Connected TV (CTV) presents a major opportunity for digital advertising that is only just beginning to take off, according to a new report by IAB released at its NewFronts event on Monday.
CTV, which represents streaming content viewed on over-the-top devices, is just one part of the overall digital video ecosystem that has grown dramatically in recent years as people spend more time streaming video content. Digital video ad spend grew 49% in 2021 from the year prior, and is on track to grow 26% this year to reach $49.2 billion.
“To use a baseball analogy, we’re still in the first inning,” Eric John, vice president of the IAB Media Center, said in a livestream at NewFronts, which is being held in a hybrid format and includes in-person gatherings for the first time since the pandemic hit.
He recommended that brands pay attention to CTV in particular as a way of reaching current customers who are accessing traditional television through streaming more often, as well as future customers who “don’t know television as anything other than streaming.”
CTV ad spend grew 57% year-over-year in 2021, hitting $15.2 billion, and about 76% of video buyers said it is a “must buy” for media planning budgets, according to IAB.
John said advertisers are drawn to CTV because it’s more effective for full-funnel advertising, it allows them to leverage data for advance audience targeting, and it presents an alternative way to reach viewers in a cookieless world.
“As third-party cookies continue to crumble across the web, buyers and brands are coming to CTV as a source of privacy-safe targetable inventory,” he said. “Of the universe of buyers who are increasing their CTV spend because of deprecation of third-party cookies, the majority, 73%, plan to ship their spend to CTV.”
CTV does face some ongoing challenges around cross-platform campaign activation, management and measurement. The lack of transparency and interoperability remain an obstacle, as does fragmentation of the programmatic supply chain.
“These are all things that we as an industry need to continue to lock arms with and address together,” John said, wrapping up his NewFronts presentation by encouraging advertisers to invest in CTV nonetheless. “As the old adage goes, it pays always to follow the eyeballs.”
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