What Are You Waiting For?
CTV is not going away, so why aren’t you investing more of your ad dollars in this space?
With linear viewership and spending levels dropping virtually every year, the epitaphs for TV advertising have been widely reported in the trades. What is lost in this chicken-little hysteria is that video advertising is thriving - thanks to CTV.
Television isn’t in decline, it’s just in transition from traditional to digital distribution channels. The same way that TV elbowed its way into the radio-dominant entertainment world of the 1950’s, streaming has arrived and is here to stay. Let’s not forget that when television made its debuted and soon dominated, radio still had a role - albeit a backseat role. Similarly, traditional TV isn’t being replaced by CTV, just improved upon and augmented.
Seismic Shifts
The CTV marketplace in the ’22-’23 upfront saw massive growth with a 35% increase in spending, which translated to over $6.4B dollars. Coupled with the time spent metrics where TV viewing and digital video viewing times are nearly identical, it clearly shows the continued growth and consumer adoption of CTV.
In fact, 2/3’s of the digital video dollars committed this upfront were spent against streaming services. eMarketer projects that total US CTV spend this year (upfront and scatter) will reach $19B this year. The upfront haul this year was more than the total, full year CTV haul from three years ago. In fact, Disney says 40% of it’s upfront spending went to its streaming platforms and Peacock doubled their upfront revenue to $1B this year.
Objective Look
As with anything in this business, when you peel back the shiny veneer & Wall Street numbers, there are some challenges & shortfalls.
CTV Benefits-
- Audience Targeting- More accurate & planful allocation of budgets to specific, high value audience targets
- Original Programming- Upscale, original programming
- Better Measurement Than Linear- Data allows for more focused view of who your ad reaches
- More Video Eyeballs- Pool of additional impressions helping to offset linear declines
But They Have Issues Too...
- Uniformity & Measurement - Too many walled gardens prevent the ease of buying across streaming vendors and the sharing of data between them
- Frequency Capping – Again, the lack of shared data and the sheer number of vendors running CTV makes it difficult to set frequency caps
Getting Crowded
While streaming has been around for years, the last 3 years have seen an explosion of providers enter the fray. And they have been significant players, many of which are from traditional linear vendors looking to stem the tide of broadcast erosion and to add revenue streams. Peacock, Discovery+ and Paramount have all established viable streaming offerings in short order. It’s clear that the networks recognized the consumer shifts and had no choice but to embrace CTV or risk irrelevancy.
Over the next 12 months, there will be even more competition and more choices. Several major players will roll out their own CTV services. Disney+, Netflix and to a lesser degree, HBOMax are three heavyweights poised to add more choices to the genre. The existing footprints of Disney and Netflix alone are enormous and will increase the pool of available impressions significantly. These two behemoths have 110MM and 180MM monthly users respectively - incredible scale at launch. These two will both improves and complicate the CTV space. And HBOMax is set to be combined with Discovery+ to launch a more robust offering with differing tiers.
On the one hand, we will have more options to invest in and more competition to help mitigate costs. But the lack of standardization is a challenge. The nomenclature each vendor uses are unique to them. There is little-to no coordination between CTV partners. So there is no uniform way for brands to track a single data set across multiple partners because none of them are speaking the same language.
What Does This Mean For Clients
In spite of the headwinds facing CTV, the positives outweigh the shortcomings. Streaming is here to stay and it’s a valuable compliment to our media plans. It allows us to augment the losses on the linear side of the aisle with quality, targeted video impressions. Test and learn…and then test some more. Experiment and try multiple vendors to determine which ones fit your marketing objectives the best. These are fertile times to add more targeted tactics to your upper funnel media plans.
Additionally, we expect Disney+ and Netflix to offer more unique, creative messaging opportunities. They have never accepted advertising before, so with a clean slate, it would behoove them to come to market with non-traditional ad formats. In a sea of streaming sameness, the hope is that they embrace the idea of truly partnering with brands to help us bring our marketing campaigns to life in new and exciting ways.
Conclusions
The industry’s collective focus has swung decisively toward the challenge posed by audience fragmentation. The decline of cookies and other identifiers is one big reason for this shift. Another is a shift in consumer behavior that has fractured media impressions across a growing number of applications and mediums.
As the world rights itself after a pandemic that threw so many media consumption patterns upside down, the streaming world will begin to settle into a new normal. One where it is part of everyday life in a way it wasn’t before the pandemic. It has earned a seat at the table alongside the more established media tactics as a quality medium that can buttress media plans beset by the loss of affordable, quality, linear activity.
