CTV Growth Puts Pressure on Converged TV Adoption
Prior to COVID-19, CTV ad spend was expected to reach $10.8 billion in 2021 and $12.49 billion in 2022. Fast forward to the present, and projections show it surpassing $13 billion in 2021 and $17 billion in 2022.
Across every metric, growth is skyrocketing, from impressions and ad spending to the sheer number of advertisers leaning in to reach audiences across streaming platforms. It's evident that these trends are not a short-lived response to the pandemic, but rather they are indicative of a more seismic shift impacting us all.
TVSquared analyzed billions of streaming ad impressions across more than 20 advertiser categories from January 2020-May 2021, as well as surveyed 100 buyers, representing agencies and advertisers, to understand CTV adoption and trends. Here's what we found:
CTV Acceleration is Driven by Everyone: Consumers, Advertisers & Publishers
CTV consumption soared during the pandemic; and where consumers go, advertisers must follow. As ad dollars were scaled back across numerous categories and marketing channels, advertisers leaned into the prime place where they could still reach their audiences—TV.
For advertisers, CTV represented the best option to reach more users. According to our survey, 70% of advertisers cited the ability to extend reach and engage with audiences beyond linear.
Marketers' new-found emphasis on CTV isn't likely to change. More than 65% of those surveyed plan to make “moderate” increases to CTV spending in 2021, growing current spend by 5%-20%, while one in five plan to make more dramatic increases of more than 20%. That's on top of the huge leaps in CTV spend in 2020.
On the sell-side, 2020 was a monumental year for CTV, with impressions increasing quarter-over-quarter, despite the environmental and economic factors that took place as a result of the global pandemic. The numbers are staggering: between Q120 and Q420, CTV ad impressions across TVSquared's platform increased by more than 80%, with massive growth directly tied to the lockdown period.
Similarly, Q120 vs. Q121 paints a strong outlook for this year, with both the volume of impressions and ad spend up by 84%.
Sellers leaned into streaming services: over the past 18 months, a slew of new streaming services were launched, including Peacock, HBOMax, Discovery+. And there are more still to come.
For advertisers, consumers' and publishers' embrace of streaming services offer an unparalleled opportunity to reach viewers however and wherever they watch. But it also presents measurement, attribution and fragmentation challenges, which advertisers would like to see solved.
While 70% of marketers are keen to attain incremental reach, effective measurement and attribution is a top concern for 40% of marketers, who say it as essential for further adoption. A more recent survey, in partnership with TVSquared and Advertising Perceptions, also showed an emphasis on measurement innovation, with 87% considering standardized cross-platform TV measurement and attribution an important factor when considering investments in converged TV.
Fragmentation has also intensified. Over the past nearly 18 months, TVSquared measured more than 150 publishers and channels through its platform – a testament to the fragmentation of audiences and the huge diversity of viewing choices. Specifically, we identified 10 different categories of publishers and platforms (MVPD, broadcast, streaming, etc.) delivering CTV ad campaigns.
How TV Budgets Were Spent in 2020
Direct streaming publishers accounted for approximately 45% of all volume, with around half of all campaigns directed through this avenue, often in combination with other channels.
Broadcast publishers (e.g. NBC, CBS), while garnering the lion's share of linear ad dollars, accounted for only a fraction of 2020 CTV volume (7%) and few advertisers.
Around half of all campaigns measured in 2020 (54%) used only one publisher, while a further 20% used two or three. However, only 5% of campaigns utilized 10 or more unique publishers.
As media owners invest more heavily in their streaming strategies, CTV budgets will continue to diversify across platform types. We saw this in the data, and we heard it from advertisers. For instance, 8% of buyers surveyed claim to currently be running CTV campaigns across six-to-10 platforms. That number is expected to increase by the start of 2022, with close to 30% of those surveyed planning to increase their mix to that same number.
How Advertisers Can Keep Up
The trends are clear, CTV has become a fixed line on a majority of TV strategies, but measurement and flexibility will play an important factor in its overall growth. Despite significant and noteworthy adoption in CTV, the future of TV is about balancing the video media mix. The larger shift toward a converged TV marketplace requires a consistent approach to measurement regardless of where and when video ads are served - from linear to streaming, consumed live and on demand.
TVSquared recently analyzed incremental reach across 20 converged TV campaigns to better understand the impression allocation for streaming and the impact on achieving greater audience reach. Results revealed that advertisers committing at least 10% of total TV ad impressions to OTT/CTV, are most likely to generate at least 15% incremental reach. For advertisers, this indicates that anything less than 10% will barely scratch the surface in terms of leveraging streaming to drive more reach.
It's obvious to all that CTV is shaping TV's transformation and putting pressure on the need for measurement innovation in the age of converged TV. Measurement innovation must sit at the center of this transformation, and take on the role of redefining how we evaluate TV altogether, from the common metrics used across both linear and streaming, to how we create a more interoperable ecosystem that delivers value to us all, from viewers to advertisers and publishers.
[Editor's note: This is a contributed article from TVSquared. Streaming Media accepts vendor bylines based solely on their value to our audience.]
Ad tech is driving billions of dollars in revenue every year. So why can't people understand what it is, how it works, and why they should care?
The current level of VOD fragmentation is unsustainable in the medium to long term. The increase in the subscription market size is disproportionate to the number of new apps entering the market, so content providers will find themselves competing for a smaller piece of the pie while spending more money on acquiring new customers.
InnovidXP is driven by more than one billion TV impressions daily and delivered to more than 95 million households, tied to an ad-serving footprint representing 88% of U.S. connected TV homes.
Reimagining how the industry buys, sells, and measures TV (and digital) is easier said than done, but there are more than a few places to start for a simple refresh on how to think about TV ad commitments this year.
As CTV grows in popularity and programmatic becomes the primary source of ad revenue, problems around measurement and monitoring are only going to become more painful and expensive if action is taken early and robustly. The time to act is now.
In time, we're going to see standardization come to the addressable TV space, just as it has to the many digital advertising opportunities that came before it. Connecting the dots across screens, regions and inventory types will become easier, as companies continue to partner smartly for enhanced efficiencies and outcomes.
As the OTT audience grows, it also becomes more fragmented. Knowing the differences between live and on-demand viewers can help both programmers and marketers make smarter choices.
At the end of the day, the goal in having publishers extend their content offerings to the CTV medium is to prime themselves for the future—to continue to grow their audience and diversify their content in a way that will have impact, and resonate. The time to take the leap is now.
The out-of-the-box solution enables broadcasters and other content owners to quickly and easily set up, launch and run their own mobile and TV apps; early adopters include Claro Sports.
Connected TV still might not yield the numbers that traditional TV does, but its targeting capabilities make it a better buy than linear
Connected television is emerging as the most viewable of all advertising formats, reaching 93.2% of their intended targets
Connected TV ad spending is way up, but it still represents a relatively small share of advertisers' budgets. What needs to change to speed up adoption?