ad, and adding one boosts attention by 12%. QR codes should be large enough to scan from the couch and visible for the full ad duration, with clear incentives offered.

Best Practices

Implementing CTV advertising effectively requires strategic planning and ongoing optimization.

Rotate multiple creatives to prevent ad fatigue. 

Running at least three different ad variations simultaneously keeps messaging fresh, especially when targeting narrow audiences with higher frequency.​

Use sequential messaging to tell a story across multiple ad exposures. 

Rather than cramming everything into one spot, break the narrative into a series of ads that build on previous messages. Platforms can customize the sequence based on viewer actions.​

Leverage dynamic creative to keep content current without recreating entire campaigns. 

Auto dealers can automatically update inventory, retailers can showcase current promotions, and brands can personalize creative based on audience segments—all without reshooting video.​

Test and optimize based on data. 

With CTV's real-time reporting capabilities, advertisers can monitor performance metrics such as video completion rate, click-through rate, and conversion rate, and adjust targeting, creative, or budget allocation mid-campaign.

Set appropriate frequency caps to balance reach and effectiveness.

Studies show that video completion rates typically drop after the first exposure and plateau after four impressions. Most effective CTV campaigns use frequency caps of 3-10 impressions per viewer over a 7-30 day period.

Align creative with platform specifications.

Different CTV platforms have varying technical requirements. Most platforms require a 16:9 aspect ratio, 1920x1080 resolution (1080p), 15-30 second duration, MP4 or MOV format, and bitrates between 8-30 Mbps. Ensuring creative meets these specifications prevents quality issues and rejection.

Benefits of CTV Advertising

Connected TV advertising offers multiple strategic advantages, making it attractive to businesses across industries and budget levels.

Precision Targeting and Personalization

CTV's greatest advantage over traditional TV is its ability to reach specific audiences rather than paying to reach entire broadcast audiences. Advertisers can target the household level using first-party data, behavioral signals, demographic criteria, and purchase intent. This precision dramatically reduces wasted ad spend by ensuring ads reach only the most relevant viewers.

A research study analyzing almost $2 billion in ad spend found that CTV generated 10 times as many conversions as linear TV, despite accounting for just 60% of the spend. This efficiency stems directly from CTV's ability to eliminate the broad, untargeted reach that characterizes traditional television.​

Superior Measurement and Attribution

Unlike linear TV's estimated reach based on panels and overnight ratings, CTV provides digital-level measurement with precise, real-time performance data. Advertisers can track impressions, video completion rates, click-through rates, website visits, conversions, and return on ad spend with the same granularity as search or social campaigns.

Attribution capabilities connect ad exposure directly to business outcomes. Using pixel-based tracking, device IDs, and identity graphs, advertisers can measure whether exposed households later visited a website, made a purchase, downloaded an app, or visited a physical location. Third-party integrations with platforms like Google Analytics enable "second-device" tracking, showing what happens when viewers pick up their smartphone after seeing a CTV ad.

Brand lift measurement on CTV enables advertisers to understand how campaigns affect brand awareness, ad recall, favorability, and purchase intent while they are still running. This real-time feedback enables quick optimization, impossible with traditional TV measurement.

Premium Environment and High Engagement

CTV ads appear in a premium, lean-back viewing environment where audiences are actively engaged with professionally produced content. This distraction-free context delivers completion rates that average 90-97%, compared to 70% for other digital video formats.

The large-screen experience creates higher impact and better recall than mobile or desktop video ads. Research shows that 54% of viewers say CTV ads are "less intrusive" than mobile ads, and 63% find CTV ads more relevant than linear TV ads. 

Cost Efficiency and Flexibility

While linear TV typically requires large minimum commitments and long-term upfront negotiations, CTV enables campaigns with budgets as low as $50 on some platforms, allowing small businesses and local advertisers to access television advertising for the first time.

Despite premium CPMs averaging $20-40, CTV delivers strong ROI. One study found that advertisers saw a 30% higher ROI on campaigns where just 7% of spend went to CTV. Another analysis showed CTV spend offers 30% stronger return on investment than other advertising channels over both short- and long-term horizons.

The programmatic nature of most CTV buying enables dynamic budget allocation, real-time optimization, and the ability to pause or adjust campaigns mid-flight.

Cross-Device Retargeting and Full-Funnel Integration

CTV advertising integrates seamlessly into multi-channel marketing strategies. Using IP-level and cross-device tracking, advertisers can identify households exposed to CTV ads and retarget those viewers with complementary messages on desktop, mobile, and social media.

Households that see a CTV ad are more likely to click on search ads, engage with social retargeting, and convert when they encounter follow-up messaging. Studies show that when CTV is used alongside lower-funnel tactics like search engine marketing or social retargeting, conversion rates significantly improve because viewers already have brand awareness and familiarity.​ Roku research predicts that in 2026, up to 50% of streaming advertisers will shift CTV ad spend from search and social budgets, recognizing CTV's ability to drive performance throughout the funnel, not just awareness.​

Interactive Capabilities

Modern CTV advertising extends beyond passive video viewing. Interactive formats, including QR codes, shoppable ads, pause ads, and clickable overlays, enable immediate viewer action and measurable engagement.

In 2024, Innovid saw QR code use in CTV ads grow over threefold, with engagement nearly tripling. Media agencies report scaling interactive ad formats from 10% of partner spend to 30% in 2025 alone, with expectations for further growth in 2026.

These interactive elements transform CTV from a pure awareness channel into a performance driver, enabling direct-response outcomes like app downloads, product purchases, and lead generation, all from the TV screen.

Who Should Use CTV Advertising?

CTV advertising works for a wide range of businesses, but certain advertiser profiles and use cases see particularly strong results.

Best-Fit Advertiser Profiles

Direct-to-consumer (DTC) brands leverage CTV effectively for both brand building and performance marketing. The ability to serve targeted ads to specific demographics, track website visits, and measure conversions makes CTV ideal for online retailers, subscription services, and e-commerce businesses.

Local businesses and small-to-medium enterprises can now access TV advertising that was previously cost-prohibitive. With flexible budgets and precise geographic targeting, local restaurants, automotive dealers, healthcare providers, home services, and retail shops can reach customers within specific zip codes or radiuses around store locations.

B2B companies and SaaS providers use CTV for account-based marketing, targeting specific companies or decision-makers with tailored messaging. The ability to target based on firmographic data (industry, company size, job title) makes CTV effective for reaching business buyers in their home environment.​

Enterprise brands running national campaigns benefit from CTV's scale combined with precision. Consumer packaged goods companies, automotive manufacturers, financial services, travel and hospitality, and telecommunications providers use CTV to reach mass audiences while maintaining targeting efficiency unavailable in linear TV.

Industries with research-driven purchases see exceptional performance on CTV. Consumer electronics, automotive, real estate, insurance, healthcare, and higher education benefit from CTV's ability to tell deeper stories in a distraction-free environment where completion rates exceed 90%.

The demographics of CTV viewers are particularly attractive for many businesses. Streaming audiences tend to be younger, more educated, and have higher household incomes compared to traditional TV audiences. Millennials and Gen Z make up 68% of CTV viewers, with 60% of CTV audiences having household incomes of $75,000 or more.

When CTV Makes Sense in the Funnel

CTV advertising performs across the entire marketing funnel, though its role varies by campaign objective.

Upper-funnel awareness represents CTV's traditional strength. 

The big-screen, high-production environment excels at brand storytelling, creating emotional connections, and building mental availability. For awareness campaigns, advertisers typically target broader audiences (2+ million households), focus on content alignment, show ads 3-5 times for awareness, and measure brand lift and awareness metrics.​

Mid-funnel consideration uses CTV to maintain top-of-mind awareness and reinforce credibility. 

Retargeting website visitors with CTV ads keeps brands visible as prospects evaluate options. Seeing a message on the trusted TV screen strengthens brand legitimacy. Advertisers measure website visit lift and cost per site visit to gauge mid-funnel performance.​

Lower-funnel conversion uses CTV's strong performance capabilities.

Using first-party data, lookalike audiences, and intent signals, advertisers can drive specific actions like purchases, app installs, and qualified leads. Lower-funnel CTV campaigns typically target high-value prospects, show ads 7-10 times for action, and measure cost per acquisition, ROAS, and conversion rates.​

Full-funnel strategies deliver the best results by balancing awareness and performance. 

Most successful CTV approaches allocate 60% of budget to awareness and 40% to performance, use sequential messaging to guide viewers down the funnel, start broad, then retarget engaged viewers, and measure both brand and performance KPIs.​

Advertisers typically turn to CTV when they need to reach streaming-first households, deliver localized campaigns with geographic relevance, combine brand-building with measurable performance, gain transparency around delivery and ROI, extend reach with cross-device consistency, or measure impact beyond impressions.​

How to Add CTV as One of Your Advertising Tactics

Successfully integrating CTV into your marketing mix requires strategic planning, proper setup, and ongoing optimization.

Define Clear Objectives and KPIs

Start by determining what you want to accomplish with CTV advertising. Your objective determines targeting strategy, creative approach, budget allocation, and measurement framework.

Awareness campaigns might focus on metrics like reach, impressions, brand lift, ad recall, and video completion rate. Consideration campaigns track website visits, engagement rates, and content consumption. Conversion campaigns measure cost per acquisition, return on ad spend, conversion rate, and revenue attributed to CTV exposure.

Select the Right Platform

Choosing where to buy CTV inventory significantly impacts campaign success. 

Demand-side platforms (DSPs) provide broad inventory access across multiple publishers through a single programmatic interface. DSPs offer sophisticated targeting, unified reporting, and cross-platform frequency control. They require expertise to manage effectively but deliver maximum flexibility and scale.

Specialized CTV platforms are built specifically for streaming TV advertising, with enhanced creative tools, simplified workflows, and performance-optimized features. These platforms often provide easier entry points for businesses new to CTV.

Walled gardens offer direct access to specific premium inventory with guaranteed placements on those platforms. While they lack cross-platform reach, they ensure a presence on the streaming services where your audience spends time.

Agility combines the best of all three approaches in a single platform. You get the broad inventory access of DSPs, the specialized CTV tools and workflows of dedicated platforms, and the premium placement options of walled gardens, all while maintaining control across channels beyond just CTV. Agility delivers enterprise-level buying power and sophistication without the complexity or learning curve.

Develop CTV-Optimized Creative

Creative quality significantly impacts CTV performance. Research shows that creative quality can double brand lift effectiveness on CTV, with strong creative significantly outperforming weak creative.​

Develop video assets that meet platform specifications (typically 16:9 aspect ratio, 1920x1080 resolution, 15-30 second duration, MP4 format). Optimize for TV viewing with bold visuals readable from across the room, clear audio that works on TV speakers, persistent URLs or CTAs throughout the spot, and early branding within the first few seconds.

Consider creating multiple creative variations for testing and rotation, developing interactive elements like QR codes when appropriate, and using dynamic creative to personalize messaging by audience segment.​

Build Your Audience Strategy

Successful CTV targeting balances precision with scale. Start by identifying your ideal customer profile (ICP) based on demographics, geography, interests, and behaviors. Upload first-party data to create custom audiences or exclusion lists.

Layer targeting criteria strategically, combining geographic, demographic, and behavioral signals while avoiding over-targeting that limits reach. 

Establish Measurement and Attribution Framework

Before launching campaigns, implement tracking infrastructure to measure results. Set up conversion pixels on your website to track post-ad actions. Integrate with analytics platforms to measure website traffic and behavior. Establish baseline metrics to measure lift (brand awareness, website traffic, conversions). Advanced attribution connects ad exposure to online purchases, foot traffic, and CRM revenue via privacy-safe identity graphs.​

Launch, Monitor, and Optimize

Start with pilot campaigns at smaller budgets to test targeting, creative, and performance before scaling. Monitor performance closely in the first weeks, paying attention to video completion rates (should exceed 80-90%), frequency distribution (ensuring you're not oversaturating audiences), audience engagement metrics, and conversion performance against benchmarks.

Optimize campaigns based on data by adjusting targeting parameters to focus on best-performing segments, testing creative variations and promoting top performers, reallocating budget to high-performing platforms or dayparts, and refining frequency caps to balance reach and efficiency.

Scale investment by expanding geographic reach, increasing budget allocation to winning tactics, and integrating CTV with complementary channels for a cross-device strategy.​

Integrate CTV with Your Broader Media Mix

CTV performs best when integrated with other marketing channels. Coordinate timing so CTV and digital campaigns run simultaneously. Increase search bids 25-50% during CTV flights to capture branded search lift. Retarget CTV-exposed households on social media (typically 20-40% lower CPMs than cold audiences). Use similar creative themes across channels for consistent messaging. Trigger email sequences for CTV-exposed prospects.​

Explore connected TV advertising with Agility

Ready to reach streaming audiences with precision and measure the impact of every impression? Agility's precision brand advertising solution helps you scale your brand through data-driven targeting, access to premium inventory, and transparent performance measurement across every open internet channel, including CTV, display, audio, and more.

Discover how Agility can power your CTV strategy.

FAQs

Can CTV ads be targeted like digital ads?

Yes, CTV advertising offers sophisticated targeting capabilities that are similar to or exceed those of other digital channels. Advertisers can target based on demographics (age, gender, income, education), geographic location (down to zip code or radius), behavioral data (viewing habits, purchase intent, interests), first-party data (customer lists, website visitors), and firmographic data for B2B targeting (company size, industry, job title). 

Can CTV advertising be measured?

Absolutely. CTV provides digital-level measurement with precise tracking of impressions, video completion rates, click-through rates, website visits, conversions, and return on ad spend. Unlike traditional TV, which relies on estimated ratings, CTV measurement leverages advanced technologies such as server-side ad insertion, device identifiers, household-level matching, cross-device attribution, and integration with analytics platforms. Advertisers can track the complete customer journey from ad exposure to website visit to purchase.