CTV Ad Spend Closing Gap With Linear TV, Reports EMarketer

Advertisers’ spending on connected TV platforms remains much smaller than on linear TV, but the gap will narrow over the next four years, said a Wednesday eMarketer report. EMarketer’s first CTV advertising forecast in 2019 said connected TV ad revenue was a tenth of linear TV’s; by 2025, it will be more than half, it said. U.S. TV viewers will spend 80 minutes a day watching subscription over-the-top video this year, up 8.7% from 2020, it said.

U.S. advertisers will spend $14.4 billion on CTV in 2021, up almost 60% year on year; ad revenue from Roku, YouTube and Hulu will be half of it, said the report. EMarketer doesn’t break out Amazon’s share of total CTV ad revenue but expects it to be “significant” due to the company's multi-sided presence through its demand-side platform, Fire TV streaming devices and ad-supported streaming service IMDb TV. Pluto TV and Tubi get a tenth of CTV ad spending, it said.

By platform, smart TVs lead CTV usage, with 132 million viewers forecast for 2021, followed by Roku at 111.7 million, Amazon Fire TV with 97 million, connected game consoles at 77.6 million, Google Chromecast at 28.7 million, Apple TV at 28.2 million and Blu-ray players at 24.5 million, it said. By 2025, most growth will come from smart TV users (142.7 million total), Roku (126.4 million) and Fire TV (118.6 million).

CTV competition has heated up because as more viewers spend time streaming, “the stakes get bigger for who controls the screen,” eMarketer said. CTV device operators ask for a cut, typically about 30%, of advertising and subscription revenue, it said. CTV operators have access to automatic content recognition (ACR) data about viewing behavior that’s “incredibly valuable” to advertisers, retailers and content studios, it said.

The ability to leverage ACR data and generate ad and subscription revenue creates a “hot” CTV market, said the report, citing a Tvrev forecast saying collective ad revenue from Samsung, Vizio and LG will grow from $1.37 billion this year to $6.17 billion in 2026.

CTV’s benefits include being more targetable than linear TV and being the preferred TV venue for young cord-cutters, said the report. Challenges include measurement: Numerous companies said CTV’s lack of standard measurements is one of the primary roadblocks to its bringing in more ad dollars, eMarketer said. Revenue, reach and brand awareness are the top key performance indicators (KPIs) brands use to judge the effectiveness of their CTV campaigns, said the report.

It cited a “disconnect” between metrics advertisers find ideal and those they use in campaigns. Top KPIs advertisers wanted for their digital video campaigns were sales lift, action and brand lift; the ones they were more likely to use were completed views, audience delivery and engagement, showing “it’s easier for advertisers to prove their ads were viewed than it is to prove their ads drove sales.”

Frequency capping is another potential limiter for CTV, said eMarketer, citing a Conviva survey saying most consumers felt that streaming video features too many repetitive ads. A September Morning Consult survey said 79% of respondents were very or somewhat bothered by ads replaying frequently. Only 35% of consumers surveyed believed streaming video’s ad quality was as good as linear TV’s, said eMarketer.

EMarketer forecasts 70% of CTV ad dollars, some $10.29 billion, will be fulfilled programmatically this year. YouTube does nearly all of its advertising sales via automation, it said. Some streaming services prefer to sell their inventory through the traditional sales methods of TV networks, relying on upfront deals, but advertisers are “bullish about programmatic’s future role in CTV,” it said.