Connected TV Makes Up Largest Ad Spend Amongst Digital Video Advertising
NEW YORK — May 2, 2022 —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.
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.
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.”
“2021 Video Ad Spend and 2022 Outlook” can be downloaded here.
IAB commissioned Advertiser Perceptions and SMI Insights to quantify the size and growth rate of the U.S. digital video advertising spend market and provide a lens into market trends, offering guidance for buyers and sellers on how they can position and differentiate their video initiatives based on where the challenges and opportunities reside. Advertiser Perceptions executed an anonymous online survey among ad agency or brand marketers who are involved in recommending, specifying or approving advertising spending in digital video, and spent at least $1M on advertising in 2021. SMI Insights’ digital video ad spend market size and growth rate estimates are based on SMI’s Pool of ad billing data, including “forward bookings”, the IAB-commissioned Advertiser Perceptions quantitative survey, interviews with industry leaders, other market estimates, and expert judgment. The SMI Pool’s coverage of the US advertising market is based on deterministic, census-level total media billings for all spending by the largest ad agencies, including all six US major holding groups and most of the largest independents.
About Standard Media Index (SMI)
SMI reports on census-level, complete billing records for placement-level detail of all media transactions in all media types as supplied by the world’s largest media buying groups, as well as leading independents, and organizes that data to create a clear, granular, and easy-to-use database for our clients and agency partners.
Depending on the market, SMI captures between 70 and 95% of all agency spend. By aggregating it, SMI offers detailed ad intelligence across all media types, including Television, Digital, Out-of-Home, Print, and Radio. Depending on the market, data can be broken down by unit cost, media owner, ad type, buy type, advertiser product category, and other dimensions.
Clients use SMI data to determine media mix models, create competitive benchmarks, and gain visibility into pricing level data. The data also allow them to understand marketplace trends on a product category level, evaluate ROI of tent poles and sporting events, and break out ad formats by media type to highlight the effectiveness of different kinds of placements.
Our data supports insights covering 34 countries around the world.
About Advertiser Perceptions
Advertiser Perceptions is the global leader in research-based business intelligence for the advertising, marketing, and ad technology industries. Our expert staff delivers an unbiased, research-based view of the advertising market with analysis and solutions tailored to our client’s specific KPIs and business objectives. These insights provide our clients with the confidence to make the very best organizational, sales and/or marketing decisions, driving greater revenue and increased client satisfaction.
The Interactive Advertising Bureau empowers the media and marketing industries to thrive in the digital economy. Its membership comprises more than 700 leading media companies, brands, agencies, and the technology firms responsible for selling, delivering, and optimizing digital ad marketing campaigns. The trade group fields critical research on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing. In affiliation with the IAB Tech Lab, IAB develops technical standards and solutions. IAB is committed to professional development and elevating the knowledge, skills, expertise, and diversity of the workforce across the industry. Through the work of its public policy office in Washington, D.C., the trade association advocates for its members and promotes the value of the interactive advertising industry to legislators and policymakers. Founded in 1996, IAB is headquartered in New York City.