Insights
November 19, 2025
What Is Connected TV Advertising? A Practical Guide
Table of Contents
Let's get right to it. Connected TV (CTV) advertising is simply running your video ads on internet-connected TVs during streaming shows and movies.
Imagine taking the power of a classic TV commercial and combining it with the precision of digital marketing. That's CTV in a nutshell.
What Is Connected TV (CTV) Advertising?
At its heart, CTV advertising puts your message on the biggest screen in the home—the television. But instead of going through old-school cable, your ads are delivered through streaming services. It’s the perfect blend of the immersive, big-screen experience of TV with the smart targeting you get from online advertising.
This lets businesses like yours reach specific households while they're watching content on devices like Smart TVs, Roku, Apple TV, or even their gaming consoles.
This isn't just a fleeting trend; it’s a seismic shift in how we watch television. In the U.S. alone, CTV ad spending hit a massive $28.79 billion, and it's on track to jump to $46.89 billion by 2029. Why the explosion? Because that’s where the eyeballs are. A staggering 90% of U.S. households now use a CTV device every month. You can discover more insights about CTV statistics in recent industry reports.
Unpacking the Lingo: CTV vs. OTT vs. Linear TV
To really get a handle on this world, you need to know the key players. The terms can be a little confusing, but the differences are important.
Linear TV: This is your traditional television, delivered through a cable box or satellite dish. When an ad break comes on, everyone watching that channel sees the exact same commercial. Think scheduled programming.
Over-the-Top (OTT): This is a broad term for any video content streamed over the internet, no matter what device you're using. Watching Netflix on your phone or Hulu on your laptop? That's an OTT experience.
Connected TV (CTV): This is where it gets specific. CTV is a type of OTT. It refers to watching that internet-streamed content on an actual television screen.
The key takeaway: All CTV is OTT, but not all OTT is CTV.
This distinction matters because CTV advertising is laser-focused on that premium, lean-back living room environment where viewers are most relaxed and engaged. The ads aren't a small pop-up on a phone; they're a full-screen, cinematic experience. To dig deeper into how these ads are actually bought and sold, it’s worth checking out a guide to programmatic video advertising.
CTV vs. Linear TV vs. OTT At a Glance
Here’s a quick comparison of these key advertising terms to help you navigate the landscape.
Think of it this way: OTT is the "what" (streaming content), while CTV is the "where" (on the TV set). This table helps clarify why CTV is such a powerful and specific channel for advertisers.
How CTV Ads Actually Get on the Screen
Ever wonder how your ad magically shows up during a streaming movie on someone's smart TV? It’s not magic, but it is an incredibly fast, automated system that works a lot like a high-speed stock market for ad space. And it all happens in the blink of an eye.
The moment a viewer hits an ad break in their show, an auction begins. The streaming app sends out a bid request to a massive digital marketplace called an ad exchange. This request is packed with anonymous data about the viewer—things like their general location, what they tend to watch, and maybe some inferred interests.
This is a simplified look at how your ad travels from your campaign dashboard all the way to a viewer's living room screen.
This whole process highlights the real-time nature of CTV advertising, connecting the right ad to the right viewer in milliseconds.
The Lightning-Fast Ad Auction
So where do you, the advertiser, fit in? You’ll use a Demand-Side Platform (DSP). Think of this as your mission control, where you set your budget, decide who you want to reach, and upload your video ad. The DSP is what plugs into the ad exchange and does all the bidding for you.
At the same time, streaming publishers like Hulu, Peacock, or Tubi use a Supply-Side Platform (SSP) to put their available ad slots up for sale on that very same exchange.
In less than 100 milliseconds—literally faster than you can blink—the DSP analyzes the incoming bid request from the streaming service. If the viewer fits the audience profile you've targeted, the DSP places a bid. The highest bidder wins, and their ad is instantly beamed to the TV.
This whole automated, or "programmatic," system runs in real-time, which allows for incredibly efficient and precise ad placement. It's a world away from old-school broadcast TV, where the same commercial was blasted out to millions of people, relevant or not.
When it comes to buying this ad space, you generally have two paths you can take:
Direct Buys: This involves negotiating directly with a major publisher, like Disney+, to get guaranteed ad placement on their specific platform. It’s often the pricier option and offers less flexibility, but it ensures your ad appears in a premium, controlled environment.
Programmatic Buys: This is the more common approach, where you use a DSP to bid on ad space across thousands of different streaming apps and services. It gives you far more scale, better targeting control, and is much more cost-effective.
With streaming now officially grabbing the biggest piece of the TV-watching pie, getting a handle on this delivery system is crucial. You can see the latest numbers on the U.S. TV viewing share captured by streaming to get a sense of the scale. This automated ecosystem is precisely what makes connected TV advertising such a powerful and newly accessible tool for businesses of all sizes.
So, Why Should Your Business Care About CTV?
Now that we’ve covered the "what," let's get to the "why." The real magic of Connected TV advertising isn't just the tech—it's what that tech can do for your bottom line. Traditional broadcast TV always felt like shouting into a crowd and hoping the right person heard you. CTV is more like having a direct, personal conversation with your ideal customer, right in their living room.
This is a fundamental change from the old "spray and pray" method. Think about it: instead of buying an expensive ad spot that hits an entire metro area, a local business can now zero in on specific households in the zip codes that matter most. Every ad dollar is put to work reaching people who are actually likely to buy.
Reach an Audience You Can't Find Anywhere Else
A huge chunk of the modern audience has completely cut the cord with traditional cable. These are the "cord-cutters," and for many businesses, they've become unreachable ghosts. Linear TV can't find them. CTV is how you get back in front of this valuable, digitally-savvy group.
But it's not just about who you reach; it's about how you reach them. The viewing experience on CTV is fundamentally better for advertisers.
You Can't Skip It: The majority of ads on streaming platforms are built right into the content and can't be skipped. This naturally leads to incredible video completion rates—often over 90%. Your message actually gets delivered.
Full-Screen Impact: Your ad isn't a tiny banner on a phone; it fills the biggest, best screen in the house. This creates a much more immersive and memorable brand moment.
Real, Measurable Results: Forget the fuzzy estimates of old-school TV ratings. CTV advertising gives you clear, digital metrics. You can see precisely how many households saw your ad, how many times they saw it, and even track what they did next, like visiting your website.
The secret is out, and the industry is shifting fast. Nielsen's latest report on advertising trends found that 56% of global marketers are planning to spend more on CTV and OTT. It's quickly becoming a core part of the modern marketing playbook.
Unlocking Advanced CTV Targeting and Measurement
Once you stop treating TV like a broad billboard and start viewing it as a data-driven channel, everything changes. Connected TV blends the immersive pull of your living room screen with the precision we expect from digital campaigns.
Advanced Audience Targeting Methods
Imagine your local home renovation team wants to reach only homeowners actively planning a kitchen overhaul. Instead of a city-wide splash, you zero in on the right doors.
First-Party Data: Upload your own list of past clients or email subscribers. Build a custom audience that mirrors your best customers.
Third-Party Data: Homeowners who’ve just searched “kitchen remodeling” or browsed competitor sites? They pop up on your list.
Retargeting: Someone jumped onto your website last night? Serve them a compelling video ad on their TV that very same evening.
Measuring What Truly Matters
Reaching the right audience is only half the battle. You still need to prove your ads are driving action. Connected TV swaps vague Nielsen scores for hard, digital-style metrics—household by household.
The core benefit is accountability. You can directly measure how many viewers visited your website, scanned a QR code, or even walked into your physical store after seeing your ad.
Analysts forecast the global CTV market will top $100 billion by 2027. For a deeper dive into those numbers, check out this broadcast TV marketing statistics report.
If you’re hungry for more on tying eyeballs to outcomes, explore analytics in advertising. And when you’re ready to turn insights into ROI, our guide on effective advertising measurement has you covered.
Decoding the Costs of CTV Advertising
One of the biggest misconceptions about TV advertising is that you need a massive, six-figure budget just to get in the game. Connected TV completely changes that equation, making the big screen a realistic and scalable option for businesses of all sizes—especially local ones.
The way it's priced is refreshingly simple. Most CTV campaigns run on a Cost Per Mille (CPM) model. All that means is you pay a flat rate for every 1,000 times your ad is shown. This approach gives you predictable, direct control over your ad spend.
Understanding CPM Ranges
So, what does it actually cost to get your ad in front of a thousand people?
Typically, you can expect CTV CPMs to fall somewhere in the $25 to $65 range. Now, that might seem higher than what you'd pay for a social media ad, but you're buying a completely different kind of experience: a premium, non-skippable ad shown to a genuinely captive audience.
Several things can nudge that cost up or down:
Audience Specificity: The more granular you get with your targeting, the higher the CPM. Reaching homeowners in a specific zip code who recently searched for a roofer will cost more than simply targeting all adults ages 25-54 in a city.
Inventory Quality: Getting your ad on a top-tier streaming service like Hulu during a prime-time show will command a higher price than an ad on a smaller, niche app.
Geographic Location: It’s simple supply and demand. Bidding for ad space in a competitive market like New York City will naturally be more expensive than in a smaller town.
The real trick is to stop focusing only on cost and start thinking about efficiency. A $40 CPM that reaches your perfect local customers is infinitely more valuable than a $5 CPM that gets sprayed across a random, uninterested audience. You’re paying for precision, not just raw views.
Sample CTV Campaign Budget Scenarios
To put this into perspective, let's look at what different budget levels could achieve. This table gives a clear picture of how your investment translates directly into eyeballs on your ad.
As you can see, you don't need to break the bank to make a significant impact. CTV is a channel where you can start with a modest budget, test what works, and scale up your investment as you start seeing a real return—all without ever losing control of your costs.
How to Launch Your First CTV Campaign
Ready to get your brand onto the biggest screen in the house? Kicking off your first Connected TV campaign is a lot more straightforward than it might seem. It really just comes down to having a clear game plan, starting with what you want to achieve and ending with a clear view of how it all performed.
First things first: what does a "win" look like for you? Are you trying to get people to your website right now? Maybe you're focused on building brand awareness in a new part of town or pushing a specific product. This single decision drives everything else, from who you target to what your video ad actually says.
With your goals set, it's time to think about your audience. Who are you really trying to reach? CTV lets you go way beyond old-school demographics. You can target specific households based on their interests, what they do online, and even pinpoint them by zip code. This kind of precision means you're not wasting your ad spend on people who aren't a good fit.
Getting Your Ad Made and On the Air
Think of your video ad as your digital handshake. You’ve got to grab someone's attention in the first three seconds and get your message across quickly and clearly. The great news? You don't need a Hollywood-sized budget. In fact, a clean, professional, and concise ad almost always works best.
For a great step-by-step guide, you can learn how to create and air a TV ad for your business using Adwave.
Once your ad is ready, you need a way to get it on screen. This usually means working with a managed service partner or using a self-serve platform that puts you in the driver's seat.
Platforms like Adwave completely change the game here, especially for small businesses. Their AI can whip up a professional-looking video ad just from your website's URL. From there, the platform automatically handles all the complex stuff—placing the ad, making sure it runs at the right pace, and giving you easy-to-understand reports. It makes running a sophisticated CTV campaign a reality, even if you don't have a big marketing team or a dedicated media buyer.
Got Questions? We’ve Got Answers.
As we wrap up, let's clear up a few common questions that pop up when people first dive into CTV advertising. Think of this as a quick-reference guide to the essentials.
What's the Real Difference Between CTV and OTT?
This one trips people up all the time, but it's pretty simple.
OTT (Over-the-Top) is how the content gets to you—it’s delivered “over the top” of traditional cable, via the internet. Think of it as the service, like Netflix or Hulu.
CTV (Connected TV) is the device you watch it on. This is your smart TV, your Roku, your Apple TV, or your gaming console.
When you run CTV ads, you're specifically targeting that premium, big-screen experience in the living room.
Is This Actually Affordable for a Small Business?
Yes, absolutely. Forget the six-figure price tags of traditional TV ads. Programmatic CTV opens the door for businesses of any size.
Because you can be so precise with your targeting—down to specific zip codes or even household interests—you’re not wasting a dime on viewers who aren't your customers. A local business can launch a powerful, effective campaign for a few hundred or a few thousand dollars, reaching only the people who matter most.
How Long Should My Video Ad Be?
Stick to the sweet spots: 15 or 30 seconds.
Most ads on CTV platforms can't be skipped. Your job is to get in, make an impact with a clear and compelling message, and get out before the viewer's show comes back on.
Ready to bring the power of TV advertising to your business? With Adwave, you can create and launch a professional, targeted campaign in minutes, not months. Get started today at Adwave.com.