CTV ad investment is increasing but there’s room for faster growth

Advertising spend on Connected TV (CTV) is increasing as viewers and advertisers migrate from linear broadcast television, but a new WARC study finds this steady growth is restricted by its performance credentials and competition from search, social and retail media. 

WARC Media’s latest Global Advertising Trends report, Connected TV’s next episode, examines advertising investment and consumption patterns of CTV, defined as streamed video viewed on a smart TV or a TV connected to the internet.

Why CTV ad investment matters

CTV is growing but it’s only one part of television inventory. It’s competing for a pool of budget that most advertisers reserve for professional video, and other channels are growing faster: retail media is growing three times as fast as CTV, for example, and YouTube’s ad revenue is set to be 17.4% greater. As Alex Brownsell, co-author of the report and head of content at WARC Media, notes: “Whilst eyeballs are rapidly shifting from broadcast to streaming, this is evolution, not revolution.”

Takeaways 

• CTV gains eyeballs as consumers embrace greater choice 

As younger generations favour streaming and smart TV adoption proliferates, there are growing opportunities for media owners to diversify ad revenue streams, and for brands to engage hard-to-reach audiences. Samsung TV’s latest research showed that the ability to access video streaming apps is “by far the most important feature” when it comes to smart TV capabilities.

• Connected TV ad investment is forecast to reach $25.9bn globally in 2023 

And it’s forecast to continue to grow at a compound CAGR of 10.4% over the next five years, according to GroupM. But CTV media owners are mostly competing for existing TV budgets rather than winning share of spend from digital channels like social, or accessing new budgets as retail media has done, which is growing three times as fast as CTV.

• Fragmented CTV landscape must improve its effectiveness

While linear TV can reach tens of millions with a single creative, CTV’s key selling point – its ability to help brands target audiences and avoid wastage – risks contradicting that key attribute of mass scale. Advertisers also need to recognise the limitations of CTV ad inventory: research suggests audiences are reaching the point of subscription fatigue, while smart TV owners remain in the minority worldwide.

Download a sample report of WARC Global Ad Trends: Connected TV’s next episode here.