New data from SpotX sheds light on some of the key changes expected to transform the CTV market.
SpotX, the video advertising platform, yesterday announced the findings of its “2021 Global Video Advertising Trends†report. The company polled industry executives from some of the leading brands in the advertising space. The report reveals that programmatic budgets are set to increase in 2021 as CTV consumption increases and marketers use better addressable technologies to bring linear inventory into programmatic workflows.
According to the report, COVID-19 has not so much disrupted the video industry as it has accelerated its predominant trends. Viewers continue to cut the cord, replacing traditional cable bundles with a self-curated mix of OTT, on-demand, and live streaming content. As people spend more time at home, consumer video viewing will continue to outpace expectations.
Streamers are consuming content across a growing range of paid and ad-supported channels. New subscription offerings from legacy giants like Disney and NBC are pulling more traditional TV households into the digital future. In this fragmented and rapidly evolving marketplace, success for brands and media owners alike hinges on their ability to strategically focus their attention and investment.
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The report also found that in the US, one of the fastest-growing markets of cord-cutters, pay-TV households will decline to 73.7 million in 2021 and will be outnumbered by non-pay TV households by 2024.
While internet-connected TVs have long been associated with younger, tech-forward viewers, SpotX’s latest report on CTV viewership shows the channel has achieved critical mass across demographics in markets around the world:
- In the US, 40% of adults are now CTV consumers. In Europe’s biggest markets, there is a 50% reach in CTV viewership, representing 61.5 million households. In the APAC region, 68.5% of consumers regularly watch OTT, predominately through mobile devices. However, in more developed markets like Japan, Singapore, and Australia, CTV is gaining popularity.
- CTV audiences are more mature than expected, with a median age of 45 in the U.S. and 43 in Europe. OTT viewers in APAC are somewhat younger, with a median age of 32.
- In 2018, the average daily CTV viewing in the U.S. was 46 minutes. Today, CTV viewers are watching three hours of programming per day, a number that continues to climb during the pandemic. OTT viewers in APAC spend an average of three hours per day watching video content, and the majority reported watching an additional one to two hours since the COVID-19 outbreak began.
The report also found that Ad spend is following new consumer habits and will flow to OTT and CTV faster than expected. Brand advertising budgets have only begun to budge from traditional TV, even as viewership stalls and new channels like OTT and CTV see rapid growth. This mismatch between consumer behavior and budget allocation is overdue for a correction. Now that advertisers understand how to activate data for efficient audience targeting while still achieving scale in OTT, we could expect to see more advertisers recalibrate their media plans towards digital.
Although many advertisers curtailed their budgets in the spring of 2020, consumer demand has rebounded dramatically in recent months, with important nuances as behavior adapts to ongoing pandemic restrictions on work and travel. Many of these in-demand verticals are fueling growth in OTT ad spend as advertisers follow the eyeballs and move budgets to streaming platforms. The report states that consumer spending will remain strong through the end of the year, after which it is likely to soften in Q1 of 2021 when the effects of pent-up demand and holiday shopping begin to level out.
What Does This Mean for Device Manufacturers?
A record-setting 41% of U.S. consumers are planning to buy a new TV during the 2020 holiday season, according to The Harris Poll research, and it is likely to be a smart TV. In recent years, manufacturers have implemented new ad-based revenue streams that simultaneously help to bring down the cost of smart TV screens. IDC reports that the historically low prices are encouraging consumers to replace their entire TV rather than purchasing digital media adapters, leading to faster worldwide adoption of smart TVs.
Smart TVs are already the most common way people watch CTV in the U.S., Europe, and Australia, and manufacturers are using that scale to launch new offerings for consumers and advertisers. AVOD services like Samsung Plus, LG Channels, and Vizio WatchFree offer free catalogs of live and on-demand content supported by ad breaks. The connected capabilities of smart TVs also enable manufacturers to collect glass-level measurements and package that data for advertisers.
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The growth in this area is staggering: the report finds the segment has seen an 800% spike in smart TV ad inventory from March through October 2020, and these devices now account for 38% of all internet-connected TV spend on our platform (up from 10% in 2019). In the coming year, original equipment manufacturers (OEMs) may, in fact, generate more profit from their data and advertising offerings than from their physical device sales.
As more consumers access streaming apps directly through the TV rather than auxiliary streaming sticks or boxes, OEMs have an opportunity to own a greater share of the user experience. Like other realms of digital media, CTV has both an abundance of content options and a lack of good mechanisms for helping consumers discover new content and apps. Manufacturers are differentiating their devices by ramping up their investment in shaping the viewer experience.
OEMs will improve their operating systems and user interfaces to better cater the viewing experience to consumers and provide personalized content recommendations. They are also introducing new ad placement opportunities for media owners to feature apps or content through prominent recommendation slots.
Why Programmatic Can Power Linear Addressable at Scale?
Programmatic plays an important role in identifying target audiences and creating reach and frequency through addressable opportunities at scale. It allows advertisers to value individual impressions differently in real-time through first- and third-party data sets, driving efficiency for advertisers, and increased revenue for media owners.
A big challenge for addressable TV has been fragmentation, as each new platform or pilot opportunity covers only a subset of the market. Stitching together different types of addressable inventory from varying environments and programmers into one programmatic marketplace means buyers can transact just as they would with OTT inventory, seamlessly adding addressable inventory to their TV buys.
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With more inventory available, and the programmatic pipes built out, the report suggests that we are likely to see more linear TV budgets transacted digitally. For programmers, this means tapping into the growing pool of programmatic TV spend that is expected to reach $6.69 billion by 2021, up from $2.77 billion in 2019.
Looking Ahead Into 2021
Audiences and advertisers are rapidly shifting their attention from linear to digital. Consumers want choice — not only when and how they watch TV, but whether that streaming content is paid or ad-supported. Advertisers need better measurement frameworks to prove the ROI of their budgets across channels. And media owners and smart TV manufacturers are sitting on gold mines of information if only they can find secure and respectful methods for monetizing their audience data.