Connected TV Makes Up Largest Ad Spend Amongst Digital Video Advertising

Digital video advertising spend surged 49% in 2021 and is expected to increase an additional 26% to $49.2B in 2022, according to IAB’s “2021 Video Ad Spend and 2022 Outlook” report.

Released at the 2022 IAB NewFronts, in conjunction with Standard Media Index (SMI) and Advertiser Perceptions, the report found Connected TV (CTV) ad spend increased 57% in 2021 to $15.2B and is expected to grow an additional 39% in 2022 to $21.2B. Between 2020 and 2022, CTV ad spend is projected to more than double (+118%). In fact, three out of four video buyers (76%) label CTV as a ‘must buy’ in their media planning budgets.

“Digital video is a driving force for buyers and will continue to be in 2022,” said Eric John, VP, IAB Media Center. “However, while CTV leads the substantial growth of digital video ad spend, the amount of dollars currently allocated to CTV is not proportionate to the amount of viewer time spent with the channel. The time is now for brands and buyers to follow consumer attention.”

Although CTV will account for 36% of total time spent with linear TV and CTV combined in 2022, the amount of dollars currently allocated to CTV is not aligned to this viewership. Only 18% of total video ad dollars are being spent on CTV vs. total video spend, which includes CTV, linear TV, social, and short-form video.

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Buyers Cite Many Factors for CTV’s Superiority

When comparing CTV to traditional, linear TV, buyers found data usage, transparency, and no reliance on third-party cookies as distinct advantages:

• CTV enables buyers to leverage many types of data not available within linear TV buys, including first-party brand data (65%), location data (61%), and shopping data (50%).
• Among users of the following KPIs, 57% felt CTV was more effective than linear TV at delivering website/sales actions, and 46% more effective at delivering brand perception.
• Buyers felt CTV provided more transparency into where ads run, with 59% of buyers stating it was ‘very clear’ on where their CTV ads ran vs. only 50% and 43% for social video and other digital video, respectively.
• With no reliance on third-party cookies, buyers are turning to CTV as a privacy-safe way to spend ad dollars efficiently and effectively. Nearly three in four (73%) video buyers doing so expect to fund their third-party cookie/MAID deprecation CTV spend increases by reallocating dollars from linear TV.

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Challenges Still Remain in CTV

As CTV continues to gain momentum and enable opportunities to better target, reach, and scale, more than a third of video buyers cite multiple challenges in CTV around cross-platform campaign activation, management, and measurement, including:

• Measuring incremental reach across platforms/publishers (48%)
• Managing frequency across platforms/publishers (43%)
• A lack of transparency/interoperability within walled gardens (42%)
• Fragmentation of programmatic supply paths (35%)

To address the challenges of CTV, buyers are preparing for a converged linear TV/CTV market that would ease management of cross-platform and cross-channel video buys. In fact, nearly nine out of ten buyers (88%) anticipate a converged linear TV/CTV marketplace in the coming years, two in three (66%) linear TV/digital video buyers now have a single planning team for the two channels, and another quarter (25%) expect to have one planning team in the future.

“Fragmentation continues to be the achilles heel for buyers,” added John. “From the study, we learned that video buyers most often cite sales lift as their ideal KPI for CTV, but they are not leveraging it due to measurement complexity, sub-par tool functionality, and data lags. As the industry continues to advance and CTV prevails, advertisers are looking toward a converged marketplace that addresses these issues and helps measure the implementation of a variety of creative and targeting tactics.”

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