CTV ad spending expected to grow 14.4% in 2023, linear TV drops: IAB

By Fierce Video

Ad spending growth is expected to slow down in 2023, but buyer investment in connected TV is still projected to see double digit increases compared to 2022, according to new outlook research from IAB.

Overall spend for the ad market is projected to grow 5.9% year over year, based on an IAB survey conducted between October 18 and November 7 of buy-side ad investment decision-makers at brands and agencies. That’s slower than the 9% year over year growth seen in 2022. The results come amid a downturn in the advertising market in the face of macroeconomic challenges.

Still, buyers expect to focus more investment through connected TV channels in 2023. Media investment  via CTV is expected to tick up 14.4% next year, alongside increased spending in all other digital channels. However, buyers estimate spending less on traditional cable and broadcast ad channels, with IAB projecting decrease of 6.3% for linear TV.

The shift in spending follows viewership changes, as July saw streaming’s share of total TV time surpass that of cable for the first time in the U.S.

Across advertising channels, digital video, inclusive of CTV, is poised to again capture the biggest share in 2023 – accounting for 22.4% (up from 19.3% in 2022), according to IAB.

In looking at top goals for media investments, by and large buyers said they’re aiming to acquire new customers (61%), followed by increase brand equity (43%) and improve media efficiency (35%).

More than half of ad buyers plan to focus somewhat or significantly more on cross-platform measurement, platforms with first-party data (for each ad placement with publishers and data acquisitions or partnerships), creator or influencer ads and partnerships, and marketing mix modeling.

Shortening distance between first impression and transaction

Advertising channels tied closely to commerce are also teed up to get more attention in 2023. Nearly one-third to almost one-half of buyers also plan to focus somewhat or significantly more investment on shoppable ads, retail media network ads, as well as data clean rooms, according to IAB.

Roku is one streaming company that’s been working on integrating shoppable ads within its platform. It turned up a pilot with Walmart earlier this year that enables viewers to complete purchases fulfilled by the retail giant directly from the Roku platform with a click of the remote and pre-populated payment information from Roku Pay.

Speaking at the Go Addressable advertising event on Wednesday, Evan Shapiro, producer, NYU and Fordham professor, and CEO of ESHAP (as well as Media Universe Cartographer who makes great maps of the media landscape) highlighted a key trend for advertisers and implications for connected TV players, which is shortening the time between first impression and transaction.

“One of the key elements in the advertising business over the next couple of years is going to be the lack of distance between first impression and transaction,” Shapiro said. “And people who can enact that more efficiently with least waste are going to be the winners for brands. It’s not just the distributors it’s also the device makers themselves.”

According to Shapiro, there’s a major power shift happening in the ecosystem, where the vast majority of video impressions are now on connected TV, and giants like Amazon and Google are gearing up to snag share. Amazon has its Fire TV and is in the process of moving from dongles to smart TVs, and Shapiro noted the e-commerce giant’s distance between first impression and transaction is miniscule.

He pointed out that Roku, the number one video streaming platform on earth, accounts for 23% of streams on the planet. However, its dominant lead is only most obvious in the U.S. Less than 10% of the company’s overall revenue comes from Roku device sales and associated services in markets outside of the U.S. and Canada.

Separately, in another example showcasing the point of CTV ad impressions by device, LightShed Partners analyst Rich Greenfield tweeted a chart from Innovid’s investor day that showed Roku accounted for 39% of its CTV ad impressions served in Q3, while 24% were served on Fire TV, followed by Samsung (12%) and Google TV (8%).  Greenfield noted CTV advertising is moving toward walled-gardens and away from DSPs. He tweeted that 46% of Innovid CTV ads were served into walled gardens in Q3 compared to 39% in the same quarter of 2021.

Meanwhile, Shapiro said that Google, not only through Google TV but its Android operating system, is now the fastest growing operating system on earth, noting it started paying OEMs small sums to implement its OS on smart TVs.

“Google is a major player, and Amazon is going to coincide with them, and they’re going to try and recreate a duopoly on the connected television advertising platform that Apple and Google now have on the smartphone,” Shapiro said at the Go Addressable event.

Apple is also in the mix, with Shapiro forecasting bundles is where the industry is headed. He noted Apple’s larger services business, which accounts for 24% of the company’s overall revenue, is bigger than Netflix and Warner Bros. Discovery combined.

“Amazon Ads, which is a side hustle, 7% of their overall revenue, is bigger than all of Netflix and three-times Fox. This is your competition, that distance between impression and transaction,” he told the audience.

While IAB’s survey reflects recent expectations, over 6-in-10 buyers, or 63% will reforecast media plans more frequently in 2023 as a result of changing marketplace dynamics, with most who do so adjusting plans at least monthly.

Article originally appeared on Fierce Video.

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