CTV Advertising: What Is Connected TV and How Does It Work in 2025
Your grandmother watches Netflix on her smart TV. Your teenager binges YouTube TV on their laptop. Your coworker streams Hulu during lunch breaks on their tablet. What do they all have in common? They're prime targets for one of the most powerful advertising formats available today, and most marketers are barely scratching the surface of its potential.
Connected TV advertising isn't just traditional TV advertising with a digital twist. It's a completely different animal that combines the visual impact and attention-grabbing power of television with the precision targeting and real-time optimization that digital marketers have come to expect. When a viewer settles in to watch their favorite show on Netflix, Hulu, or any streaming platform, they're entering an advertising environment where every impression can be measured, every audience segment can be precisely targeted, and every dollar spent can be tracked back to actual business outcomes.
Here's what most marketers miss: streaming now accounts for more viewing time than traditional broadcast TV, yet many are still treating CTV like an experimental side channel rather than the core media opportunity it has become.
This article talks about connected TV advertising to give you the practical knowledge you need to succeed in 2025. We’ll go over how this technology actually works behind the scenes, why it's becoming the go-to choice for brands that demand both reach and accountability, and most importantly, how to build CTV campaigns that deliver real business results instead of vanity metrics.
Connected TV blends the scale of television with the precision of digital, delivering targeted, measurable advertising on streaming platforms.
CTV ads run on internet-connected devices like smart TVs, Roku, and game consoles, reaching audiences through services like Hulu and YouTube TV.
Advertisers can target by demographics, behavior, geography, and content, serving relevant ads to individual households in real time.
CTV offers benefits like higher ad completion rates, lower waste, and better attribution compared to traditional TV.
Creative best practices include front-loading key messages, using clear calls to action, and designing for sound-on, large-screen viewing.
Good Kids helps brands unlock CTV's full value with tailored strategies, high-impact creative, and campaign execution that drives measurable results.
What Is Connected TV (CTV)?
Connected TV refers to any television that can stream video content through an internet connection. This includes smart TVs with built-in streaming capabilities, external devices like Roku or Amazon Fire TV, gaming consoles like PlayStation and Xbox, and even Blu-ray players with streaming features. Unlike traditional linear TV that follows a broadcast schedule, CTV allows viewers to watch what they want, when they want it.
The distinction between CTV and OTT (Over-The-Top) often confuses marketers. While OTT refers to the content delivery method, streaming video directly to viewers via the internet, CTV specifically describes the device used to watch that content on a television screen. In practice, when advertisers talk about CTV advertising, they're referring to ads served on television screens through streaming services.
The CTV Ecosystem: Key Players and Platforms
The streaming landscape includes ad-supported services like Hulu, Peacock, Paramount+, Tubi, and Pluto TV. Device manufacturers dominate market share, with Roku controlling 48%, Amazon Fire TV at 28%, and Apple TV holding 8.5%. Hybrid platforms such as YouTube TV, Sling TV, and FuboTV combine live and on-demand content, while publisher direct options include Disney+, Max, and Netflix with their ad-supported tiers. Free Ad-Supported TV (FAST) channels offer linear-style programming with advertisements.
The rapid adoption of CTV has created a complex but opportunity-rich ecosystem. In 2022, 111 million U.S. households interacted with connected TVs monthly, with projections showing 121 million households by 2027. This expanding audience presents significant opportunities for brands to reach engaged viewers in premium environments.
How CTV Advertising Works
CTV advertising combines the storytelling power of television with the targeting precision and measurement capabilities of digital advertising. When a viewer watches content on a streaming service, ads are dynamically inserted based on various targeting parameters — from basic demographics to sophisticated behavioral and contextual signals.
The Technical Process
CTV advertising operates through programmatic technology that automates the buying and selling of ad inventory. The process begins when streaming services make ad slots available through supply-side platforms (SSPs). Demand-side platforms (DSPs) then identify relevant audiences based on advertiser criteria, leading to real-time bidding where advertisers compete for impressions in milliseconds as content loads. Winning ads are served to specific households or devices, with performance data flowing back for continuous optimization.
Unlike traditional TV where everyone watching the same program sees the same ads, CTV enables different households watching identical content to see completely different commercials based on their profiles and behaviors.
Targeting Capabilities That Transform TV Advertising
CTV's targeting arsenal includes demographic parameters like age, gender, income, and education level. Geographic targeting ranges from national campaigns down to hyperlocal zip code level. Behavioral targeting leverages viewing habits, purchase history, and online activity to find the right audiences. Contextual targeting matches ads to content genres or specific programs, while retargeting reaches viewers who've previously interacted with your brand. Lookalike audiences help find new viewers similar to your best customers.
This precision targeting ensures ads reach the right viewers at the right time. A luxury automotive brand can target high-income households interested in premium vehicles, while a local restaurant chain can focus solely on viewers within their delivery radius.
The Strategic Advantages of CTV Advertising
The numbers tell part of the story, but the real power of CTV advertising lies in capabilities that traditional TV and digital display simply can't match.
1. Precision at Scale
Traditional TV forced brands to choose between reach and relevance. CTV eliminates this trade-off. Advertisers can now reach millions of viewers while ensuring each impression goes to a relevant household. With over 200.1 million connected TV users in the U.S., brands access massive scale without the waste inherent in linear TV buying.
The efficiency gains are substantial. Where traditional TV might achieve 40-50% on-target delivery, CTV campaigns regularly hit 75-85% accuracy. This precision translates directly to better ROI; brands report 39% average revenue growth in their first year of CTV advertising according to data from performance TV platforms.
2. Premium, Engaged Audiences
CTV viewers actively choose their content, creating a more engaged viewing experience than passive channel surfing. Completion rates for CTV ads average 95%, compared to 65-70% for traditional TV. This engagement stems from several factors:
Viewers can't skip CTV ads like they can fast-forward through DVR recordings. The lean-back nature of TV viewing means audiences are more receptive than when browsing on mobile devices. Premium streaming content creates positive associations that transfer to advertiser messages.
Research shows 72% of viewers remember specific CTV ads they were served, significantly higher than other digital formats. This recall translates to action; 32% of U.S. viewers used their CTV devices to complete a purchase after viewing an ad.
3. Measurable Performance and Attribution
CTV transforms TV from a branding channel to a performance marketing powerhouse. Advanced measurement capabilities include view-through attribution to track actions taken after ad exposure, cross-device tracking to follow the customer journey across screens, and incremental lift studies to measure true impact versus control groups. Real-time optimization allows campaigns to adjust based on performance data, while closed-loop measurement connects ad exposure to actual sales.
Marketing analytics for CTV provide insights previously impossible with traditional TV. Brands can see not just who watched their ads, but what actions viewers took afterward, from website visits to store purchases.
4. Flexibility and Agility
Unlike traditional TV's rigid upfront commitments and fixed schedules, CTV offers unprecedented flexibility. Campaigns can start with budgets as low as $5,000 versus $50,000+ for traditional TV, launch in days rather than weeks, and pause, adjust, or scale instantly based on performance. Advertisers can test multiple creative versions simultaneously and optimize targeting parameters in real-time.
This agility enables test-and-learn approaches impossible with linear TV. Brands can experiment with different messages, audiences, and strategies without massive upfront commitments.
CTV Ad Formats and Creative Opportunities
The strategic value aside, the real creative potential emerges when you see what's actually possible within the CTV advertising ecosystem.
Standard CTV Ad Formats
The foundation of CTV advertising remains the traditional video commercial, but with enhanced capabilities. Fifteen-second spots work ideally for brand awareness and simple messages, while 30-second spots remain the standard for storytelling and product demonstrations. Sixty-second spots allow for deep dives into complex products or emotional narratives.
But CTV's interactive capabilities create opportunities beyond passive viewing:
Interactive and Shoppable Formats
Modern CTV formats include clickable overlays where viewers can click for more information using their remote, QR codes that viewers scan with smartphones for instant engagement, and shoppable videos that enable purchases directly through the TV interface. Choose-your-own-adventure formats let viewers select which content to see next, while pause ads offer non-intrusive messages that appear when viewers pause content.
A subscription streaming service used shoppable ad formats to drive direct sign-ups, resulting in 30% growth in monthly subscribers. These interactive elements transform TV from a one-way medium to a two-way conversation.
Creative Best Practices for CTV Success
Front-Load Your Message: Capture attention in the first 3 seconds
Design for Sound-On: 95% of CTV viewing happens with audio
Optimize for TV Screens: Ensure text and graphics are legible from across the room
Include Clear CTAs: Tell viewers exactly what action to take
Test Multiple Versions: Use CTV's targeting to optimize creative performance
Good Kids' approach to video production recognizes that CTV creative must balance TV's premium standards with digital's performance focus. We create modular content systems that work across CTV, social, and digital, maximizing production value while maintaining flexibility.
CTV Advertising Challenges and Solutions
CTV advertising delivers impressive results, but smart marketers know that every powerful tool comes with its own set of obstacles to navigate. If this is your first time researching CTV advertising, here are some challenges you need to keep in mind.
1. Fragmentation Across Platforms
With content spread across dozens of streaming services, reaching audiences at scale requires working within a complex landscape. Each platform has different capabilities, requirements, and audience compositions.
Successful advertisers work with DSPs that aggregate inventory across platforms, develop creative that works across different technical specifications, build frequency caps to avoid overwhelming viewers across services, and use unified measurement solutions to track cross-platform performance.
2. Brand Safety and Ad Fraud Concerns
40% of marketers cite brand safety as a concern with CTV advertising. While CTV environments are generally more controlled than open web advertising, challenges remain around invalid traffic from bot-generated impressions that waste budget, content misalignment when ads appear next to inappropriate content, and frequency bombardment when viewers see the same ad repeatedly.
Partnering with reputable platforms and using verification services helps ensure ads appear in brand-safe environments. Premium publishers offer more control but at higher CPMs.
3. Measurement Standardization
While CTV measurement surpasses traditional TV, the industry lacks unified standards. Different platforms report metrics differently, making cross-platform comparison challenging.
Key considerations include focusing on business outcomes rather than vanity metrics, using consistent KPIs across all CTV campaigns, implementing server-side tracking for accurate attribution, and working with partners who provide transparent reporting.
How to Build Your CTV Advertising Strategy
Knowing the landscape is one thing, turning that knowledge into campaigns that actually move the needle requires a systematic approach.
Start with Clear Objectives
Successful CTV campaigns begin with specific goals aligned to business outcomes. Brand awareness campaigns reach new audiences with memorable creative. Consideration campaigns drive website visits and content engagement. Conversion campaigns generate leads, sales, or app downloads. Retention campaigns re-engage existing customers with new offerings.
Different objectives require different approaches to targeting, creative, and measurement. A brand awareness campaign might prioritize reach and frequency, while a conversion campaign focuses on precise targeting and strong CTAs.
Audience Strategy: Quality Over Quantity
CTV's targeting capabilities tempt advertisers to over-segment audiences. Instead, focus on meaningful segments that align with business goals.
Start broad by testing wider audiences to identify top performers. Analyze performance using data to learn which segments respond best. Refine targeting by narrowing focus to highest-value audiences. Scale winners by increasing investment in proven segments while continuing to test and reserve budget for discovering new audiences.
Budget Allocation and Media Planning
CTV budgets vary widely based on goals and markets. Test budgets typically range from $5,000-10,000 monthly for initial learning. Regional campaigns require $25,000-50,000 for meaningful reach, while national campaigns need $100,000+ for scale and frequency.
Consider these factors when planning budgets:
Key Budget Considerations:
CPM Ranges: $15-30 for broad targeting, $30-50+ for premium/niche audiences
Frequency Goals: 5-10 exposures typically needed for action
Creative Production: Budget 10-20% of media spend for creative development
Testing Reserve: Allocate 20% for experimenting with new tactics
Seasonal Fluctuations: Q4 CPMs can be 30-50% higher due to demand
Closing Thoughts - Doing Your CTV Advertising the Right Way
The shift to CTV isn't coming; it's here. With 85% of households using connected devices and ad-supported streaming growing rapidly, brands that aren't exploring CTV risk missing their audiences entirely. But launching a successful campaign requires more than just moving TV budgets online. It demands new thinking about creative, targeting, and measurement.
Executing CTV advertising properly requires blending traditional TV craft with digital performance expertise; exactly where Good Kids excels. Our approach to CTV campaigns reflects our broader philosophy: creative that connects, strategy that performs, and execution that delivers.
Our strategic planning identifies the right platforms, audiences, and approaches for your goals. Creative development produces TV-quality content optimized for CTV performance. Campaign management handles everything from setup through optimization to reporting. Performance analytics provide clear insights into what's working and why, while integrated campaigns connect CTV to broader marketing efforts.
We've helped brands achieve 40-60% better performance than industry benchmarks by focusing on creative that earns attention rather than interrupting it. Our production capabilities ensure your CTV ads meet premium standards while our strategic approach maximizes every dollar invested.
