Contrary to popular belief, the bulk of CTV ad spending is still manual. According to FreeWheel, 68% of connected TV spending in 2023 went to direct insertion orders, 25% to programmatic guaranteed, and only 7% towards auction-based, non-guaranteed deals like PMPs and the open exchange.  Digiday estimates that as much as 70% of CTV inventory is traded manually, often during upfront negotiations.

Pricing is usually the issue when it comes to buying upfront inventory, especially when advertisers seek to apply their preferential inventory rates from linear TV to the CTV space.

Why? From the network’s standpoint, CTV represents a distinct ecosystem with its own audience, delivery mechanisms, and measurement capabilities. Therefore, the networks argue, CTV advertising shouldn’t be tied to legacy linear TV rates and should be evaluated separately. So, advertisers seeking to migrate their preferred linear TV rates to CTV may face resistance from networks looking to establish new pricing structures.

To avoid pricing issues, media buyers sometimes seek out programmatic buying of CTV as a good alternative. In fact, research shows that in 2022 connected TV accounted for over 20% of all programmatic video ad spending and about 10% of programmatic digital display. In other words, CTV ad inventory is increasingly flowing through programmatic pipelines.

However, programmatic buying has its flaws:

  • Publishers lack transparency. According to eMarketer, the biggest challenge advertisers face when buying CTV inventory is a lack of transparency. Multiple vendors can sell the same inventory. These vendors typically don’t talk to each other and instead conceal inventory behind closed walls, leaving advertisers blind as to where their ads are running.
  • Less control over the ad buy: Programmatic CTV buying often relies on algorithms and automated systems to make ad placements. This can result in less control over the specific placements and timing of ads. Advertisers may have less influence in determining where their ads appear, which can affect ad performance and brand alignment.
  • Brand safety: Advertisers need to ensure that their ads are shown in appropriate and brand-safe environments. However, due to a lack of transparency in programmatic buying, there is a risk of ads being displayed alongside inappropriate or objectionable content.
  • Ad tech fees: In the programmatic advertising ecosystem, multiple vendors and intermediaries add fees and markups to transactions. Advertisers and publishers end up paying multiple markups for the same campaign, driving up costs and potentially exceeding the actual value of the media being purchased.
  • Accurately determining KPIs: CTV advertising spans multiple platforms and publishers, making it difficult to measure campaign performance consistently and accurately. To solve this, ad tech vendors are building robust measurement and attribution solutions to better track and analyze the effectiveness of CTV campaigns.
  • Ad fraud: The lack of transparency in the CTV advertising ecosystem makes it challenging to identify and prevent ad fraud effectively. Advertisers often have limited visibility into specific placements and inventory sources, making it easier for fraudsters to exploit loopholes.

Premium versus non-premium CTV inventory: What’s the difference?

Premium is a bit of a buzzword in the connected TV space. Marketers seek out premium inventory to reach premium audiences. Publishers advertise themselves as a premium supplier. But what exactly is premium connected TV inventory? The criteria for labeling inventory as premium varies from publisher to publisher, but there are some common themes.

Non-premium CTV inventory refers to ad placements in less popular or niche content, often from smaller or independent publishers. Non-premium inventory may include long-tail or user-generated content that may not have the same level of viewership or established brand recognition. Examples include independently owned FAST channels like Pluto.

  • It’s important to note that FAST channels are different from AVOD. FAST channels are always free, while AVOD models can charge a fee. Plus, FAST channels include linear programming, unlike AVOD.

Premium CTV inventory generally refers to ad placements within high-quality, sought-after content, typically from reputable publishers or premium streaming platforms. This inventory is typically hidden behind a paywall, signaling that audiences are willing to pay for said content. Examples include streaming services like Hulu and Peacock.

  • Performance is another indicator of whether inventory is premium. Premium is the same thing as performance. Premium inventory has a demonstrated ability to convince consumers to buy a product.
  • Advertisers not only seek out premium inventory to reach premium audiences, but also to mitigate brand safety concerns. Marketers agree that advertising along premium content is safer than user-generated content — which typically falls under non-premium inventory.

Tip: A common misconception is that premium connected TV inventory is the only way to effectively reach your target audience. While hit shows and primetime spots are attractive, there are more efficient ways to reach your target than exclusively focusing on expensive premium shows. Break out of the old-fashioned dichotomy by expanding your buys to wherever your audience is watching — premium or not. FAST channels, for instance, are a great place to reach your target audience, despite being thought of as non-premium.