The Cost of CTV Advertising: How to Budget for Your Next Campaign

Connected TV (CTV) advertising is changing the game for how brands engage with their audiences, offering a unique blend of digital marketing precision and the immersive storytelling power of traditional television. With its ability to deliver highly targeted, data-driven campaigns directly to the living room screen, CTV offers performance-based marketers the opportunity to optimize every impression and to create campaigns that directly align with their business goals. But what about the cost of CTV?

Taking full advantage of this platform requires careful planning and a thoughtful approach to budgeting. From understanding pricing models to balancing creative production costs, a well-structured strategy is essential to make every dollar count and achieve impactful results.

Here’s how to navigate the cost of CTV advertising and make the most of your budget.

1. Start with the Pricing Basics

CTV platforms typically use CPM (cost per thousand impressions) as their pricing model. CPM rates can range from $20 to over $50, depending on the platform and targeting specificity. While these rates are competitive compared to traditional TV, they can quickly add up. The more refined your targeting—whether by demographics, geography, or viewer behavior—the higher the CPM.

2. Know That Targeting Isn’t Free

Precision comes at a price. If your goal is to reach a niche audience or implement household-level targeting, be prepared to pay a premium. While these features can deliver exceptional results, it’s essential to ensure the investment aligns with your campaign objectives.

3. Choose Your Platform Wisely

Premium platforms like Hulu or YouTube TV command higher CPMs but offer extensive reach and engaged audiences. However, smaller apps or niche platforms may provide better ROI for campaigns with specific goals. It’s about finding the right balance between cost and audience relevance.

4. Don’t Skimp on Creative

A well-crafted ad is crucial in CTV campaigns. Production costs for a professional, high-quality CTV ad can range from a few thousand dollars to well over five figures. Investing in top-notch creative ensures your message resonates, leaving a lasting impression on viewers.

5. Think About Length and Frequency

Ad length and frequency significantly impact both costs and results. While 15-second ads may be cheaper per impression, they often require higher frequency to drive recall. Strike a balance between exposure and engagement to maximize your budget while avoiding viewer fatigue.

6. Watch for Extra Costs

Add-ons such as premium placements, enhanced targeting features, or audience measurement tools can sneak up on you. These extras, while valuable, should be factored into your initial budget to avoid surprises.

7. Set a “Test and Learn” Budget

Testing is not optional—it’s essential. Allocate 10–20% of your total budget to experiment with platforms, creative variations, and targeting strategies. This “test and learn” approach helps you refine your campaigns and maximize ROI when scaling up.

8. Keep ROI Front and Center

Impressions are just one piece of the puzzle. Metrics like CPA (cost-per-acquisition) and CPC (cost-per-click) provide deeper insights into campaign performance. Continuously monitor and adjust your strategy to ensure every dollar works harder.

9. Match Your Budget to Your Goals

Your budget should align with your campaign objectives. A brand awareness push will require more resources than a focused performance-based campaign. Clearly defining your goals upfront will help you allocate funds effectively.

Budgeting Smartly for Success

CTV advertising represents more than just a media buy; it’s a transformative way for brands to connect with audiences in an increasingly fragmented media landscape. As marketers embrace this channel, budgeting becomes not only a matter of dollars and cents but also a strategic exercise in aligning resources with business goals – it’s about leveraging the flexibility, precision, and creativity of CTV to achieve goals that drive lasting impact. It’s essential to think beyond line items and focus on value creation, innovation, and long-term impact. By approaching budgeting with a strategic and forward-thinking lens, advertisers can unlock the full potential of this medium to stand out, resonate, and succeed.