Key Takeaways

• US CTV ad spending will amount to roughly $24.2 billion in 2023, growing at 10% year-over-year.
•  Millennials and Gen Z are driving this shift away from linear TV consumption, with consumers under 35 years consuming 25% less linear TV than older consumers.
• The top three categories that saw the highest digital video/CTV ad spend growth in 2021 are the travel, apparel, and wellness categories.

• The preferred buying method for CTV ads in the past year (2021) was publisher direct: sales rep (63%), followed by programmatic direct (61%), and publisher direct: self-serve (38%), indicating that buyers prefer direct buys.
• The Drum predicts that 40% of US households will become cord-cutters in 2023, transferring from linear TV consumption to CTV.

Introduction

CTV Ad Spending & Growth

• According to Statista, the size of connected TV (CTV) ad spending in the US is projected to be $23.9 billion, growing to $38.83 billion in 2026.

 

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• However, eMarketer estimates the 2023 CTV ad spending in the US to reach $24.2 billion in 2023, growing at a CAGR of 26.7%.

 

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• The IAB, an American advertising business organization, indicated that the US CTV ad spending will have a 10% year-over-year (YoY) growth in 2023.
•  Shifting TV consumption and the increasing ownership of smart TVs are factors driving the CTV ad spending industry.

Growth Factors

• In a study by GroupM, the report noted that "the primary reason for all of the growth we expect in Connected TV+ advertising is that these environments are simply where a large and growing share of viewing is shifting."
•  Millennials and Gen Z are driving this shift away from linear TV consumption, with consumers under 35 years consuming 25% less linear TV than older consumers.
• Magna also indicated that linear TV viewership in the US will reduce by 5.8% in 2023.
• Additionally, The Drum predicts that 40% of US households will become cord-cutters in 2023, transferring from linear TV consumption to CTV.
• About 73% of advertisers plan to fund their CTV ads by diverting their linear TV ad budgets.

 

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• Historical survey data also indicates that smart TV ownership in the US has increased by 8% in the past two years to 74% in 2022, with 79% of wifi-enabled households leveraging CTV devices to stream an average of 122 hours of content monthly.

 

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• Additionally, advertisers can now run scalable, data-driven smart TV experiential campaigns by leveraging the behavioral history of the audience and contextual machine learning (ML) CTV solutions.
• Smart TVs are thus driving an increasing opportunity for advertisers to present customized messages to their audiences.

Preferred Buying Method & Ad Spending Breakdown

• The preferred buying method for CTV ads in the past year was publisher direct: sales rep (63%), followed by programmatic direct (61%), and publisher direct: self-serve (38%), indicating that buyers prefer direct buys.

 

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• Small media spenders prefer self-serve CTV buying options (55%) more than large (34%) and mid-tier buyers (32%).
• Programmatic CTV advertising has been identified as the preferable route for advertisers and performance buyers.
• The projected CTV ad revenue breakdown by company in 2023 ranks Hulu as the single highest platform for CTV ads ($4.82 billion), followed by YouTube ($3.83 billion), Roku ($3.08 billion), Pluto ($1.64 billion), and Tubi ($1.26 billion).
• Other companies' collective CTV ad revenue is estimated to reach $9.58 billion in 2023.

 

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• The top three categories that saw the highest digital video/CTV ad spend growth in 2021 are the travel, apparel, and wellness categories. The categories reviewed do not include political ad spending. A breakdown of 2021 digital video/CTV ad spend and year-on-year growth per category is available below:

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• Year-on-year, programmatic CTV ad spending is projected to increase by 39.2% in 2022, compared to the 82.4% increase experienced in 2021, according to a report published by eMarketer.
• According to a recent report, "political advertisers [in the US] increased their spending on CTV devices by 1500% in the first half of 2022 compared with the same period in 2020." Overall, political advertisers spent a total of $1.44 billion on CTV ads in the 2022 midterms.

Research Strategy