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State of the Screens

Have CTV Ad Estimates Gone Over The Top?

By July 15, 2021No Comments

Connected TV ad spending, in billions

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%)

Flashback: CTV Leads Digital Ad Growth

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%

Big Shift 1 - Television to Digital Video

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%

The Convergent TV Landscape

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.

Convergence Democratizes TV Ad Spend Graph

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.

A Crazy Scenario - Total Impressions Drop Due to Lower Ad Load Graph

Video: Building the Right Cross-Screen Media Mix | RampUp NY 2019 Conference

Building the Right Cross-Screen media Mix Video

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

Quick answer: Everyone 🙂

Who are the sellers graph

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%

Buyers see CTV as more targeted efficient and scalable graph

Quote from Irwin GotliebFormer 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).”

Video: Irwin Gotlieb Predicts Troubling Tipping Point for TV Ad Pricing

Irwin Gotlieb Predicts Troubling Tipping Point for TV Ad Pricing

More #1: 5 bold bets for CTV in the post-pandemic world (pair with: Verizon Media’s Iván Markman Shares Strategies for Ad Buyers and Networks)

 

More #2: Premium Video Content Command Higher CPM’S Than Linear TV

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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