Needham & Company senior research analyst Laura Martin sent a Halloween-worthy warning shot this morning to all the brands, investors and streaming services counting on a big shift to connected TV platforms for a better, more efficient and more effective advertising experience.

“From an inbox filled with stats related to the 30 stocks we cover, occasionally we see a data point that haunts us,” wrote Martin in a note distributed this morning . “We can't shake the feeling that, if that data point turns out to be important, it undermines important economic assumptions we (and often Wall Street) hold as true.”

The data point: “nearly 80 percent of CTV viewing is shared viewing.”

Only 21 percent of CTV viewing is done alone, according to August 2022 data from Amagi, the big streaming service provider. Two people are watching 62 percent of the time, and three people are watching the screen 15 percent of the time. The balance of viewing comes in larger groups.

The Amagi figures aren’t really shocking; most people tend to think of watching shows on a big screen, whether from a linear source or a streaming one on a connected TV as a more communal experience. It’s really the way most us have been watching “TV” for decades (and arguably, since campfire shadows played on the walls of prehistoric caves).

But Martin touches on an overlooked point in all the understandable hype about CTV’s potential: we do watch the smart, Internet-connected big screen together a lot more than we do when looking at some piece of video on a phone, tablet or even computer.

Why does that matter? Martin suggests three potential implications that indeed could haunt valuations of streaming platforms and effectiveness of CTV advertising just as the sector seems poised to take off.

As Martin points out, this overwhelmingly shared viewing experience contrasts with the way in which audiences typically have watched video on mobile and even computer screens. Viewing on both those latter screens were overwhelmingly done by a single person, making it easy to infer audience interest and target ads extremely tightly.

That’s not the case when the big screen is shared. Martin laid out possible implications in three areas:

• CTV is considered better for ad targeting than traditional linear TV, but shared screens mean some of that targeting is “wasted” on a significant group of viewers who may not care about the ad. That could affect CTV pricing power, a possible problem particularly for streaming services such as Netflix, whose ad-supported tier launches this week at what are considered extremely high CPMs.

• The far bigger screens of CTV can make for a more impactful ad experience than on mobile or computer screens. But if targeting’s effects are diminished significantly by shared viewing, it “could” slow the shift of ad dollars (some $55 billion worth) from digital video to CTV at a time when the sector is counting on a big influx of dollars.

• CTV services and platforms are supposed to be better positioned to control how often viewers see the same ad over and over. Shared screens “could” undermine attempts at frequency capping, leading to viewer annoyance and a ‘waste” of ad spending. Again, Martin suggested that could further slow CTV adoption because fixing frequency capping in shared viewing experiences is a lot more complicated.

Of course, none of this means the strangled death in the crib of CTV’s early days. As my esteemed colleague Alan Wolk pointed out, many brands are less concerned about tight targeting and direct conversion to sales.

A food or QSR brand might say “our audience is everyone with a stomach,” meaning they’re trying to reach and activate everyone who might see it, regardless of demo or audience slice.

Other brands are more concerned about where an audience is located than who they are. Geo-targeted ads that reach everyone in a household aren’t disrupted by Martin’s concerns. And other ads are targeted at the household level rather than with the individualized precision of a mobile ad.

All true and worth noting. But Martin’s point provides a useful rebalancing of some of the hype around CTV’s ascendance. It’s definitely where we’re heading, but lots still needs to be worked out. And for all of CTV’s promise and capabilities, there are still some things where other options might prove to be wiser choiices. Brands and marketers need to keep that in mind as they make the jump to the CTV revolution.