Have CTV Ad Estimates Gone Over The Top?

Author

Michael Beach
July 15, 2021

Big news: Daniel Salmon @ BMO Capital Markets has planted the flag when the connected TV (CTV) ad market will hit $100B.

Connected TV ad spend (YoY growth) according to BMO Capital Markets:
1) 2020 – $14B
2) 2021P – $21B (↑ 54%)
3) 2022P – $29B (↑ 37%)
4) 2023P – $37B (↑ 30%)
5) 2024P – $47B (↑ 27%)
6) 2025P – $58B (↑ 22%)
7) 2026P – $65B (↑ 12%)
8) 2027P – $72B (↑ 12%)
9) 2028P – $80B (↑ 12%)
10) 2029P – $90B (↑ 12%)
11) 2030P – $100B (↑ 12%)

Big question #1: How is the pie currently split between TV and digital video?

Quick answer: Linear TV still accounts for most (52%) of total video advertising in the U.S., but CTV is the fastest growing screen type (↑ 49%).

U.S. video market by screen type according to Cross Screen Media:
1) TV (Broadcast) – 39%
2) TV (Cable) – 13%
3) Digital (Social) – 16%
4) Digital (Mobile/Desktop) – 20%
5) Digital (CTV) – 12%

YoY growth rate by screen type according to Cross Screen Media:
1) Digital (CTV) – ↑ 49%
2) Digital (Social) – ↑ 31%
3) Digital (Mobile/Desktop) – ↑ 28%
4) TV (Cable) – ↓ 5%
5) TV (Broadcast) – ↓ 5%

Quote from Daniel Salmon – Analyst @ BMO Capital Markets:“The growth of CTV advertising is the answer to the No. 1 topic we’ve been asked over the course our career. When will the inevitable growth of internet advertising disrupt TV ad budgets? Defined as use of a television to stream video over-the-internet, CTV sits at the crossroads of advertising transformation, bridging the signature traditional channel (television) and the fastest-growing digital format (video).”

Mr. Screen’s Crystal Ball #1: The CTV ad market is poised for significant growth if it can accomplish the following two items.

Key drivers for CTV growth:
1) Targeting and measurement – Marketers are willing to pay more for better-targeted ads proven (measurement) to improve their bottom line.
2) Programmatic “like” access/workflow – More advertisers = higher prices. Increase access while lowering the entry cost.

Big question #2: What potential roadblocks could keep money away from CTV?

Quick answer: Slow progress on the above items, along with a lack of inventory.

Mr. Screen’s Crystal Ball #2: This is something we covered @ RampUp NYC back in 2019. Due to lower ad loads + a higher share of ad-free viewing on streaming, we see an 8% decline in ad impressions for every 10% shift in viewing time from linear to CTV. The only way to grow this market is through better ads that marketers are willing to pay significantly more.

Big question #3: Who is working on this problem?

Quick answer: Everyone

Big question #4: What do CTV buyers want?

Top reasons for shifting budget from linear to CTV/OTT according to the IAB:
1) Targeting and efficiency – 81%
2) Incremental reach – 55%
3) Creative optimization – 27%

Quote from Irwin Gotlieb – Former Global Chairman @ GroupM:“The buy-side is either going to be faced with skyrocketing cost per thousands or improved targeting and addressability solves the problem for both (sides).”

Reply

or to participate.