Video is king of content. More people consume it daily, and companies realize its value in attracting and converting customers. While the love of video isn’t new, the medium is now more accessible. You don’t need a production crew to create a high-quality video and tell stories. The era of streaming has worked in parallel to give video its reign. It’s no surprise that video ad spend is increasing and that CTV (connected TV) is the fastest-growing segment.
That’s the news from a recent IAB (Interactive Advertising Bureau) report. The researchers concluded that video advertising spending increased by 49% in 2021, with an expected 26% increase for 2022. In getting specific, the study states that CTV is the largest segment of growth, with a 118% increase in revenue from 2020 to 2022. This in-demand format is what 76% of video ad buyers said was a “must-buy” in their media planning.
So, why is CTV so hot?
CTV Has Considerable Appeal for Advertisers
Linear TV ad spots aren’t going away. They still represent a proven model to reach and engage audiences, but advertisers can’t help but find CTV appealing. In the study, ad buyers answered why they wanted to put their dollars in CTV. Those reasons include:
- CTV has targeting potential that traditional media doesn’t. You can target by behaviors and interests, ZIP codes, state and DMA (designated market area). These attributes make it a great fit for local advertisers that have a more defined customer they’re seeking to engage.
- Advertisers are happy to shift to CTV because there’s no reliance on third-party cookies. We’re entering the age of being cookieless. Even if your advertisers aren’t aware of what cookies are, they have some knowledge about their role in display ads. That’s causing a shift in spending, with CTV the beneficiary.
- The study also revealed that 57% of video buyers believe CTV to be more effective than linear TV at delivering web traffic and sales activity. With CTV, brands get the same big-screen experience. These ads also aren’t skippable for those subscribing to ad-supporting streaming services. Further, viewers can take action with their remote or scan a QR code to claim an offer in the ad.
With all this praise, CTV isn’t perfect. The study provided an outlook of how the medium will address challenges in the future.
CTV’s Future: A Converged Linear/CTV Market
Nearly 9 in 10 (88%) video ad buyers anticipate that there will be a converged TV/CTV marketplace in the coming years. They said it would ease the management of cross-platform and cross-channel buys. That’s very much in line with the media sellers’ desires to consolidate and integrate technology. Additionally, the report indicated that 66% of linear TV/digital video buyers have a single planning team.
Should this shape the future of video ad buying, media companies would have an advantage in capturing a greater share of advertising dollars from customers. If you can sell it all, manage it effectively and meet the needs of advertisers with multichannel campaigns, you can grow revenue and sustain it. That’s something every media seller has questions about as linear ebbs or stays flat except for the jolt of political advertising every two or four years.
Ultimately, advertisers must bend to the demand of customers, and streaming is where they spend their time. In 2022, people will spend 1:44 with CTV daily and 3:02 with linear. In 2023, the projections are 1:49 for CTV and 2:51 for linear.
Yet, with all these audiences and increased spending, the report denotes ad dollars are not keeping pace. Only 18% of total video ad dollars will be spent on CTV in 2022. Why? It’s likely that small businesses have objections about video in general and don’t think they have the resources to produce video. Those are all misconceptions, which you can clear up for them. (Read our post on debunking video advertising myths to start.)
More Ways to Get CTV Opportunities in Front of Advertisers
If advertisers already have video ad spend in their budget, that’s a great start. However, they may not realize the value of CTV. It can reach just about anyone. Nearly 9 in 10 consumers have a CTV device, and 89% of U.S. households have at least one streaming subscription.
So, their audience is there, and they can also reach cord-cutters, a growing consumer segment. In 2022, the number of cord-cutter households could reach more than 39 million.
There’s also the general appeal of video because it’s visual and auditory. It entices multiple senses and is a great way to show off a product or a service and tell a story.
These are all fundamental to selling CTV. The other part to consider is the logistics and providing both linear TV spots and CTV. In a previous post about CTV as a friend or foe to broadcast TV, we overwhelmingly think it’s the former.
Media has always been in a state of change, innovating to what’s next. Think of how much has changed in the past 20 years. Everyone now has a computer in their pocket, and we can stream anything from anywhere. Media selling has to be current with those realities. That means expanding what you offer to collect more dollars and being an expert on all tactics.
Here’s a final note to drive home the importance of getting local businesses on your radar for CTV. The IAB report shared that 55% of small media spenders purchased CTV in the last 12 months via self-serve. That may or may not have worked out for them, depending on their acumen and the platform. In most cases, you can probably assume there was friction and a lack of ROI. These advertisers need you and your expertise for CTV to provide the results they desire.
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