2023 was the year that excitement about CTV took center stage in advertising. The channel is expected to grow 21% in the US, climbing further to $42 billion in spend by 2028.

But that growth will not be split equally among SVOD, AVOD, and FAST channels. The most dramatic shift will occur in FAST, which still has the most room for growth. As FAST flourishes, cable viewing habits will complete their transition to digital while AI capabilities evolve, enabling CTV to become one of our industry’s most important marketing channels.

Here’s how those developments will play out in 2024.

The FAST-Led Transformation of TV Into a Streaming-First Medium

Many advertising professionals and consumers may look at the CTV ecosystem and regard the shift from cable to streaming as nearly complete. But in reality, it is only halfway through.

We can think of the transition to streaming as occurring in three stages. The first was moving content to digital so that it can be watched on mobile devices, tablets, and connected TVs. This has been going on for years, first with SVOD and AVOD channels and then increasingly with FAST. There are now thousands of FAST channels. So, the first stage of the transition to streaming is complete.

The second stage of the streaming transition is monetization. The industry took big leaps forward towards better monetization in 2023. Relatively pricey subscriptions to ad-free apps used to be consumers’ go-to, but in an environment with higher interest rates and tighter household budgets, they began looking for more affordable options. Publishers like Netflix, Amazon Prime, and Disney – seeking to offset potential revenue losses from subscriptions – began launching ad-supported subscription tiers. To the industry’s delight, consumers didn’t shy away from ad-supported content, as illustrated by the significant viewership growth with the leading FAST channels. The shift to advertising-supported streaming will only pick up speed in 2024 as consumers seek more options and content owners look to make up for a loss of revenue generated by declining cable audiences.

The third stage of the streaming revolution, though, is where the most progress remains to be made: viewership. And this is where the biggest change will manifest in 2024. Yes, content is now widely available digitally, content owners are monetizing it more effectively, and audiences are watching, with 57% of Americans tuning into FAST content in 2023. But internal data indicates that most households are only watching one or two FAST channels per month despite thousands being available. In comparison, at the height of cable viewership, people watched an average of 17 cable channels. That also leaves us with 43% of Americans who have not watched any FAST channels. It’s a massive market, yet to be unlocked.

One of the reasons for this is that a gap remains between the streaming content that is out there and what audiences know is available to them. Over the next year, viewers will migrate, and by five years from now, the transition from cable to streaming will be complete. FAST will be the primary driver of this growth in streaming viewership, due to both the recent surging interest in free ad-supported options and consumers’ increased familiarity with the phenomenon of casually tuning into always-on digital channels in the way they have always consumed linear content.

AI-driven technologies will play a key role here in helping viewers discover more content this year. For example, AI can monitor momentarily trending content by analyzing channel viewership patterns, driving viewers to channels that are capturing higher than normal viewership – be it a weather channel covering severe climate conditions or a news channel covering a breaking story. In addition, leveraging GenAI, streamers and publishers can cut, sequence, overlay, and mix content at a low cost – and, at some point, completely automatically – to create relevant and timely ad creatives that align best with their target audiences, improving conversion rates and ROAS among viewers.

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The Growth of Performance CTV Advertising Fueled by FAST’s Rise

The ascendancy of FAST will be a boon for advertising on CTV, which will not just increase in scale but also flourish into a true performance-marketing channel. Advancements in AI-driven technologies and marketing solutions will give rise to more targeted and personalized CTV experiences. This, in turn, will give streamers and publishers the ability to accurately measure and attribute a viewer’s actions to a specific campaign, allowing advertisers to transform marketing efforts from an alleged cost center to a proven revenue driver.

The benefits of CTV performance advertising won’t just apply to brand advertisers, either. They’ll also help CTV publishers grow. Given that there are thousands of FAST channels, a good place for FAST publishers to find new audiences is to reach those who are already watching other FAST channels. But across thousands of options, where do they begin?

Growing viewership and advances in AI will help solve this problem. When publishers are able to collect more insights on what audiences are watching, they can then use AI-driven technologies to help audiences discover content they’ll like even if the audience isn’t actively aware of that content.

One way to solve the CTV content discovery equation is affinity. If someone watches basketball highlights on YouTube, perhaps they’ll watch live Nets games on the YES network. Beyond this example, however, there are even more effective viewership patterns that would be invisible to human marketers, but can be efficiently uncovered by AI – which can make sense of, and find meaningful patterns within, large amounts of data.

For example, mood is a big driver of conversions. If a viewer is switching channels, they’re probably open to a new content recommendation. That’s a question of how they’re watching, not what they’re watching. Alternatively, if they’re watching a dark, moody show, they may be open to other shows with similar tones — again, not just a simple question of topical affinity.

Another factor in viewership preferences is recency. People watch content in patterns. Someone who just watched the news may have gotten their fill for the day and won’t immediately be receptive to complementary news content. In this instance, with audience data and AI-powered technology at their disposal, marketers can wait to introduce a CNN viewer to additional news content until the time when she is most primed to respond favorably to it.

A final valence of the growing performance CTV advertising sector will be cross-device targeting, especially the one-two punch of CTV and mobile. If a viewer is using their phone while also watching TV, chances are they are not very engaged in the TV programming. Targeting audiences on mobile when they are already watching TV is a high-impact way to introduce them to new content. This is especially effective when advertisers can see that someone has watched similar content on a mobile device.

This more granular and effective targeting is all part of CTV’s transformation into a performance marketing channel. Historically, TV has been the branding medium par excellence: a big screen where advertisers could tell emotional stories and build connections with audiences, but which lacked some of the mechanisms to easily and precisely tie those connections to conversions. But with CTV, audience actions will become more legible. This deluge of data will not only better train algorithms, leading to more effective targeting, but also provide more comprehensive measurement, allowing advertisers to pay only for conversions and spurring more investment in the channel. In essence, growing CTV viewership and AI-powered technologies will work in tandem, building larger audiences that advertisers understand and can influence better.

The Emerging Flywheel of Ad-Supported CTV Content

The best businesses gain steam as they gain scale. 2024 will show that is the case with CTV advertising. As more consumers switch to ad-supported digital viewership, publishers will be able to analyze viewing patterns, predict preferences, and build audiences more effectively. This will lead to yet more viewers, spinning the flywheel and generating more ad dollars for the publishers looking to grow their audiences — while delivering more relevant content for consumers and more relevant audiences to brands.

CTV picked up steam in 2023. But the channel is just getting started. With viewership growing and AI fast developing, the flywheel has just started spinning. It will take off in 2024.

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