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

By John Glenday, Reporter

November 9, 2021 | 5 min read

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

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.