Beyond the Numbers: How to Optimize Your Strategy with the Right CTV Metrics

The primary metrics for Connected TV (CTV) advertising, whether it's CPM, CPC, or ROAS, are the backbone of measuring success in your CTV campaigns. But knowing the names and definitions is just the beginning. The real challenge lies in understanding the specific nuances of each metric and deciding how to track them effectively. In some cases, you may consider dropping one metric in favor of another to optimize your advertising strategy.

We've already covered the definitions of all these metrics in our guide, “Understanding CTV: Your Go-To Glossary for Streaming Metrics and Methodologies.” But now, let's dive deeper. In this article, our experts will explain the pros and cons of each metric, highlighting the critical nuances that could make or break your campaign.

The most popular CTV metrics

Here is the list of metrics we're going to explore. We consulted with Jaime Singson, Senior Director of Product Marketing at Simulmedia, to offer insights into each metric's advantages and disadvantages.

• CPM (Cost per Thousand)
• CPA (Cost per Action)
• Unique Reach
• CPR (Cost per Unique Reach)
• ROAS (Return on Ad Spend)
• Conversion in CTV
• Frequency

CPM (Cost per Thousand Impressions)

CPM measures the price of 1,000 ad impressions and is widely used in TV and digital advertising. It’s calculated by dividing the advertising cost by impressions and multiplying by 1,000.

While CPM is an essential metric for managing budgets, focusing solely on it is limiting. But you should not concentrate on it, as it doesn't measure unique reach or audience engagement. Advertisers need to be cautious of low CPMs, which may involve blending in less impactful inventory like mobile ads, potentially harming brand perception.

Find out more about CPM on our YouTube channel.

CPA (Cost per Action)

CPA measures the cost per action, such as purchases or sign-ups. This is more complex in CTV due to the separation of devices used for ad exposure and action.

How does measuring CPA in CTV differ from digital and traditional TV?

In CTV, ad exposure happens on one device (like a TV), while the action occurs on another (desktop or mobile). Unlike digital ads, where actions often happen on the same device, CTV uses household graphs to link devices across the same household. This differs from traditional TV, which relies on probabilistic measurement, observing general action spikes after ad exposure rather than directly tying ads to specific conversions.

How can advertisers accurately attribute actions to specific CTV ads?

Advertisers use household graphs to match the connected TV where the ad was seen with the device where the action occurred, such as a laptop or mobile. CTV relies on deterministic methods like household IP addresses without third-party cookies, enabling accurate cross-device tracking and attribution, unlike traditional TV’s more generalized approach to ad-action correlation.

Unique Reach

Unique reach in CTV advertising refers to the number of distinct, non-duplicated viewers or households that see a particular ad during a campaign.

Why is understanding unique reach significant for advertisers? What opportunities does it provide to advertisers?

Understanding unique reach is crucial for advertisers looking to expand brand awareness. It ensures ads reach new potential customers rather than repeatedly targeting the same person. Maximizing unique reach allows advertisers to deliver their message to a strategic audience at least once, more impactful than multiple exposures to the same individual. This broadens brand appeal and expands awareness to a larger pool of potential buyers.

What are the cons of relying on unique reach as a metric, and what significant insights does unique reach fail to reveal?

While unique reach is vital for expanding awareness, it doesn't measure audience quality. Ads may reach low-propensity buyers or non-target audiences. Additionally, unique reach doesn't reveal which segments are more likely to take action or have higher purchase value. Relying solely on this metric can lead to ineffective targeting if the audience is too broad or too narrow. A holistic approach is needed to understand audience engagement and fully optimize the campaign.

CPR (Cost per Unique Reach)

CPR calculates the cost to reach one unique viewer or household, making it helpful in optimizing budget efficiency.

The main advantage of CPR is its ability to find new audiences at a lower cost, broadening the campaign's reach. However, it can be challenging to optimize manually, and focusing too much on lowering CPR may lead to under-delivery if bids are set too low. Automation is key to optimizing CPR effectively.

ROAS (Return on Ad Spend)

ROAS measures the revenue generated for every dollar spent on ads, making it crucial for financial stakeholders to evaluate campaign success.

Why is ROAS crucial for evaluating CTV advertising campaigns?

ROAS helps tie revenue to conversion events, making it essential to measure CTV campaign value. It tracks which tactics and publishers drive the highest spending behavior, helping improve efficiency by increasing revenue or lowering costs. It’s a key metric for financial stakeholders to gauge campaign success.

What are the cons of relying on ROAS?

Focusing only on ROAS can lead to a narrow funnel, limiting brand exposure to new consumers. This short-term focus may boost results temporarily, but it stunts long-term growth by not feeding the top of the funnel with new prospects, resulting in diminishing returns over time.

Conversion Rate

Conversion rate measures the percentage of viewers who take a desired action, such as a purchase, after seeing an ad.

What are the pros of using conversion rate?

Optimizing for conversion directly impacts the bottom line by driving revenue-generating activities like purchases. It's also important to track intermediate steps, like account creation or adding items to a cart, as these help improve the overall customer journey and lead to better conversion performance.

What are the cons of relying on conversion rate?

Focusing solely on conversion rate, especially for rare events, can result in optimizing for noise rather than meaningful data. It can also “starve” the top of the funnel, leading to higher costs and diminishing long-term results. A holistic approach is essential for sustained success.

Frequency

Frequency measures how many times the same viewer sees an ad. It’s key for building brand awareness but can lead to viewer fatigue if overused.

What are the pros of this metric? How to find optimal frequency?

Optimizing frequency is about balancing ad exposures to maximize conversions without diminishing returns. For most products, 3 to 7 exposures per campaign are ideal. The best frequency depends on factors like product type, campaign length, and seasonality, with higher frequency for high-consideration products and lower for impulse buys. Advertisers should adjust based on these factors to find the sweet spot.

What are the cons, and how to ensure that repeated exposures are truly effective?

The downside of relying on frequency is the risk of overexposure, which can annoy audiences and damage brand perception. Overexposure wastes ad spend and alienates viewers—52% of consumers report that excessive ads harm their opinion of the brand. Advertisers should aim for the right frequency without overloading viewers to avoid this.