Throughout the Covid pandemic, we’ve seen the acceleration of digital trends that had been slowly building for years. As a society, we’ve made huge changes in where and how we work, where we can live – and how we consume media, especially video. Now that the world is about to change radically again, what is going to happen with connected TV (CTV)? Verizon Media’s Iván Markman offers five predictions for what’s next.
Trends in video consumption have pushed more eyeballs – and more content and ad dollars – to streaming and connected TV. By the end of 2020, consumers were spending 44% more time on streaming services (including CTV) than they were at the end of 2019. That growth instigated a 36.3% year-on-year increase in programmatic CTV ad spending in 2019, and a projected 54.4% increase through 2021.
This is a dramatic shift, even after years of cord-cutting by consumers. But let’s keep a reasonable perspective. In 2020, worldwide Covid lockdowns greatly limited outdoor activities and drove spikes in CTV viewership. Today, more viewers are getting vaccinated, and the outside world is opening up. The exceptional growth CTV consumption saw in 2020 won’t be repeated anytime soon. But it also won’t and can’t be rolled back.
We can make some bold, but reasonable, bets on how the evolution of viewer behavior will influence future strategies of media businesses and the advertisers who support them.
1. CTV viewership will stay steady or decline slightly, but will continue to rise overall
Our pandemic habits led digital media to leapfrog multiple years of expected growth. In video, for example, Pluto TV reported 55% year-over-year growth in monthly active users in 2020, and Tubi reported 65% year-on-year growth in monthly active users, with much of that growth happening early in the pandemic. But while total streaming hours are not likely to match 2020’s numbers, CTV’s audience share will continue growing on the whole. And with consumers and advertisers looking for more trusted content mediums, we’ll be seeing a shift in advertiser strategy away from the old linear/social campaign model, and specifically toward CTV and other digital omnichannel reach and engagement extension strategies.
2. Traditional broadcasters will still be able to call shots with live sports programming
Take the NFL, whose games boast the highest ad rates in TV – it’s embracing streaming, but primarily the streaming services of broadcasters. NBC’s Peacock, Fox’s Tubi, ESPN/ABC’s ESPN+, and Viacom/CBS’s Paramount+ are all gaining the privilege to stream NFL games, and their parent networks will be paying more to do so. Amazon Prime has picked up the rights for Thursday night games – a less valuable deal, with a price tag at least half that of the deals struck by any of the other contenders. The NFL deals (and the conspicuous absence of streaming leaders like Apple TV+ or YouTubeTV in those deals) indicate there’s still time before streaming-only platforms dominate the sports world.
3. CTV platforms will proliferate as cable networks did in years past
More and more niche streaming platforms are entering the market, and this trend will continue. But proliferation doesn’t necessarily mean democratization of the market. Emerging streaming services will target content largely to specific audiences, and they’ll help reignite the AVOD model. AVOD is already forecast to grow 17% globally in the next four years, with that growth coming from new viewers and SVOD market share. The largest media companies will dominate SVOD, and households will have a limited appetite and budget to pile on more subscriptions.
4. The role of Upfronts will change as advertisers angle for biddable CTV inventory and more flexible buying options
Compared to the old TV Upfront model, CTV introduces flexibility to the way advertisers can buy. The challenge is that the proliferation of streaming platforms and devices complicates campaign optimization and management, as well as addressability. More CTV buying happens on a channel-by-channel basis than not. But as CTV grows in importance, planning it in an omnichannel way across data and targeting will increasingly become table stakes. Streaming platforms are pushing more and more premium inventory into programmatic guaranteed and PMPs, and more collaboration between agencies will help this trend continue.
5. More biddable CTV inventory will accelerate an industry-wide push toward a sustainable identity solution
Indeed, collaboration is necessary in 2021 for CTV to see its full value in programmatic. As streaming platforms are placing more CTV inventory into programmatic channels, ad tech companies and brands need a better, sustainable ID solution that complies with data privacy regulations. With data privacy legislation already in place or on the table in the EU, Brazil, California and several other US states, any ID solution must be compliant with the most stringent regulations in order to scale. Agencies, who will demand CTV be a meaningful part of omnichannel tracking and measurement, will recognize the need to collaborate and determine what they need from an identity solution. And as they’ve done with the pushes for viewability and brand safety in the past, they will and should put the heat on their tech partners to work on identity solutions that scale across the broader programmatic landscape.
The last year has seen an evolution in CTV. By accelerating that evolution in such a brief burst, we’ve essentially given the CTV marketplace a stress test, which in turn has offered key lessons about how to plan for sustained growth over the coming years.
Iván Markman is chief business officer at Verizon Media.