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CTV History: The Evolution of TV Advertising and Its Game-Changing Impact

Kateryna Metsler
Kateryna Metsler  |  Senior Growth Marketer: Content/SEO
Published: Sep. 18, 2024
CTV

The Fight for Prime Time – How CTV Changed the Game

Once upon a time, the battle for prime-time ad slots was everything. If you missed the chance to buy an ad during the latest hit TV show, you missed your moment. This was the world of linear TV. But then, a Connected TV appeared, and everything changed. Connected TV didn't just offer advertisers a new opportunity—it completely rewrote the rule book. Linear TV still holds value, but CTV is now the leader. Let's look at how CTV emerged, developed, and became a game-changer in advertising.

More on how the industry has changed over the last 40 years, you can find in the Historical Overview.

The Dawn of Connected TV (1990s – 2000s)

The origins of Connected TV go back quite far. Unlike traditional scheduled TV, TV and video distributors have always been interested in delivering content to viewers on demand. As early as the 1980s and 1990s, there were attempts to build the technology to compress video and give it directly to television sets. Still, the file sizes were large, and compression technology was limited. A famous project from the early 1990s was Time Warner's Orlando Project (an initiative to create an interactive television service), which was expensive but laid the groundwork for how video on demand would function.

Around the same time, the concept of "intelligent television" started to take shape. Integrating data and TV was born, but it was still a distant dream.

By the mid-2000s, brands like Samsung introduced smart TVs, finally connecting televisions to the Internet. It wasn't long before users could stream content from the web, transforming how we consumed entertainment.

Key milestones:

  • 1990s: Time Warner's Orlando Project and the first patents for "intelligent" TVs
  • Samsung and others began releasing smart TVs with internet capabilities

These early innovations paved the way for today's sophisticated targeting capabilities. Advertisers should recognize that CTV's foundation lies in the technology designed to make TV interactive, laying the groundwork for more personalized and engaging ad experiences.

The Streaming Revolution (2007 – 2010)

The actual turning point came with the rise of streaming giants. When Netflix launched its streaming service in 2007, it wasn't just a new way to watch—it was the beginning of a new era in entertainment. YouTube followed closely, allowing users to create and consume content.

The term "OTT" (over-the-top) was coined, signaling the shift from traditional TV to internet-driven video content. The old rules were gone, and advertisers began to see the potential for a new, more dynamic way to reach viewers.

Key milestones:

  • 2007: Netflix launches its streaming service.
  • 2010: OTT becomes a recognized term for internet-delivered content.

Streaming services fundamentally shifted how audiences consumed content, moving them away from traditional TV. Advertisers who embraced streaming early on gained access to more engaged, tech-savvy viewers. Lesson: Staying agile and embracing new platforms offers a competitive edge.

As more people cut the cord, advertisers should allocate budgets to CTV to reach younger, cord-cutting audiences that can't be found on linear TV.

CTV Advertising Takes Off (2010s)

Advertisers began experimenting with CTV as a new channel as more households adopted smart TVs and streaming devices. Programmatic advertising—the automated buying and selling of ad space—emerged, making CTV ads more accessible and efficient. It was no longer about fighting for prime time but reaching the right person at the right time, wherever they were.

Key milestones:

  • Early 2010s: Programmatic advertising technology emerges, revolutionizing ad buying.
  • 2012: 12 million U.S. households now have connected TVs.

Programmatic advertising unlocked the ability to reach highly targeted audiences, bringing greater efficiency to CTV ad buying. Advertisers now have access to real-time campaign optimization, improving reach and relevance.

With programmatic, advertisers can now deliver tailored messages to segmented audiences. Analyzing campaign performance in real time allows brands to adjust creatives and targeting for better ROI.

Streaming Goes Mainstream (2015 – 2020)

By 2015, CTV was no longer a niche market. Viewership surged as streaming services like Hulu, Amazon Prime, and Disney+ entered the scene.

However, the transition from DVDs and traditional TV to streaming was slow. The growth accelerated, especially in non-US markets where other challenges, like national telecommunications companies controlling access, played a role. Streaming exploded with more connected TV hardware and infrastructure improvements around 2017-2018.

Advertisers quickly followed, reallocating budgets to CTV. Enhanced targeting capabilities allowed brands to deliver personalized ads, making CTV a must-have for marketers looking to connect with their audiences meaningfully.

Key milestones:

  • In the mid-2010s, CTV viewership skyrocketed, and advertisers began investing heavily.
  • 2020: Over 50% of U.S. households use smart/connected TVs.

With CTV's increasing popularity, the key to success is balancing reach and personalization. Target broad audiences for brand awareness while using first-party data for precision targeting.

As CTV becomes a primary consumer platform, advertisers can engage with specific segments at scale. Brands need to develop strategies that combine brand-building with direct-response tactics, a concept known as "brandformance."

Covid-19 Accelerate CTV (2020 – Present)

As billions stayed home, they turned to their connected TVs for entertainment, leading to a boom in CTV advertising. Ad innovations like shoppable TV ads—where viewers can buy products directly from their screens—took off, and CTV ad spending surged.

But Covid-19 was more of an accelerant than a game-changer. The shift towards streaming was inevitable, and Covid-19 just sped things up. Capital markets, investors, and Wall Street also saw the potential of companies like Netflix and Amazon, and this investment fueled growth. Without COVID-19, we may have seen a 1-2 year delay, but we were already on this path.

Key milestones:

  • 2020: The pandemic leads to a significant spike in CTV usage and ad spending.
  • 2021 and beyond, CTV continues to grow as traditional TV viewership declines.

COVID-19 drove the transition from linear to CTV faster than anticipated. Advertisers who adapted quickly reaped the benefits of increased viewership.

CTV's Evolution – From Niche to Necessity

The evolution of Connected TV is more than just a shift in how people consume content—it's a complete transformation of how advertisers reach and engage with audiences. With advanced targeting, programmatic buying, and interactive features, CTV offers brands unprecedented personalization and real-time optimization opportunities.