How Connected TV Fits in 2021 Media

The growth of connected TV usage has accelerated exponentially giving way to further consideration for ad dollars this year. In 2019, media buyers began realizing CTV’s potential as viewing increased and advertising opportunities and products expanded. In 2020, viewership and advertising dollars increased significantly again and the shift in consumer behaviors that’s driving increased consumption of CTV is not slowing down.

What is CTV Advertising?

Connected TV is anything that delivers video content on your television and is connected to the internet—also referred to as “over-the-top” (OTT). Devices delivering OTT include Roku, Apple TV, Chromecast, and Amazon’s Firestick. Other avenues of CTV include video game consoles such as PS5 and Xbox, and Blu-ray players. Content distributors (Hulu, YouTube TV, Crackle, etc.) can serve advertisements, similar to traditional commercials (pre-roll and midroll). These outlets provide audience at scale, beyond linear TV viewers. CTV inventory is sold directly by TV networks and video publishers. It can also be purchased programmatically through a demand-side platform (DSP).

Market Trends

In 2020, according to analyst firm eMarketer, U.S. CTV ad spending totaled $8.11 billion and will increase to $11.36 billion in 2021. CTV viewers, in 2020, totaled 45.7 million for Gen Z, 56.5 million for Millennials, 48.5 million for Gen X, and 32.8 million for Baby Boomers. CTV will reach four-fifths of U.S. households this year. Cord-cutters (those permanently cancelling cable subscriptions) represent a growing population who cannot be reached on linear TV. At Centro, we are seeing strong growth in CTV ad spending across the board. As an example, among our political advertising clients, CTV accounted for 25% of the programmatic ad-buying between January 1 and October 5, 2020. In 2018 (arguably one of the most active mid-term elections), with the same type of clients and buying, CTV was just 5% of total spend.

Media-Mix Considerations

Choice of vendors for spending on CTV in 2021 may be concentrated—YouTube, Hulu and Roku account for nearly half of all U.S. CTV ad revenues. Amazon with Fire TV and IMDb TV trails closely. Buying options will likely increase, with a possible preference for purchasing through the most-direct channel possible. Pricing constraints through this approach, however, could drive more activity in programmatic buying within open markets. This has the potential for some vendors to make more inventory available for purchase programmatically. Although, in 4Q 2020 some CTV inventory sold out.

As you think about CTV, keep in mind that measurement and attribution can be a challenge when trying to blend linear TV metrics with CTV measures. With the CTV market needing to mature, ad fraud could also emerge with questionable outlets seeking shortcuts and new ways to monetize inventory. As viewers continue to flock to streaming video, the value of CTV in reaching customers warrants increased attention and consideration within the media mix. We believe ad spending will accelerate throughout 2021 and that CTV will continue to grow.

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