With the changing digital landscape, consumers are warming up to connected TVs (CTVs) like never before. As Indian audiences increasingly embrace OTT content while gradually making the shift from traditional linear TV viewing, the change also presents an untapped advertising goldmine for brands and advertisers alike.
On the sidelines of the Indian Digital Brand Fest organised by Indiantelevision.com, we caught up with mediasmart vice-president of India & SEA Nikhil Kumar, an Affle company, to understand how advertisers can buckle up to face this new beast in advertising. Last year, mediasmart commissioned research that helped understand the CTV behaviour patterns in India to provide greater market understanding. With mediasmart recently releasing its latest industry report on the CTV ecosystem in India that would help fast-track the growth of this industry, we take a deep dive into some of the underlying challenges and come away with some key takeaways.
Kumar, a consumer marketing professional with over a decade of experience working in FMCG , retail, F&B, and ad-tech set-ups with global brands like TikTok, Puma, L'Oreal, Cafe Coffee Day, and InMobi, is extremely bullish about the current and future role of CTV as a medium for delivering impact for brands. He believes that CTV consumption today goes beyond the inhibitions of individual consumption on mobile screens and probably also brings back the family-viewing phenomenon of linear television, but with very measurable metrics of targeting and delivery.
In an in-depth interaction with Indiantelevision.com, Kumar also talks about his journey from primarily marketing brands spread across the consumer goods sector, food retail, and sports & wellness, to now navigating the ad-tech space. While managing marketing for multiple brands, there were great learnings towards understanding consumer behaviour and sentiments, advertising objectives, media channel goals and analysis, and so forth. What I have really enjoyed after switching sides and working within ad-tech/mar-tech set-ups is the understanding of how each dollar spent is effectively reaching or not reaching the intended consumer. More importantly, the journey from ad exposure to intended purchase & the continued lifetime journey are built on strong data tech stacks with due diligence on consumer privacy. So for me, the whole journey from the brand side to now the adtech side has been an immense learning curve."
My learning, which I often share with my team, is—"Never sell the product, sell the insight—sell the solution to the problem that the marketer is intending to solve—that’ll bring better adoption for your offering," shares Kumar.
On why advertisers are cautious adapting to the CTV medium, despite the rapid adoption of it by consumers
We live in an era that can be defined as pre-covid and post-covid. Covid played a huge catalyst in the growth of connected TVs as people realised that they could view the same content they see on their mobiles on a bigger screen via connected TV , thereby providing a better experience.
For advertisers, the caution is actually natural, primarily because of the newness of the medium—connected TV & the scale/reach it brings from a planning lens. I think the hesitancy could also be derived from not understanding whether CTV reach spend should be bucketed under offline or digital spend, because it's still TV and that’s well covered by most large spenders.
Most large traditional advertisers feel they are already advertising on TV to a much more mass audience on broadcast, so why do they need to spend extra to advertise on CTV?
When CTV started getting sold in India as an inventory for monetisation, it was being talked about as a digital medium. But then they are doing enough advertising for OTT already on mobile. And suddenly there’s this new accessibility for users via CTV. So you have to educate them that OTT is not CTV. The subset of CTV can be OTT, but that’s not the totality of it. There’s so much more that you can do on CTV, like play games, watch live news, etc., which led to its phenomenal growth. I think brands and advertisers, rather than being hesitant, are becoming more inquisitive.
A year back, there was hesitancy, which has turned to inquisitiveness, and today, if you look at it, it’s a Fomo (Fear of missing out) created for every media planner or agency owing to the scale of CTV growth globally. If they don’t have CTV as a top priority, clearly it’s a miss. Even the agencies catering to smaller brands from tier II and tier III categories feel the need to hop onto the CTV bandwagon. More so because of the sheer pressure that the clients are creating on how to get their brand’s ads on the medium. Because that is where their audience is, watching their content.
On whether the decline of DTH and linear TV viewing is leading to the spurt in CTV or vice versa
It's important to understand that sometimes users weren’t even contributing to DTH for them to decline from the database. These are the cord-nevers beyond the cord cutters.
Suddenly, people are realising that the decline of DTH doesn’t mean the growth of CTV. Yes, it does imply that. But connected TV by itself as a base is growing. There’s a section of consumers who have never had a cable/DTH connection (cord-nevers), who bought a smart TV and immediately connected it to the internet and started watching it.
Advertisers are also understanding that some of the audiences they want to reach out to are not there on TV. Thus, more than being hesitant, I think they are convincing themselves that this is a medium that’s creating more impact and providing a way to reach audiences they can’t reach otherwise on TV.
Around 2.5 million DTH and cable subscribers have declined in the past two years or so, while comparatively, nine million wired broadband subscribers have increased. According to these two data points, the home wifi/broadband ecosystem is growing. There’s an accessibility to TV, while at the same time, there’s a decline in DTH, and last but not least, there’s suddenly a growth pattern in the availability of content. The number of OTTs that are available in the market is not just restricted to Hotstar, Netflix, Amazon, Sony, Zee, and Mx Player. There are 40 plus OTT players today—vernacular, regional, multi-lingual, event dialect-specific OTTs—there’s so much happening in the space.
We have recently released a report titled "India CTV Report 2022," which is one of the most comprehensive reports on this subject. Last year, when we first released it, it became a bespoke reference point for most avid marketers and media houses. This year, we did a very interesting comparison of the prices that you are paying. A comparison of the cost of these OTTs versus the average price of a DTH plan has not been put into perspective . If you compare the prices, it is actually not that expensive. So you can have all the content from around the world that you want to see at a price that is affordable. These are some of the factors that are really contributing to the growth of the connected television market in the country.
And it’s not restricted to Gen-Z or millennial users, as we realised from our survey report. In our first-party survey covering a diverse audience segment across metros and non-metros, we realised more than 84 per cent claimed to be watching CTV with someone in the household rather than alone, similar to the TV broadcast era, in which family viewing was the dominant form of consumption. The TV broadcast era was followed by the era of mobile phones, which meant we went from a family viewing/co-viewing to a personalised content consumption experience on our mobile devices. This received a huge boost with the Jio revolution from 2016 onwards. And now, in a post-pandemic era, the connect TV experience has brought everybody back together for co-viewing, implying we have come full circle, but now with a way to answer the question: what happened after the TV ad was served?
On how can agencies & advertisers overcome the lack of standard industry metrics- one of the key reasons limiting faster advertiser adoption of CTV
There are always challenges related to a new medium in how measurability is going to happen. In fact, globally, one of the reports released recently claimed that there’s massive ad fraud happening already within the CTV space globally. If you see, most of the OTTs are owned by large broadcast networks. The OTT, or the platform, is evaluating the user reach and where your ads were served, along with who saw them. How does one evaluate ad fraud, which is obviously a difficult area?
This is where programmatic advertising is becoming more and more important for advertisers, because for them it's not important where the ad is shown, it's more important to whom the ad is shown. The idea is to target audiences as opposed to targeting platforms where your ad is running, and hence, targeting the same user across multiple platforms becomes possible.
Additionally, programmatic advertising provides transparency. You can access the dashboard. You can see the ads getting served, what time they were served, how they were served, which audience segments they were served to, and which audiences are engaging with them. Today we have technology where you can map a TV to a device id on a mobile phone. Hence the intuitive understanding that "this is the guy who has a TV at home; this is the device ID so I can continue the lifetime journey of engaging with that consumer either on his TV or on his mobile."
Technologies like ours are building that trust so that while currently there’s no measurement for what can happen on TV, you can link that journey to a user on their mobile where all possible mobile measurement options exist.
And you can control it because it's digital. So we know who saw the ad. Because you can track it down to a TV, to a location, to the size of a TV, to a certain household. So many data points can come up. You can target users by the size of the screen, by location, etc.—so many targeting options are available because of the digital nature of the medium. Hence, the trackability of success is also there. And hence, it’s clearly an impactful medium.
On some of the underlying challenges & emerging trends in advertising on CTV in the domestic market
So challenges can also be opportunities, and some of them we saw were in education, as India is still a market with high spending on traditional platforms like TV and print. We need to focus on educating advertisers and agencies on how CTV, as a digital medium, is a growing channel and an incremental reach medium at that. For instance, the festive season this time is all going to be about going back to retail, OOH, a massive print spend, and a big burst on television across brands. But, was your brand able to reach the users on CTV where they are most engaged and spend close to 4 hours a day? If not, you have clearly missed an opportunity. So that’s the first challenge in the ecosystem's education.
If we talk about trends, the growing trend is that gaming has grown by leaps and bounds on CTV and is going to become a destination. Another major trend is programmatic advertising via CTV to avoid spillovers. We are a country that does almost 60 per cent of media buying directly as opposed to 40 per cent programmatically. But how do you integrate the user's journey across multiple ecosystems and screens that he operates on into one experience? That’s where programmatic advertising comes into the picture, which can help you build a unified view of the consumer.
On how can marketers maximise viewer engagement on ads and improve the ad viewing experience for users on CTV?
That’s an interesting premise because on CTV there are multiple ecosystems that clearly users spend time on—there is the OTT or on-demand content ecosystem, and the other is user-generated content (UGC) platforms. Beyond this, we also have news, gaming, and music, which are growing very fast.
What does a user tend to do when they see an ad on a UGC platform? They are more likely to skip it since the 20-or 30-second ad in a three-minute video is more of a distraction.
The user's behaviour on on-demand OTT is observed to be very different, where on average they spend anywhere between 30 mins and an hour watching their favourite on-demand show or movie. The user is committed to spending a longer time there and hence doesn’t mind watching a 20-second ad here. Another thing to note here is that, as per the Ormax OTT Audience Report: 2022, only 31 per cent of India’s digital video audience is paid users, while the remaining 69 per cent is an advertising-based video-on-demand (AVoD) audience. Clearly, a huge chunk of the audience is reachable via ads on OTT and CTV.
Also, CTV, with its immersive brand storytelling on the large screen, along with the ability to connect the journey from TV to mobile, can create an ecosystem that enables a user to retain the ad better for all kinds of segments like beauty, cosmetics, auto, FMCG, e-commerce, app-first etc. Ad retention and a CTA (call to action) created via omnichannel audience targeting, CTV household sync, and drive-to-store technologies enable users to act upon the ad that they have seen. Because at the end of the day, what is advertising for if not to act upon it?
On how does the India market differ from the US and European markets in this aspect
From a CTV advertising standpoint, I think the US and Europe are more evolved markets. They saw the trend almost three to four years ago. In the US, almost 90 per cent of households have at least one CTV device—clearly, it is a highly evolved CTV market. Besides, non-pay TV households are set to exceed pay TV households by 2023, indicating cord cutting and cord nevers are on the rise in the US.
The European Union is very similar, though it obviously has GDPR (General Data Protection Regulation) laws and other regulations that affect how users are tracked. But in both global markets, the share of CTV impressions is growing really fast. In fact, in the US, the share of CTV impressions has exceeded the share of mobile, which has skewed the global average as well, in favour of CTV. If you look at the US, CTV ad spending will touch almost 10 per cent of the total ad spending by 2024. And within that high share, most ads are being transacted programmatically, not even direct buys. They have moved from a system dealing with multiple publishers. So, that’s the evolution and mindset that we are moving towards.
If you compare it to India, it’s a very small market in terms of adoption. It's been just two years since we started CTV advertising. So it's early days, but last year we grew almost 30-40 per cent. We have seen the CTV reach go from six million to nine million and now to 14 million, and the pace is only increasing Q-o-Q. So, while the size of the market is small today, the adoption rate is very high in the domestic market. CTV penetration is growing really fast, and we predict that it will be 40–50 million by 2025. So, even though the Indian market is small, it is surely packing a big punch. CTVs are here to stay and grow.