What is Connected TV? How CTV Advertising Works in 2025

Staying competitive as a marketing agency means anticipating where audiences are going next, and right now, that means embracing streaming TV.  

The shift is undeniable: Day by day, brands are redirecting their ad spend away from linear TV advertising to capitalize on the high-engagement opportunity of Connected TV (CTV). But here’s the catch—many agencies still assume CTV is reserved for deep-pocketed advertisers. That’s no longer true.

Today, Connected TV offers the best of both worlds—the targeting power of digital advertising with the brand-building impact of TV. 

Connected TV advertising is a prime opportunity for agencies looking to:

• Attract high-value clients who expect cutting-edge advertising solutions.

• Compete with larger agencies that already offer CTV as a service.

• Diversify revenue streams beyond search, social, and traditional programmatic ads.

• Prove ROI with data-driven insights traditional TV simply can’t match.

This guide breaks down everything you need to know about CTV ad campaigns, their benefits, how they work, and how to integrate it into your agency’s strategy for 2025 and beyond. 

What is Connected TV?

Think of Connected TV as the bridge between old-school cable and the digital age. Instead of being locked into scheduled programming, viewers stream their favorite content on-demand via internet-connected devices like Roku, Apple TV, and smart TVs.

Unlike linear TV (where content is delivered via cable or satellite), CTV lets viewers watch what they want when they want. This on-demand shift in viewing habits is why brands are pouring ad spend into CTV.

What Counts as CTV?

Connected TV includes more than just televisions—here’s what counts as CTV: 

• Smart TVs (Samsung, LG, Vizio) with built-in streaming apps.

• Streaming devices (Roku, Amazon Fire TV, Apple TV, Chromecast) that connect regular TVs to the internet.

• Gaming consoles (Xbox, PlayStation) with access to streaming platforms.

What is Connected TV Advertising? 

A recent report by Kantar Media highlights that the proportion of individuals watching nearly all their content through traditional TV channels has dropped by 42% since 2021. Instead, they’ve moved to Connected TV (CTV) and streaming platforms. In 2025, the number of connected TV users in the United States is expected to reach 200.8 million.

What does this mean for marketing agencies? It means that consumer preferences are changing, and your clients stand to benefit from advertising where their customers are watching.

CTV advertising delivers video ads on streaming TV platforms through internet-connected devices like smart TVs, Roku, and gaming consoles. Unlike linear TV ads, which air on a set schedule, Connected TV ads are served programmatically—allowing for real-time targeting, automated bidding, and advanced performance tracking. That means agencies get to adjust campaigns on the fly, optimize ad spend, and reach the right audience at the right moment.

OTT vs. CTV Advertising: What’s The Difference?

The terms Connected TV (CTV) and Over-the-Top (OTT) are often used interchangeably, but they’re not the same. While they share similarities, understanding the differences is key to building an effective media strategy.

The best approach depends on your client’s goals, audience behavior, and campaign objectives. In many cases, combining both CTV and OTT creates a more well-rounded video marketing strategy—maximizing reach while maintaining precision targeting.  

CTV Advertising Trends in 2025 

As brands move their ad dollars away from traditional TV, they’re prioritizing more measurable, data-driven placements on Connected TV. To keep your agency relevant—and your clients ahead of the curve—here are the key CTV advertising trends to watch in 2025: 

CTV Ad Spend is Surging

CTV ad spend is projected to hit $42.4 billion by 2027, as brands move budgets away from linear TV, display, and social media to invest in more targeted and measurable campaigns. This means greater demand for CTV expertise—offering CTV as a service has the power to attract high-value clients and unlock new revenue streams.

AI-Driven Targeting is Redefining Personalization

Machine learning is making CTV campaigns smarter by:

• Segmenting audiences based on behavior and intent.

• Optimizing creative dynamically for different viewer profiles.

• Adjusting bids in real-time for maximum performance.

This offers you greater precision in ad targeting, improved campaign efficiency, and stronger ROI—giving you a competitive edge when pitching data-driven advertising solutions to clients.

CTV Ad Formats Are Evolving Beyond Awareness

CTV isn’t just for brand awareness anymore. Interactive formats like QR code ads, voice-activated shopping, and clickable video ads are turning TVs into direct sales channels. This means CTV can now drive measurable conversions, not just impressions—making it easier to prove ROI and justify ad spend to clients.

Cross-Device Attribution is Closing the Loop

CTV isn’t just about impressions—it’s about measurable impact. Brands can now track how CTV ads influence user actions across mobile, desktop, and even in-store purchases. This means better reporting and deeper insights, allowing you to show clients exactly how their CTV campaigns contribute to their overall marketing success.

The Benefits of CTV Advertising

Now that you know why CTV is growing, let’s uncover how a CTV advertising platform delivers business value—for both your agency and your clients. 

Video advertising is the best medium to show off a brand's personality and the benefits of a product or service.

Paul Echols, Creative Director and Owner, Square 205

1. Advanced Audience Targeting & Personalization: CTV combines the targeting precision of digital marketing with the impact of TV advertising, ensuring brands reach the right viewers at the right time. Unlike traditional TV, which relies on broad demographic estimates, CTV advertising uses real data to serve ads based on first-party and third-party data, geotargeting, behavioral, and contextual targeting (more on that in the next section!).

2. Higher Engagement & Stronger Ad Recall: Unlike traditional TV viewers who passively consume whatever is on, CTV audiences actively choose their content, making them more engaged and receptive to ads. Because CTV ads can’t be skipped like many digital formats, they enjoy higher completion rates and stronger brand recall—a major advantage over linear TV and social media ads. 

3. Measurable Performance & Attribution: Unlike traditional broadcast TV ads, where tracking is limited, CTV offers the ability to track metrics in real time, helping agencies optimize campaigns as they run.

4. Cost Efficiency Compared to Linear TV: CTV ads offer flexible pricing models that allow brands to spend efficiently while maximizing impact. Because of this, CTV opens doors for brands priced out of traditional TV advertising while offering premium placements on the big screen.

How Does CTV Advertising Work?

Unlike linear TV, which relies on pre-scheduled ad slots, CTV advertising operates similarly to digital programmatic advertising—with real-time targeting, automated bidding, and cross-device measurement. In this section, we’ll give an overview of how it all works. 

How is Audience Targeting Done?

So, how does CTV deliver ads to the right audience? The key is advanced targeting. One of CTV’s most significant advantages over traditional TV is its ability to provide highly targeted ads based on user data. When setting up campaigns, you might leverage:

• First-Party & Third-Party Data: Using client CRM data, streaming platform data, and third-party audience segments for advanced targeting.

• Contextual Targeting: Placing ads based on the content a user is watching (e.g., showing a fitness brand’s ad during a workout video).

• Behavioral Targeting: Reaching viewers based on their past interactions, such as websites visited, purchase history, or app activity.

• Geotargeting: Delivering hyper-localized CTV ads—ideal for local businesses looking to drive in-store visits.

• Retargeting & Lookalike Audiences: Re-engaging users who previously interacted with a brand and finding new customers with similar behaviors.

With these data-driven targeting methods, CTV helps brands cut through the noise and connect with the right audience when they’re most receptive. 

How Much Does CTV Advertising Cost?

CTV ad pricing is flexible and varies based on targeting, platform, and competition. Common pricing models include:

• Cost Per Mille (CPM): Pay per 1,000 impressions, typically ranging from $20–$50 depending on audience segmentation.

• Cost Per Completed View (CPCV): Think of CPM like renting a billboard—you pay for visibility. CPCV, on the other hand, ensures you only pay when someone actually watches your ad.

• Programmatic Auctions: CTV inventory is often bought in real-time auctions via demand-side platforms (DSPs), allowing agencies to optimize pricing dynamically.

How Do You Measure the Success of CTV Ads? 

Unlike linear TV advertising, which offers limited reporting, CTV analytics provide detailed performance tracking. Some CTV ad metrics you need to track are: 

• Impressions & View-Through Rate (VTR): Measures how many times an ad was shown and fully watched.

• Ad Engagement & Click-Through Rate (CTR): Tracks user interaction, such as QR code scans or CTA clicks.

• Conversion Tracking & Attribution: Shows how CTV ads influence actions on other devices (e.g., website visits, app downloads, purchases).

• Ad Recall & Brand Lift: Measures brand awareness improvements through post-exposure surveys and analytics.

Use AgencyAnalytics’ StackAdapt integration to view engagement metrics such as watch time, cost per completed view, video completion rate, and more. Try AgencyAnalytics free for 14 days. 

Where Do CTV Ads Show?

CTV ads run across a wide range of streaming services, devices, and platforms. These ads are displayed before, during, or after video content, much like traditional TV commercials—but with advanced targeting capabilities. 

Beyond full-screen video, brands can also set up banner ads, pop-ups, overlays, and interactive ad formats that allow viewers to take immediate action using their remote control, QR code scan, or voice command.

Here’s where CTV ads appear:

• Streaming Services: Ad-supported platforms like Hulu, Tubi, Pluto TV, Peacock, Sling TV, and Freevee serve commercial-style video ads.

• CTV Devices & Platforms: Smart TVs and streaming devices such as Roku, Amazon Fire TV, Apple TV, and Chromecast enable advertisers to reach viewers who prefer on-demand content.

• Gaming Consoles: Platforms like Xbox and PlayStation allow advertisers to place video and display ads within streaming apps, reaching a tech-savvy, engaged audience.

• Ad-Supported Content on Paid Platforms: Even subscription-based services like Netflix and Disney+ have introduced ad-supported tiers, opening up premium inventory for advertisers targeting high-value streaming audiences.

In the next section, we’ll further examine the different ad formats and share how to use them effectively for your client campaigns.

CTV Advertising Examples

Here’s what CTV ads look like—and why they’re effective. 

1. Interactive & Shoppable Ads

These ads allow viewers to engage directly from their screens, making it easier than ever to take action. A QR code or on-screen CTA lets users scan with their phone to shop for a product, visit a landing page, or sign up for an offer—all without searching for the brand separately.

Why it Works: Interactive ads shorten the customer journey, driving instant conversions rather than relying on viewers to remember and take action later.

2. Retargeting Ads 

Retargeting on CTV re-engages users who have visited a brand’s website or engaged with previous ads. Viewers might see an ad for a product they browsed earlier or an abandoned cart reminder, reinforcing brand presence across multiple touchpoints.

Why it Works: Retargeting taps into high-intent audiences, making conversions more likely by showing relevant messaging at the right time.

3. Contextually Relevant CTV Ads

Instead of blasting ads to broad audiences, contextual targeting places ads within relevant content to maximize engagement. A fitness brand’s ad for new workout gear, for instance, may appear during an on-demand workout video, making the ad feel more natural and timely.

Why it Works: Viewers are more receptive to ads that align with their current activity, leading to higher engagement and ad recall.

4. Localized CTV Advertising

For businesses with physical locations, CTV’s geotargeting capabilities allow brands to reach viewers within specific cities, ZIP codes, or even neighborhood-level areas. A restaurant chain might run ads offering discounts to viewers located within a few miles of their locations.

Why it Works: Localized CTV ads reduce wasted impressions, ensuring brands reach audiences that are actually within reach of their business. 

5. Cross-Device Attribution 

A major advantage of CTV advertising is the ability to track engagement across multiple devices. For example, a user might see an ad for a subscription service on their smart TV and later sign up using their phone or laptop. Cross-device attribution allows advertisers to connect these dots and measure true ad impact.

Why it Works: CTV isn’t an isolated channel—it’s part of a bigger digital ecosystem, and measuring how it influences actions across devices helps prove ROI.

Use the AdRoll reporting dashboard to create impressive CTV reports in minutes. Try AgencyAnalytics free for 14 days. 

The Future of CTV Advertising: What’s Next?

Now that you know how CTV ads work and why they matter, the question is: What’s your next move?

To remain competitive, your agency must move beyond awareness and start taking action on the shifts reshaping the industry: 

• Programmatic CTV Will Dominate: Most inventory will be bought in real-time, forcing agencies to sharpen their bidding strategies and optimize placements dynamically. Manual buying won’t cut it anymore.

• AI-Powered Targeting Will Redefine Reach: Machine learning will take audience segmentation to a new level, ensuring campaigns reach high-value prospects with precision—without wasting ad spend.

• CTV Will Become a Conversion Engine: Interactive and shoppable ads are turning TVs into direct sales channels. Think QR codes, voice-activated ads, and instant “click-to-buy” options that eliminate friction.

• CTV Will Fully Integrate With Other Channels: Search, social, and programmatic will no longer be siloed. Expect unified measurement, cross-channel attribution, and smarter budget allocation.

• Privacy Changes Will Force Smarter Targeting: With third-party cookies fading, first-party data and contextual targeting will become non-negotiable. Agencies that master privacy-compliant strategies will win.

Action Plan for Agencies

Staying ahead in CTV advertising requires action. Here’s where to focus:

• Build CTV Expertise Now: Train your team, explore programmatic platforms, and develop CTV-specific strategies before your competitors do.

• Position CTV as a Core Multi-Channel Play: Clients need to see how CTV complements social, search, and display. Make the case with data, not just buzzwords.

• Maximize First-Party Data: Develop privacy-first targeting strategies that extract deeper insights and drive better results. Data will be your biggest advantage.

• Test Interactive CTV Ads Today: Shoppable ads, QR code activations, and voice-enabled engagement aren’t just trends—they’re revenue drivers. Start testing with clients who value innovation.

Final Thoughts

As clients reallocate budgets toward data-driven campaigns, agencies that understand CTV’s potential will have a clear advantage. The brands you work with will expect CTV expertise, strategic guidance, and measurable results. 

Now’s the time to invest in CTV—understand its nuances, leverage its targeting power, and integrate it into full-funnel strategies. Follow through, and your agency will be among the ones driving the industry forward in 2025 and beyond.