Demystifying the Differences Between Linear TV and CTV

A version of this was originally featured on ANA.

The general perception that traditional TV viewing is in decline overlooks a key point that marketers need to pay attention to: far from being obsolete, linear TV advertising is actually reaching new audiences through connected TV (CTV) platforms.

Linear TV is no longer a single, steady format; it has grown and changed, with linear TV advertising effectively merging into digital experiences due to the proliferation of audience viewing options, particularly around linear-like digital consumption. For marketers, this evolution means that to thrive in the future world of TV is not just about being proficient in the CTV advertising space but also in the nuances of linear TV. Brands will need to know how to tap into TV's fragmented audience effectively. Ignoring this interconnectedness risks missing out on a significant segment of the TV audience, because a majority of ad opportunities coming through these linear-like streaming experiences are fulfilled through the linear TV pipes, with only a small portion fulfilled through the CTV pipes.

But what exactly constitutes linear and non-linear in this new landscape? Is it the device, the programming content, the consumer experience, or the ability to run addressable advertising? To find the answer, marketers need an understanding of how the same content is distributed differently across platforms.

The Evolving Television Landscape

In the early stages of television history, audiences relied on broadcast TV, accessing live linear channels through over-the-air transmissions and experiencing linear content in a scheduled manner. The introduction of cable and satellite subscriptions brought a new dimension, with content transmitted through dedicated boxes, further exploding consumer choice on traditional TV.

The evolution of the TV industry saw the emergence of streaming platforms like TV Everywhere (TVE), blurring the distinction between traditional linear TV and digital streaming. With the introduction of virtual multichannel video programming distributors (vMVPDs) and free ad-supported streaming television (FAST), these boundaries have further blurred, creating a complex TV environment.

Making Sense of the Alphabet Soup

Understanding the terminology is critical. TVE enables streaming of linear content on internet-connected devices, while vMVPDs (e.g., YouTube TV, Sling TV, Hulu+Live TV) combine linear and streaming. FAST offers free streaming channels beyond traditional systems. However, there needs to be more consistency in how TVE, vMVPDs, and FAST are classified, often grouped as streaming despite delivering live linear content.

FAST encompasses free streaming apps replicating traditional TV (i.e., FAST apps) such as Pluto TV, Tubi, Roku Channel, and Plex, among others, and time-scheduled channels within streaming services (i.e., FAST channels) that are typically comprised of shows from older content libraries.

An example of this complexity is the difference between the NBC App, a TVE service requiring a traditional TV subscription, and Peacock, a streaming service that doesn't need a standard TV subscription but offers its service using subscription and ad-supported models. Both provide some shows accessible as video-on-demand (VOD) but differ in the live scheduled programming that's available. For instance, Peacock doesn't provide the same live, linear channel feeds found on cable or satellite TV but instead offers curated 24/7 show feeds as FAST channels, such as the single-show FAST channel dedicated to the long-running 1980s program Unsolved Mysteries, contrasting with the live-streaming feature of NBC App that includes traditional channels such as Bravo and SYFY. While TVE apps like NBC App started as a way for cable and satellite subscribers to access content while traveling, it also became a way for cord-cutters to access live linear programming by using shared passwords of friends and family who are subscribers.

The Interconnected Ecosystem of Ad Consumption

Layered onto the intricate relationships between content, channels, and apps is the allocation of advertising rights, further complicating the television landscape. In the traditional linear advertising model, distributors typically monetize 10 percent to 15 percent of ad space, while programmers command 85 percent to 90 percent. As these feeds transition to TVE and virtual vMVPDs apps, viewers witness the same 14 minutes of national advertising by programmers, with the remaining two minutes sold by the app owner, often labeled as streaming ads. For example, watching a scheduled episode of Below Deck on the Bravo Channel via the YouTube TV app involves streaming a live linear feed via the vMVPD app. NBC/Bravo generally monetizes 85 percent with national linear ads, and Google/YouTube sells the remaining 15 percent as streaming ads.

The overlap between linear and streaming TV complicates advertising strategies. Cord-cutters, traditionally seen as outside the reach of linear advertising, can still be targeted through linear ads on TVE and vMVPD streaming apps. These ads appear on live scheduled linear channels within streaming platforms, challenging media planners. Buying a national linear spot might also place ads within streaming environments, further blurring lines due to inconsistent industry definitions.

The common belief that streaming is overtaking linear TV overlooks the hybrid nature of platforms like TVE, vMVPDs, and FAST, all of which provide live linear content via streaming apps. Additionally, this view doesn't differentiate between ad-supported and ad-free streaming, a crucial distinction for marketers.

Data analysis reveals insights into ad viewing habits. For example, Nielsen's Gauge report from September 2023, which excludes vMVPD data, shows broadcast and cable making up 52.8 percent of viewing time, with streaming at 29.8 percent. However, this includes ad-free content and doesn't account for low ad load environments. Using Simulmedia's TV+ platform, Simulmedia has found that of the 29 minutes spent daily watching ads, 75.9 percent (22 minutes) is on linear TV, and 24.1 percent (seven minutes) is on CTV.

The significant difference between linear TV usage time and linear TV ad-viewing time suggests that focusing on ad-viewing trends provides a more accurate lens for marketers to allocate budgets versus the emphasis on content viewing or channel usage metrics.

Navigating the Interconnected Realms

As audiences shift toward CTV, marketers need to recognize that cord-cutters still encounter traditional linear ads on streaming platforms like TVE and vMVPDs. This overlap challenges advertisers, as separate transactions for linear and streaming can lead to audiences being repeatedly inundated with the same ad or series of ads.

Marketers must adapt their strategies to effectively reach audiences and understand how viewers consume TV across platforms. It is essential to employ advanced buying strategies, such as using TV viewership data to suppress exposed audiences to avoid ad duplication. This approach helps optimize the viewer experience and a campaign's effectiveness.

Marketers navigating the convergence of streaming and linear TV must employ sophisticated tactics to ensure efficient budget allocation and engage their target audiences without overwhelming them with repetitive ads. By addressing these challenges proactively, advertisers can achieve better marketing outcomes.

Networks Are Trying to Adapt FAST As Consumer Perceptions of TV Evolve

Like linear TV, the mechanics around TV channels are also evolving. Take the TMZ channel available through the Tubi app. Is that a channel available in the cable world? Well, Fox produces TMZ, which is a show that airs on Fox's linear channels. Fox also owns Tubi, which has created a free ad-supported streaming television (FAST) channel consisting of an uninterrupted stream of TMZ episodes. This type of single-show channel experience does not exist in the traditional TV world and is a wholly unique viewer experience in the streaming world, with the ads all flowing from the streaming pipes.

To create more significant differentiation among FAST apps, Fox is unlikely to license that content to other competitive players in the TV ecosystem, such as apps belonging to competitor TV corporations like Paramount, Warner Bros. Discovery, or the original equipment manufacturer (OEM) of the viewer's connected TV (CTV) device. Many OEMs have their proprietary FAST apps, like Vizio's WatchFree, Samsung's TV Plus, and Roku's Roku Channel, which are comprised of FAST channels and offer various content licensed by different production companies. These new players have challenged the traditional confines of cable and broadcast TV and assert their influence on the consumer by making their FAST app the default way to stream content.

Consumers do not typically distinguish between live, linear streams, and pure streaming channels on FAST apps — to the viewer, it's all TV. While this distinction might not matter to consumers, advertisers must navigate these intricacies for effective TV budget allocation in a landscape where the lines between traditional and CTV viewing experiences continue to blur.