Wednesday, September 22, 2021, 9:20 AM ET|Posted by Will Richmond
Yesterday’s partnership announcement between Roku and Shopify brings CTV advertising another step closer to realizing its ultimate potential as a full-funnel channel for advertisers. Loyal VideoNuze readers know that I have been advocating for CTV advertising to become full-funnel for a while now (see “How CTV Advertising Can Drive Super Bowl Ads Above $10 Million Per Spot,” “Behold, YouTube,” “The CTV Advertising Flywheel is Here, and It’s Only Going to Accelerate,” and “Connected TV’s Big Opportunity at the Bottom of the Funnel.”).
CTV advertising is of course surging these days, with eMarketer forecasting CTV ads in the U.S. alone will more than double to over $27 billion in 2021. CTV ads are benefiting from proliferating adoption of CTV devices, many new streaming services creating compelling content for audiences, cord-cutting, and massive changes in viewers’ behaviors. Still, when I talk to industry executives, there’s broad consensus that today CTV ad spending is coming mostly from the shift in spending from linear TV to CTV as advertisers seek to maintain their reach and frequency goals. In other words, CTV is mainly a “follow the eyeballs” strategy.
To be sure, CTV advertising will feast on this shift for years to come. But because CTV is built on a digital platform, ultimately it will offer mid to lower-funnel opportunities for advertisers to drive conversions and certain KPIs (e.g. buy a product, sign up for an SVOD service, request follow up information, etc.). As CTV’s capability for conversion is proven in, a virtually unlimited amount of advertising spending will be unlocked, just as it has been in search/digital marketing.
All of this brings us back to the new Roku-Shopify partnership, in which Roku is building an app for the Shopify App Store, so that small to medium-sized businesses can create CTV ad campaigns to achieve their full-funnel objectives. For those not familiar with Shopify, it is the leading provider of subscription software and powers over 1.7 million online stores globally. Shopify is a kind of counterweight to Amazon, where millions of small business and individuals sell their products, often in an ad hoc manner, but according to Amazon’s strict, and ever-changing, business terms.
The partnership means that Shopify businesses can extend their marketing and sales to TV campaigns on Roku (because Roku is still available only in a small subset of countries globally, I assume that the geographies where Shopify business will actually be able to run CTV campaigns will be modest initially). Shopify businesses will be able to choose their audiences, budgets, timing and duration, then upload their creative. It isn’t entirely clear what “calls to action” can be embedded in the ads, or to what degree interactivity will be enabled. My guess is that this too will be modest initially but will evolve over time.
If that approach sounds familiar, it should. Google has basically run the same playbook in search from the beginning of time. It has enabled small to medium-sized businesses with a full suite of self-service ads, many of which are success-based (i.e. advertisers only pay when a user takes a certain action”). And Facebook and others have followed Google’s playbook. If there’s one key lesson to learn from these experiences, it’s that when this playbook is well-executed, a virtually unlimited amount of ad spending is unlocked. See the market caps of Alphabet and Facebook for proof of this.
This is no doubt the opportunity that Roku and Shopify are eyeing over the long-term. It is highly consistent with my vision of CTV advertising as a full-funnel channel, able to deliver large and small businesses the complete range of upper-funnel branding, reach and frequency KPIs through to lower-funnel personalization, optimization, conversion and attribution that directly lead to bottom line results.
Of course Roku is not alone in pursuing full-funnel CTV ad solutions. Amazon in particular, seems alert to the opportunity, and with its limitless resources, original video, branded CTV devices and Prime program, is especially well-suited to have an impact. Other players will no doubt also be entering the action. All of it will mean that CTV advertising’s full-funnel future will become closer with each passing day.
Note: In VideoNuze’s 2022 events (more on these coming soon), we’ll be devoting significant time on the programs to understanding CTV advertising’s evolution as a full-funnel channel.