Connected TV Ad Spending To Soar

BY Kathy Crosett
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BIA analysts predict that connected TV ad spending is set to soar this year, with local ad market activity likely to reach $2 billion. Next year, an increase of 9.2%, to $2.2 billion, is likely. Do your clients understand the difference between CTV and OTT? And are they buying the right kind of video advertising to reach their target audiences? Let's take a closer look at what's happening in that market.

Connected TV Ad Spending Versus OTT

CTV is a subset of OTT, which includes apps and services that don’t require subscriptions to traditional cable or pay TV service,” reports Erin Hynes for Stackadapt. OTT services such as Hulu and Peacock offer formats to their services that contain advertising. In some cases, a streaming service can also be called FAST (free ad-​supported TV). While the OTT spending comprises a small percentage of total local video advertising, it is growing while more traditional formats like local cable and broadcast TV are shrinking. 

The Most Popular Video Ad Format

According to Extreme Research, which studies all video-​based advertising, marketers and audiences are showing preferences for specific types of video ads.

The company’s analysis of Q1 CTV activity indicates the format delivered 38% of all video ad impressions. In comparison, desktop computers delivered 19% of video ads in the first quarter of 2022.

Marketers are experiencing great success with their 30-​second CTV ads. That ad format garnered 91% of all Q1 impressions. This data point indicates that consumers are seeing marketer messages as they enjoy free ad-​supported programs delivered via CTV. But are consumers watching the entire 30-​second ads they encounter? The researchers studied this topic too and found, “30-​second ads had a 77% completion rate for the year [2021], while 15s were completed 86% of the time.”

Where Marketers Buy CTV Ads

We all know that marketers have their choice of trying to place their ads programmatically on an aggregator site or buying specific spots on premium publisher sites. In 2021, media aggregators had 53% of impressions. That left only 47% for premium publishers, and analysts note the percentage decreased significantly since 2019. While it might seem like marketers are shifting their business to media aggregators sites, it’s worthwhile for local publishers to retain quality spots to sell to their best clients. These spots might include the local news reports, which attract a live audience that will see your client’s message while they view the content that’s most important to them.

CTV is Capturing a Larger Portion of the Ad Budget

Once marketers start using CTV, they allocate larger percentages of the ad budgets to the format. Mary Vestewig, VP of digital account management at Extreme Reach, explains, “regardless of volume of impressions, we see that for 67% of our advertisers, CTV accounted for 50% to 100% of the total ad mix in Q1.”

The Audience for CTV

Over half of U.S. consumers are already using at least one FAST service. Because of rising inflation, they are also limiting the number of ad-​free subscriptions they’re willing to pay for to access streaming content. This development means more consumers will likely shift to the FAST format to enjoy their favorite content. While they are doing so, advertisers will be shifting more ad money into the CTV format. Specifically, BIA notes that hospitals are likely to grow their OTT spending by 33% this year. Other industry verticals planning over a 20% increase in 2022 OTT ad buying include offices of physicians/​dentists/​chiropractors and colleges and universities.

To learn more about specific audiences, such as College Class Attendees, that are influenced by the OTT TV messages they see, check out the AudienceSCAN profiles on AdMall by SalesFuel. When you share that information with your prospects, they’ll appreciate the insight and the personalized effort you’re making to help them increase the ROI on their investment.

Photo by JESHOOTS on Pexels.