CTV a Growing Trend to Watch for Digital Advertising in Latam

Today, any conversation about what’s hot in digital advertising must mention connected TV (CTV). Although it is already part of our daily lives and growing in importance in the advertising industry, some executives may not have heard about this seemingly essential tool and how it can be used in a marketing strategy. 

CTV refers to any TV set connected to the internet, most commonly used to stream video. As well as encompassing smart TVs, the term also refers to TVs connected via set-top boxes, TV sticks and even gaming consoles. So, if you’re streaming video content from a Roku device, a Sony smart TV, or a PlayStation, you’re using connected TV.

With the rise in popularity of CTV, marketers now recognize it as a top advertising platform. Trends show that it’s here to stay and specialists should already be looking at how to take advantage of the channel for their marketing campaigns. But why is CTV one of digital advertising’s fastest-growing channels and where is CTV advertising heading in Latin America? 

CTV Advertising in Numbers

In 2021, spending on CTV advertising in the US was valued at US$14.19 billion, according to Statista. The market research platform recognizes that it is a growing trend, combining the ease of online advertising and reach of TV. The study shows that, at its current pace, CTV ad spend is expected to grow to US$38.83 billion by the end of 2026.

The Latin American market is not far behind. A survey carried out last year, also by Statista, among internet users from selected countries in the region who watched TV, found that 58 percent of respondents from Mexico took some action after viewing CTV ads; 52 percent in the case of Brazilians and 45 percent of Argentinians. 

As a reference for the whole industry in the region, the eMarketer numbers regarding digital ad spending in Latin America are highly revealing. While the 2022 forecast for worldwide average ad spending growth is 15.6 percent, six out of the 10 fastest-growing digital ad markets, surpassing this number, are located in the Latin America region. The list includes Argentina, with an impressive 64 percent, followed by Colombia, with 44 percent, Peru, with 36 percent and Mexico occupying the sixth position, with 29 percent. 

Future of CTV Advertising in Latin America

CTV is likely to continue growing quickly, thanks to larger audiences and viewer demographics, rich storytelling possibilities in a medium poised to capture consumer attention, and evolving measurement capabilities that will make CTV a go-to for both brand and performance marketing. These are the factors that must be considered to have a better understanding of how CTV can work for a marketing strategy:

1. CTV viewership and generational behavior

There are two main groups driving CTV adoption: cord-nevers and cord-cutters. Cord-nevers include the young people, mostly Gen Z and millennials, who have never paid for cable and are accustomed to watching TV on digital devices. As those young consumers start their own families and become heads of households, many are opting for CTV, not cable, as they seek to watch their favorite programs on a larger screen.

On the other hand, cord-cutters are often older viewers used to traditional TV who are consciously making the switch to cheaper delivery methods. Plus, with CTV, audiences can become more targeted in the programs to which they buy access, prioritizing channels of their choice.

The last key point to understand about CTV viewership is that it is not just premised on evangelism of a new technology but on a widespread transition from the old way (linear) to the new. This means CTV viewership is likely to grow even during an economic downturn because it does not depend on convincing consumers that they need an entirely new product; CTV delivers a similar product with a more curated selection of content via cheaper, on-demand delivery.

2. Rich storytelling possibilities

CTV is growing so fast as an advertising channel because it provides a powerful medium for storytelling and has several advantages in getting the viewer’s attention. 

First, screen size matters. It is much easier to get the viewer’s attention and drive ad recall on a 40-inch television screen than on a mobile device. Audio also helps CTV advertising cut through the clutter, as sound is almost always on when viewers are watching CTV.

Second, consumers routinely watch CTV with their friends, families, and colleagues. CTV viewers are ready to hear, discuss, and share stories, amplifying the value of advertising on the channel. So, CTV advertising fosters a social experience, which can increase its efficacy by orders of magnitude over similar messaging in isolated environments.

Finally, consumers are more tolerant toward advertising in a TV context than on mobile or desktop. That’s because on the latter devices, consumers are generally trying to get tasks done, and advertising can get in the way. But when watching TV, viewers are generally in a relaxed, entertainment-oriented mindset, so advertisers can expect a more receptive audience.

3. Evolving measurement capabilities

The third factor for CTV advertising’s growing popularity is that it offers a rare opportunity to combine powerful brand storytelling with the granular measurement of performance channels. There are a few elements to this performance story.

For one, audience targeting is much more precise on CTV. Audiences make conscious, active decisions about what to watch. They are more critical and engaged, so advertisers can be confident that when they purchase ads against a specific kind of programming, they are targeting viewers more likely to be in the market for their products and services. Plus, the fact that CTV audiences are active consumers allows CTV platforms and streaming services to generate massive amounts of first-party data, which advertisers can use to target viewers.

This more engaged, conscious viewership also comes with the possibility of interactivity. QR codes, for example, are making CTV ads interactive, allowing viewers to respond directly to what they see on screen. Ultimately, CTV advertising will become much more of a two-way conversation as consumers buy items not only via shoppable ads but also by interacting with the content they are watching. For example, viewers may be able to buy clothing their favorite TV character is wearing.

World Cup and CTV in Latin America

For the Latin American market, CTV is a new way to reach and interact with consumers where they are with rich stories and to more effectively measure the performance of TV ad campaigns. I expect that CTV will grow faster next year from the momentum of the FIFA World Cup in November, which also happens to overlap with the tail end of the Buen Fin holiday, officially kicking off the shopping season.  

As one of the most popular and widely watched sporting events in the world, The World Cup will be a golden opportunity for big advertisers and sponsors in Latin America to use CTV ads during the tournament to target a highly engaged audience and measure correctly its impact on the market. It will also serve as proof points for other brands looking to start using CTV campaigns in their marketing and digital media plans.