Cracking the Efficiency Curve: Little Shifts Mean A Lot

There is an odd disconnect in the way TV advertising is bought and sold these days. 

While 67.5% of total TV ad spending goes to linear TV, audiences spend just 54.2% of their time there. Meanwhile, connected TV accounts for 45.8% of total TV viewing time, yet only receives 32.5% of ad spend.

There are many reasons for this, all of which have something to do with linear TV being much easier to buy and measure, but the result is that linear TV currently accounts for a whopping 86.9% of total ad impressions. 

Which of course leads to some obvious issues, the main one being oversaturation. According to a study released today from LG Ad Solutions and iSpot, linear TV has a frequency of 26.5 while CTV sits at a much lower 7.3. With that level of oversaturation on linear, the result is a rapidly diminishing Return On Ad Spend, or ROAS. As frequency balloons, the ads lose their effectiveness—audiences tune out, and advertisers see diminishing returns on their spend.

The trick then is to find that ideal balance, to understand just how much CTV needs to be added to the linear mix in order to achieve peak efficiency. That ideal measure is something LG and iSpot are calling “The Efficiency Curve” and they’ve compiled data to show how relatively small shifts in ad spend can create a mix that allows brands to achieve significantly improved levels of effectiveness.

The study further determined that this efficiency curve varies according to the level of ad spend. Smaller campaigns see gains when they shift around 20% of their impressions to CTV while large brands can achieve balance by shifting as little as 3.3% of their total impressions to CTV.

The study, which you can download here, is notable in that in an age of hybrid viewing, TV OEMs have a window (or a screen, to be exact) into the viewing habits of consumers across both linear and streaming. Their ACR data tells them how much of each platform a household has been watching and which ads have been served up to them. This then allows them to balance their ad delivery across linear and streaming to avoid overfrequency.

This makes the OEMs ideal partners for brands looking to achieve this sort of equilibrium and for brands looking to take things a step further by making CTV their primary buy for 2025.

The Case For A CTV-First Strategy In 2025

Many forward-thinking brands are looking to make CTV the crux of their 2025 TV ad buys. That does not mean they are abandoning linear—far from it—but they are using linear as a reach extension vehicle, in a sort of 180 from the conventional wisdom, which was to use CTV as a way to achieve incremental reach for linear.

The benefits can be impressive: greater total reach, greater unduplicated reach via streaming-only viewers, the ability to more easily drive measurable outcomes like web conversions and, of course, a reduction in oversaturation coupled with great efficiency.

Our TVREV crystal ball says we are going to see more of this in years to come as CTV continues to mature and brands see it as the most effective way to reach their customer base.

Real-time optimization will play a key role too.

Measurement companies like iSpot are able to offer brands the ability to optimize their campaigns in real time, allowing them to massage the media mix in order to achieve peak efficiency.

Better Data, Better Results

The promise of CTV has always been the superior data it can provide. By using that data to understand how to create better efficiency in their TV mix, brands will continue to unlock the real value of CTV. 

Those that don’t risk getting left behind in a linear-first landscape stuffed with not just too many ads, but too many of the same ads.