Internet-connected TV continues rapid growth, but challenges remain

Despite some, uh, technical issues, the NewFronts kicked off yesterday, hosting attendees both IRL and remotely.

Ahead of the kickoff, the IAB released its 2021 Video Ad Spend and 2022 Outlook report with Standard Media Index and Advertiser Perceptions, showing that digital video advertising grew 49% in 2021 and is expected to grow 26% to reach $49.2 billion in spend this year.

Break it down: Among video channels, ad spend on internet-connected TV (CTV) is growing the fastest. According to Leichtman Research Group, at least 82% of US TV households now have at least one CTV. IAB projects CTV spending will not only grow 39% this year to reach $21.2 billion, but also more than double from 2020.

Even though it’s growing quickly, the IAB’s report found that CTV only gets 18% of video ad sales.

So why is that? CTV has some downsides. When IAB asked buyers about their concerns, many cited “measuring incremental reach” and “managing frequency” across platforms and publishers. They also highlighted “a lack of transparency/interoperability” within walled gardens as an issue, as well as “fragmentation of programmatic supply paths.”

Buy, buy, buy: Eric John, VP of the IAB Media Center, said in a statement, “The time is now for brands and buyers to follow consumer attention” and go all-in on CTV. A few of the reasons listed in the report include:

• Access to data not compatible with linear TV, like first-party brand data, location data, and shopping data.
• Better returns, with 57% of buyers saying CTV was more effective than linear TV at leading to website and sales actions, and 46% “more effective at delivering brand perception.”
• More transparency than social or other digital videos on where ads are running.
• No dependence on third-party cookies, which are on their way out anyway.

Why not both? Choosing linear vs. CTV could become a decision of the past if buyers have it their way. Almost nine out of 10 (88%) said they expect to see a merged linear TV/CTV marketplace in the coming years.—KH