Streaming deep dive with M&C Saatchi’s Guillaume Lelait: Connected TV growth, leaders, ads, measurement, and future
The pandemic years were the golden age of subscription-based connected TV as streaming media companies invested tens of billions in new content, shows, and platforms.
The post-pandemic years will be the golden age of ad-supported connected TV as the streaming media ecosystem switches from a blue-ocean go-get-em new customer acquisition phase to a red-ocean hyper-competitive go-win-em model.
Another factor: consumers struggling with subscription fatigue in uncertain economic conditions.
“Viewership from platforms that have ad-supported placement is growing one and a half times faster than the rate of subscriptions for streaming services,” says Guillaume Lelait, managing director Americas at M&C Saatchi Performance in a recent Growth Masterminds podcast episode.
So what are the opportunities for mobile marketers in this emerging space?
Fast growth in connected TV and streaming media
Another M&C Saatchi executive that I recently spoke to, Jonathan Yantz, suggested that ad spend in connected TV might eventually rival ad spend in social media. That’s a big prediction, given that Facebook ad revenue alone is already in the $100 billion annual range while connected TV is forecasted to be around $39 billion (U.S. only) in 2026.
But connected TV ad revenue has been growing fast.
Plus, 92% of U.S households are already accessible on connected TV, and you have to think that good-old-fashion TV advertising, still at almost $70 billion in 2022 (U.S. only), will mostly transition to connected or streaming TV over the next few years.
That adds a lot of runway for growth.
“CTV ad spend represents 18% of the whole video ad spend,” Lelait says. “Linear, it’s still 57%.”
And while growth of the CTV advertising industry is slowing to perhaps 30% annually over the next few years after a torrid 40-50% annually in the last few years, that’s still double the growth of mobile ad spend, Lelait adds. So as the bulk of linear TV ad spend transitions over to connected TV and streaming, there’s huge upside potential.
CTV advertising is a different world than mobile advertising
Much as those of us who have cut our teeth in tech during the long rise of the smartphone to computing platform supremacy might wish otherwise, mobile is a mature space. It’s known. It’s consolidated.
There are 2 major powers: Google and Apple.
And, correspondingly, there are 2 major channels: Google Play and the iOS App Store.
We’ve lived this now-familiar world for more than a decade, and we know it pretty well. We know the ad formats that work, the agencies that make the ads, the DMPs and SSPs and exchanges and mediation platforms that deliver them, and the attribution solutions that measure them.
Connected TV is a different world. And it’s not just one world, either.
- Connected TV is technically internet-connected TVs from brands like Sony, Samsung, LG, and others
- Streaming is technically services such as Netflix, Amazon Prime Video, Disney+, Hulu, or Peacock
- OTT is technically hardware platforms such as Apple TV, Amazon Fire TV, Roku, cable/satellite TV boxes, and more
All of these are slightly different, but all are getting mashed up as platforms, channels, services, and hardware get extensively interwoven in a considerably more complex and less consolidated landscape than mobile. The result is that you can get Apple TV+ (the service) on a connected Sony TV, or Roku Channel (the platform) on a Vizio smart TV, or Amazon Prime Video and Disney+ on Apple TV (the hardware), or pretty much any streaming service via Roku hardware, and so on. Throw in Hulu, Peacock, HBO Max, Paramount+, Tubi, Crackle, Pluto TV, and many more … and there are a huge number of players.
And of course some players, like Apple, Roku, and Amazon, play in multiple spaces, offering all of hardware, software, platforms, and services. Plus both connected TV and OTT platforms offer app-store-like functionality, allowing consumers to install different streaming services in addition to natively-available channels, entertainment, and functionality.
The upshot is that the CTV and streaming ecosystem is vastly different from mobile, and significantly more complex in some ways.
The ad formats are very different too.
“A large amount of the inventory is video based, and it’s actually non-skippable,” Lelait says. “Compared to Facebook, Instagram, TikTok, where everything we think about is hook rate — how many seconds is someone watching — here the platforms are like: ‘We are seeing your campaigns worked. You had a 96% completion rate.’”
Another difference: the ad slots are typically 15 seconds and 30 seconds, much like linear TV. But there’s far fewer ad slots than either mobile or linear TV.
“If you play a casual game, every couple of levels you get exposed to an ad,” Lelait says. “On CTV, it’s about four to six minutes per hour.”
Measurement on connected TV: a whole new world
Attribution and measurement are still fairly new in the CTV market.
One way connected TV players enable marketing measurement is by matching at the user level. For example, a CTV platform might pass ad views to a DSP, and the DSP will work with a measurement provider such as Singular to match these with devices who took action on the ad campaign.
That’s good as far as it goes, but there are obvious challenges.
“They basically create the attribution in a very, ‘Well done, you achieved a $6 CPI’ way,” says Lelait. “But what you actually don’t really know is that the conversion may have happened from another channel — from Facebook, Google — during the same window of time.”
That’s where media mix modeling can help, of course.
But there are also additional models, including using impression tracking via tags, which is not universally supported, or click measurement on Singular links via a remote control, for example. Linear TV’s panel-based methodologies that estimate viewership are of extremely limited value.
One method Lelait is decidedly not sold on is the QR methodology that Coinbase made famous in their $14 million Super Bowl ad. Despite virtual menus in restaurants accessed via QR codes, they’re still not a common functionality for most people.
“We have a [running] joke with someone: ‘Please, the moment you see a 1% engagement rate on your Q code … send me the report,” Lelait says.
There are also measurement SDK integrations.
A streaming provider, for instance, that is resident on both a smart TV app and a mobile device might notice engagement with an ad and kick off a push notification on a consumer’s mobile device, where he or she can more easily take action. That’s an interesting option particularly for massive companies like Amazon or Google, who are likely to be installed both on your TV and your phone, and both of whom can use their vast troves of data to understand which ads to target to which audiences. But it’s also a major reason for streaming providers to work hard to make all customers multi-device.
About targeting: that’s another key point of differentiation.
Targeting on mobile has generally been behavior-based, though not on iOS since App Tracking Transparency. Targeting on CTV can use first-party data that platforms gather on your viewing behavior, or it could use prior purchase or search data, potentially, in the case of Amazon or YouTube. But targeting on CTV is more likely to be via demographics, geotargeting, income targeting, and other household parameters.
Which, in conjunction with contextual targeting based on content being shown can be quite effective.
What verticals CTV advertising works for
“Apps and gaming will lead the way,” Lelait says. “[But] I think commerce is going to really take over on CTV.”
There are mobile app install campaigns on connected TV, and they continue to achieve significant results, just like mobile app install campaigns on linear TV. But over time, commerce might be the sweet spot, Lelait believes. Which, of course, aligns with what has worked on linear TV in the past, and therefore also aligns with what linear TV advertisers who are moving over to connected TV and streaming TV are familiar with.
One interesting opportunity: triangulation.
Or, as another marketer I chatted with once called it: surround sound marketing: on your big screen on the wall and on your little screen in your hand.
“We are seeing … traditional mobile DSPs who now have an offering on CTV and what they’re doing is actually smart,” Lelait says. “I’m going to keep the IP of the household where the ads have been shown. And then on top of that I’m going to run some display ads and also some re-engagement campaigns. So you can see how they are bringing maybe a DMP in the middle and they’re trying to triangulate you and, and basically extend the reach that those DSPs all have.”
How’s that going to work?
Giants like Google are able to connect viewers with search data, show ads that relate, and allow people to engage with those ads via their Apple TV remote, or TV remote, or on their phones.