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How Does Connected TV Ad Inventory Work?

A recent survey found that almost 90% of U.S. adults own at least one connected TV (CTV), and half of them watch content on a CTV daily — so it’s no surprise that CTV ads have become one of the world’s fastest-growing digital marketing channels. 

As more consumers decide to cut the cord on traditional cable or satellite TV, advertisers who want to reach a larger audience will need to adapt to this new, connected landscape. 

But how does connected TV advertising work? Learn about what types of ad inventory are available, how advertisers bid on and purchase CTV ads, and how ad campaigns are organized and delivered on connected TVs.

What Is CTV Ad Inventory?

Connected TV ad inventory is the collection of ad spaces available for purchase on connected TV devices, such as smart TVs, streaming media players, and gaming consoles. 

By purchasing ad inventory on these devices, advertisers can display their ads to users who are streaming video content, making this practice an effective way to reach a large, targeted audience. 

How Is This Inventory Accessed? 

How can advertisers purchase this ad inventory? There are four primary channels, each with its own pros and cons:

Direct Deals

Some CTV platforms allow advertisers to negotiate deals directly with individual publishers and content providers to purchase ad inventory. This avenue can be ideal for advertisers who have highly specific requirements for their ad campaigns, such as precision targeting of audiences or placements. 

Because direct deals allow custom terms and pricing arrangements to be set, this approach can offer more flexibility and control over other options. However, it also means that buying a large number of ad placements can quickly become a time-consuming and resource-intensive venture. 

Ad Networks

Advertisers can also access CTV ad inventory through ad networks, which act as middlemen between marketers and content providers. 

This approach allows advertisers to access inventory for multiple sources through a single platform, which makes it great for reaching a diverse audience and accessing a wider range of digital (and even traditional) publishers.

The main draw of ad networks is their convenience. In addition to the broader pool of publishers, ad networks typically operate on a cost-per-mille (CPM) basis, which means that advertisers can expect to pay a fixed rate for every 1,000 ad impressions. 

While ad networks allow marketers to avoid the hassle of individually negotiating deals, this approach requires sacrificing a certain amount of targeting and control over ad visibility, placement, and frequency. 

Demand-Side Platforms (DSPs)

DSPs are software platforms that allow advertisers to purchase ad inventory in real time via automated auctions. These platforms connect to ad exchanges where publishers make their inventory available. When an exchange receives a request for an ad to be displayed, it sends that request to multiple DSPs simultaneously. 

The DSPs then bid on the ad inventory based on factors like target audience, ad placement, and maximum bid set by the advertiser. 

Like ad networks, one of the benefits of DSPs is the wide range of inventory that is available to advertisers. Another benefit is that DSPs generally offer integrated tracking and analytics tools that can help further optimize campaigns and allow advertisers to evaluate ad performance and gather additional insights. 

Private Marketplaces (PMPs)

PMPs are invitation-only platforms that allow advertisers to purchase ad inventory directly from specific publishers or content providers. 

These platforms are typically set up by publishers to offer more exclusive ad inventory to select advertisers. They create a curated selection that can be particularly appealing to advertisers who are looking for higher-quality placements and more flexibility than open auction formats offer. 

However, it’s important to note that the same exclusivity that makes PMPs so attractive can also be a barrier to entry: Advertisers must usually be invited directly by a publisher, and they may have to meet certain criteria or commit to specific spend levels in order to participate. 

PMP ad inventory is also generally more limited than other options, which can make it challenging for advertisers who are dead-set on certain ad placements. 

Recent connected TV trends make it clear that the cord-cutting movement is here to stay — and that there is enormous potential for advertisers who are willing to learn and leverage the unique ins and outs of these platforms and their approaches to securing ad inventory. 

The decision to purchase inventory via open market auctions or through direct deals will ultimately depend on the specific goals of your ad campaigns, but each of these approaches has its place in any CTV advertiser’s toolbox. 

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