Rule of 40: - The CTV imperative

Rule of 40:

The CTV

imperative

U.S. only

As streaming becomes viewers’ default

viewing preference, the success of national

TV advertising campaigns is now fully

dependent on CTV investments

Maximizing

national reach

in the new TV

ecosystem

Foreword

Introduction

The Rule of 40: The CTV imperative

Reach is the basis of advertising. TV has long been the best way to quickly build

reach with an advertising message that includes sight, sound, and motion. But have

we adjusted our media planning to account for the new reality of how much reach

national broadcast and cable can truly provide to brand advertisers?

The fragmentation of viewing, the continued growth of broadband-only homes, and

the ongoing decline in cable subscribers (even taking into account virtual MVPDs)

are all making it harder to reach U.S. households using national broadcast and

cable. The truth is that the point of diminishing returns for national broadcast and

cable campaigns is far lower than most advertisers plan for.

In this paper we identify four truths for navigating the new TV ecosystem:

1. As Americans shift their viewing behavior to streaming, the practical reach

of a linear-only national TV campaign is just 50% of U.S. TV households.

2. Because of the change in viewing behavior, shifting linear spend to CTV

increases national TV reach without the need to add budget to a media plan.

3. By allocating 40% of linear budgets to CTV advertisers can not only balance

frequency between Linear-Centric and Streaming-Centric audiences–but also

increase reach to linear viewers by adapting to their streaming behavior.

4. Ad-supported VOD is an important part of any media strategy, as more viewing

is now consumed via ad-supported VOD than commercial-free streaming

services. Three-in-four Samsung Smart TV viewers are watching ad-supported

streaming content.

CTV has

become core to

national TV reach

Our approach

The Rule of 40, which Samsung Ads ﬁrst published in 2021, demonstrated the need to

reallocate 40% of TV budgets to ad-supported VOD to balance ad impression delivery

across linear and streaming viewers. To further explore the new reality, we have

expanded our initial analysis to study the national reach and frequency of 21 national

brands across a range of product categories and budget sizes. In addition to using a

large set of campaigns and Samsung ACR data, this analysis uses Nielsen¹ data to

model the TV viewing behavior of a representative sample of all U.S. TV households.

To understand the point of diminishing returns for national reach, we divided the

Nielsen Universe into 2 simple segments:

• Linear Centric—viewers that spend more time watching linear TV than

CTV streaming

• Streaming Centric—viewers that spend more time watching CTV streaming

than linear TV

For the important A18-49 audience target, the Streaming Centric segment consists of

just over half of the population (50.3%) but consumes only 13% of the linear impres-

sions (GRPs) across the 21 brands we identiﬁed. On the other hand, the Linear Centric

segment is 49.7% of the population but consumes 87% of the linear impressions.

This imbalance is the root of the new complexity of reach and frequency planning.

The Rule of 40: The CTV imperative

¹ Used under license from Nielsen but model results are neither validated nor endorsed by Nielsen.

Chapter 01

Streaming

transition

The Rule of 40: The CTV imperative

Streaming transition

Chapter 01 Streaming transition

The fragmentation of viewing, the continued growth

of broadband only homes, and the ongoing decline in

cable subscribers are making it impossible to reach

U.S. households using national broadcast and cable.

The maximum possible reach for a heavy linear

schedule is now just 60% of Adults 18-49. Across

the 21 national campaigns we analyzed, the reach

curve of linear TV plateaus at just over 50% after

1,050 GRPs or 1.35B impressions.

6Source: Samsung Ads proprietary model of Nielsen linear TV data.

Reach of a linear campaign to the A18–49 TV universe

20%

40%

60%

Adults 18–49 Household Reach

80%

100%

GRPS

The transition

to streaming

has significantly

impacted the

national reach

of linear TV

campaigns

National Reach

100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500

The Rule of 40: The CTV imperative

However, the practical reach of linear TV, the point at which reach is

maximized before further spend becomes wasted frequency, is

signiﬁcantly lower—under 50% of national reach. Because the half

of the TV audience that is Linear-Centric consumes 87% of a linear

campaign’s impressions, linear TV quickly oversaturates that audience

and frequency becomes too great. As such, the practical reach and

frequency of linear TV to the A18–49 audience is about 800 GRPs or 1B

impressions. Beyond this level, additional spend increases frequency

among those already reached while additional reach slows signiﬁcantly.

Chapter 01 Streaming transition

Delivery of a linear campaign to the A18–49 TV universe

Source: Samsung Ads proprietary model of Nielsen linear TV data.

100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500

Frequency

National Reach Frequency

20%

40%

60%

80%

100%

The Rule of 40: The CTV imperative

Practical Reach & Frequency

Adults 18–49 Household Reach

8Source: Samsung Ads proprietary model of Nielsen linear TV data.

Adding CTV to a media plan is the only way to maximize audience reach across all adults

18-49. Using an actual $30M TV campaign, ﬁgure C illustrates the Rule of 40. The Rule of 40,

which we ﬁrst published last year, identiﬁed the optimal budget allocation across linear and

CTV to be a 60/40 split to deliver equivalent impression levels to all TV viewers. Shifting

budget from linear TV to CTV lifts the reach among the Streaming-Centric audience from

38% to 65% without any additional spend.

10%

20%

30%

40%

50%

60%

70%

100% Linear/

0% CTV

80% Linear/

20% CTV

60% Linear/

40% CTV

Reach to streaming centric audience

Chapter 01 Streaming transitionThe Rule of 40: The CTV imperative

Adults 18–49 Household Reach

What our current analysis uncovered is that adding CTV to

a linear campaign also increases reach to Linear-Centric

households by reaching them when they’re streaming—

a trend that is likely to continue as viewers shift more of

their TV time to streaming. In this example, national linear

centric reach increases from 61% to 76%, thus increasing

national TV reach from 50% to 71%.

Chapter 01 Streaming transition

Linear centric

10%

20%

30%

40%

50%

60%

80%

70%

Linear centric National TV reach

100% Linear/

0% CTV

80% Linear/

20% CTV

60% Linear/

40% CTV

Source: Samsung Ads proprietary model of Nielsen linear TV data.

The Rule of 40: The CTV imperative

Adults 18–49 Household Reach

Chapter 02

National

TV reach

The Rule of 40: The CTV imperative

11Source: Samsung Ads Model.

Chapter 02 National TV reach

National TV reach

Achieve

national TV reach

at scale by

rebalancing your

TV budget with

the Rule of 40

Audiences can be effectively reached in CTV.

Americans have embraced streaming. Across

the Samsung Smart TV Universe, 97% of

viewers stream content and 75% of TV viewers

spend most of their time with streaming.

Reach of a

linear campaign

to the A18–49

TV universe

75%

Mostly streaming

25%

Mostly linear

The Rule of 40: The CTV imperative

But not only are Americans streaming, they’re consuming

ad-supported streaming. 73% of the Samsung universe

watches ad-supported streaming content. Time spent with

AVOD streaming surpassed SVOD streaming during the ﬁrst

quarter of 2022 for the ﬁrst time ever. This should come as no

surprise given the changes in the ecosystem over the past

several years, as the adoption of streaming drove a boom in

ad-supported and FAST services. The trend has grown so

prevalent that the world’s largest streaming services, Netﬂix

and Disney+, are launching ad-supported tiers to reach the

broadest possible audience.

12Source: Samsung Ads proprietary ACR data, Q1 2022 U.S. Only.

Chapter 02 National TV reach

AVOD

SVOD

Total viewing hours

Q1 2022 Q1 2021

+25%

+3%

73%

reach of AVOD

on Samsung

Smart TVs

The Rule of 40: The CTV imperative

of luxury car seekers are

mostly streamers

68%

of A25–54 with income

$100k+ are mostly streamers

69%

Taking advantage of abundant CTV advertising

audiences helps advertisers maximize national TV

reach across all verticals and budget levels. Using

a combination of Nielsen¹ and Samsung Ads data,

we modeled the effect that the Rule of 40 would

have on actual campaigns across various industries

and budgets. In each case, the impact is signiﬁcant.

Travel brand—$7M TV budget

For a travel brand with a $7 million dollar linear

TV budget, shifting 40% of spend to CTV would

increase total national reach from 27% to 32%,

an increase of 19%.

Automobile brand—$30M TV budget

In reviewing a $30 million dollar campaign for

an automotive brand, adding more CTV would

increase national reach by 41%. The campaign

achieved 50% reach among the national TV

audience using linear only. By shifting 40% of

that budget, the campaign could reach more

than 70% of the audience.

Insurance brand—$51M TV budget

Insurance brands are some of the biggest

spenders on linear TV and, as such, offer the

clearest example of just how important CTV

has become in achieving national reach. For

a $51 million dollar campaign, national linear

TV reached just 62% of U.S. TV households.

By shifting budget to CTV, national reach

would increase by 36% to nearly 85%.

Chapter 02 National TV reach

CTV allocation

National TV reach

50.1%

20%

62.3%

40%

70.6%

CTV allocation

National TV reach

62.3%

20%

76.9%

40%

84.6%

¹ Used under license from Nielsen but model results are neither validated nor endorsed by Nielsen.

Source: Samsung Ads Model.

41%

RO40 impact

of domestic travelers are

mostly streamers

70%

CTV allocation

National TV reach

27.2%

20%

30.1%

40%

32.3%

19%

RO40 impact

36%

RO40 impact

The Rule of 40: The CTV imperative

Budget allocation between linear and CTV must

catch up with viewer behavior to ensure maximal

national TV reach.

4 key points for

navigating the

new TV ecosystem

Advertisers who need national reach must

incorporate CTV as part of their media

strategy—the practical national reach

of linear TV is now just 50%.

Optimize your national TV reach without

adding budget—by shifting spend to CTV.

Follow consumers to CTV by adopting the

Rule of 40 to balance frequency between

linear-centric and streaming-centric audiences.

Make ad-supported VOD part of your media

plan—three-in-four Samsung Smart TV

viewers are watching ad-supported

streaming content and more viewing is

now consumed via ad-supported options

than commercial-free services.

Methodology

Samsung Ads data is one-to-one, deterministic data that is not modeled or based on

aggregated panels. Our ﬁrst party data is powered by Automatic Content Recognition

(ACR) technology which identiﬁes content viewership across linear TV, OTT, and gaming

environments. We have the ability to measure whatever is happening on the TV device—

with privacy by design.

Our Smart TVs offer consumers the choice to opt in to receive Interest-Based Ads and the

ability to customize their Smart TV viewing experience. We employ industry-standard

security safeguards and practices to protect information. For more information on

Samsung’s privacy policy, check out: https://www.samsung.com/us/account/privacy-

policy/samsungads/

Third party data from The Nielsen Company (used under license from Nielsen but model

results are neither validated nor endorsed by Nielsen) along with Samsung Ads ﬁrst party

data were sourced for the purpose of this analysis.

Samsung Ads created a model to measure the impression (GRP) delivery of 21 national

brand TV campaigns against linear-centric and streaming-centric audiences. We ran

different scenarios to ﬁnd the point at which linear-centric reach peaks and begins to

diminish. The model then enforces the Rule of 40 to reallocate TV budgets and

measures the national TV reach across both linear-centric and streaming centric

audiences. For a full description of the methodology, reach out to your Samsung Ads

sales representative.

The Rule of 40: The CTV imperative

About Samsung Ads

Samsung Ads is an advertising ecosystem spanning hundreds of

millions of smart devices across TV, mobile, and desktop. With the

largest single source of TV data in the market, we not only have

more, we have double the TV data scale of the next largest

competitor. Our unrivaled understanding of consumers, powered

by exclusive Samsung data and insights drives more engagement

and delivers more results. With Samsung Ads, advertisers can

achieve reach, scale, and precision in every connected moment.

Samsung Ads. The power of more.

Get in touch at adsales@samsung.com samsungads.com

The Rule of 40: The CTV imperative