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TV’s still missing most digital advertisers – can the CTV surge change that?

The digital-first economy has propelled e-commerce spending close to $1tn per annum

A new study from the IAB has framed the gulf in advertisers in TV v online destinations in the US market. Despite burgeoning CTV tech turning TV into a digital media, it’s still failing to attract a huge swath of SMEs that prefer the ease of social media spend.

The IAB 2022 Brand Disruption Report paints a picture of a pivot point for the US economy as pandemic shifts become firmly entrenched as the new normal. It also shows that the digital-first economy has propelled e-commerce spending close to $1tn per annum.

Ad buyers up CTV spend

  • Connected TV (CTV) spending is on the rise, with 84% of buyers upping their spend courtesy of the sector’s ability to deliver addressability in a privacy-compliant manner.

  • Consumers are also embracing CTV, adding close to 20 minutes to their total consumption in 2020 and a further 7 minutes this year.

  • On the flip-side, pay-TV providers continue to hemorrhage customers, shedding a net 1.23 million subscribers in the second quarter of 2021.

  • In the US 200 advertisers supply 88% of US network TV revenue. In contrast, Facebook boasts 10m advertisers (roughly). Can TV attract more of those advertisers?

  • It’s a question of scale. Only eight US cable TV networks see prime-time ratings above 1m households in linear viewing. Comparably, 22,000 YouTube channels have more than 1 million subscribers. TV would argue it is a quality environment with better content.

TV advertising innovations

  • Mindful of the difficulty and expense of TV advertising limiting access to all but the biggest brands, streaming services such as Hulu are courting advertisers with self-service ads for as little as $500.

  • Smart TV player Roku is also getting in on the act, offering streaming TV ads as a service for Shopify merchants to lower the barrier to entry for smaller brands wishing to invest in CTV.

  • Fire TV has found success with its voice-activated purchase functionality, enabling voice commands during ad breaks to connect viewers directly to their Amazon account.

A shift to digital and social

  • The IAB sees the trend for advertising spend to shift toward social media to accelerate, principally among media that combines social activities with entertainment and shopping.

  • Most tellingly, all ad spending growth is now drawn from digital media, which is up 52% from 2019, even as linear media ad spend is down 13 points. The end result of these shifts is a recovery in total media ad revenue of 24% this year v 2019.

  • Amid these changes, digital media channels now account for 72% of brands’ advertising budgets, with TV drawing a 10% share and digital video accounting for 15%.

What does the IAB say?

  • Randall Rothenberg, IAB’s executive chair and report co-author, wrote: “The Media-Retail Cartel that limited the brands to which Americans were exposed and could acquire has been infiltrated and overturned by thousands of new brands, the limitless e-commerce shelf, millions of social media influencers and a growing streaming-media persuasion machine that, contrary to conventional wisdom, favors advertising.”

  • Chris Bruderle, senior director, research and analytics, IAB, said: “Brands matter more than ever – but it’s a radically different world now. The new reality is permanent, there exists a ‘no-rest-for-the-weary’ competition for share among incumbents, disruptors and their marketing partners.”

2021 key takeaways

  • A surge in free, ad-supported streaming TV will power the adoption of shoppable media.

  • Media advertising will focus on driving participation in live events and experiences.

  • Marketers will increasingly participate in ongoing communities, social selling, live virtual events, classes and other forms of active brand involvement.

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