- The Growing CTV Advertising Landscape
- Comparison of CTV and Traditional Television Advertising
- Traditional TV Decline Statistics
- Ad Spend of CTV Advertising
- The Traditional TV Advertising Spending
- Demographics and Targeting in the CTV Advertising
- Targeting Capabilities and Audience Insights
- The Impact of Demographics on Ad Content and Strategy
- Sport Events coverage Linear vs CTV platforms
- Political Ad Spend on CTV
- The Future of CTV and Traditional TV Advertising
In recent years, Connected TV (CTV) has surged in popularity as viewers flock to streaming services for their diverse content offerings and convenience. This shift has created a dynamic advertising landscape that presents unique opportunities for companies looking to engage their audience through digital channels.
Unlike traditional TV that broadcasts programs at set times, CTV enables viewers to select what and when they watch, offering an on-demand experience that aligns with modern consumption habits.
The Growing CTV Advertising Landscape
Connected TV (CTV) has become the fastest-growing major ad channel in the U.S., projected to expand by 22.4% and reach a total of $30.10 billion in ad spend by 2024. This remarkable growth trajectory is attributed to the performance, audience segmentation, data-driven insights, and interactive capabilities that CTV offers.
CTV’s rise is underpinned by increasing viewer numbers, with U.S. adults spending an average of 123.4 minutes per day on CTV in 2024, trailing only behind mobile devices.
Moreover, the U.S. digital ad spend allocated to CTV is expected to account for one in ten dollars by 2024, signaling the growing importance of this medium in the advertising mix.
Comparison of CTV and Traditional Television Advertising
When comparing CTV with traditional television advertising, several distinct trends and numbers highlight the shifting preferences:
The growing viewership of Subscription on Demand
83% of U.S. households have a subscription video on-demand (SVOD) service according to Leichtman Research. Given that there were an estimated 125 million TV households in the U.S. for the 2023-2024, there are approximately 123 million households in the U.S. that watch TV via streaming services in 2023.
Traditional TV Decline Statistics
In the face of evolving consumer preferences and technological advancements, traditional television viewership has seen a steady decline, evidenced by various indicators and statistics.
- Overall Traditional TV Usage: Total traditional TV usage, comprising broadcast and pay TV, dropped below 50% in July for the first time ever.
- Pay-TV Customers: The usage among pay-TV customers fell to 29.6% of TV, while broadcast dropped to a 20% share on July, 2023.
- Year-over-year Decline: Pay-TV operators reported a weighted average 9.6% decline in subscribers year over year, amounting to about 4.4 million households.
- Pay-TV Household Numbers: There were 41 million pay-TV households during the second quarter, down from 50 million and 45 million in the same periods in 2021 and 2022, respectively.
- Viewership Decrease: Year-over-year, pay-TV viewership was down 12.5%, while broadcast was down 5.4%, according to Nielsen.
- Streaming vs Traditional: Streaming services made up nearly 39% of usage in July.
- Monthly Declines: Major pay-TV providers, such as Comcast Corp. and Charter Communications, often report quarterly drops in customers, with Comcast and Charter losing 543,000 and 200,000 pay-TV subscribers during the second quarter of 2023, respectively.
- Broadcast and Cable Viewership: Broadcast viewership dropped 3.6% in July, making up just 20% of all TV viewership, and cable viewing dropped 2.9%, making up 29.6%.
- Year-over-year Broadcast and Cable Drop: Broadcast viewership slid 5.4% and cable TV dropped 12.5% year-over-year.
These statistics demonstrate that traditional TV viewership has been experiencing a significant decline, as consumers increasingly turn towards streaming platforms.
Ad Spend of CTV Advertising
CTV ad spend witnessed a 40.1% increase in 2021, reaching $11.36 billion. This growth is set against the backdrop of a decreasing traditional TV ad spend, indicating a pivot towards CTV among advertisers.
Connected TV (CTV) is making significant inroads in the advertising market, with growing investment from advertisers who are enticed by its potential for targeted outreach and audience engagement. The trend is so pronounced that by 2025, it’s expected that CTV ad revenues could overtake traditional linear TV ad spend, possibly accounting for more than half.
In 2023, CTV ad spend hit an impressive $24.6 billion in the U.S., and the trajectory suggests a climb to $42.4 billion by 2027. This shift underscores a broader change in the industry, as brands look to CTV as a more dynamic and effective way to reach consumers who are increasingly cutting the cord on traditional television.
The Traditional TV Advertising Spending
Projected revenues for traditional TV advertising globally are set to hit $147.90 billion in 2024. However, a slight decline at an annual rate of -1.12% is expected between 2024 and 2028, leading to an anticipated market value of $141.40 billion by the end of that period.
In 2024, the expenditure per viewer is estimated to stand at $26.88. By 2028, the number of individuals reached by this market is likely to grow to 5.7 billion. Despite the competition from digital media, traditional TV advertising maintains a significant presence in worldwide ad markets, including in the U.S.
Demographics and Targeting in the CTV Advertising
In 2024, the landscape of CTV viewership demographics displays a clear tilt towards younger audiences, with Gen Z’s linear viewership declining and CTV viewership on the rise.
It is projected that Gen Z’s CTV viewership will approach 55 million viewers in 2024. Moreover, CTV user penetration is impressively high among the age brackets of 25 to 54, soaring over 80%, and for ages 12 to 17, the penetration is over 75%.
However, the figures drop for the youngest and oldest viewers; less than 50% of individuals aged 0 to 11 and 65 and older are engaged with CTV.
Targeting Capabilities and Audience Insights
CTV’s targeting capabilities are one of its most lauded features, allowing for precise audience segmentation based on interests, demographics, and viewing habits.
This refined targeting is contrasted with the broader reach of traditional TV ads, which employ a one-size-fits-all approach. CTV advertising enables brands to deliver customized ads to distinct audience demographics with content that resonates with their lifestyles and viewing preferences.
The integration with retail media and social media is further enhancing CTV’s targeting capabilities, providing advertisers with rich first-party data to fine-tune their audience segmentation.
The Impact of Demographics on Ad Content and Strategy
Advertisers leveraging CTV can tailor their ad content and strategy to align closely with the demographic insights at their disposal. For instance, with Gen Z’s significant presence on CTV, advertisers might create content that resonates with the values, trends, and digital fluency of this demographic.
Additionally, the high CTV penetration rates among those aged 25 to 54 suggest that content aimed at this broad working-age group can be effectively delivered through CTV platforms. This demographic targeting results in more personalized ad experiences that are likely to engage viewers, keep their attention, and potentially lead to higher conversion rates.
Sport Events coverage Linear vs CTV platforms
The Super Bowl commands substantial advertising budgets due to its massive viewership. A 30-second ad spot during the Super Bowl comes at a record-breaking price tag of $7 million for linear TV. However, it is noted that CTV and digital advertising post-game provide an opportunity for brands to capitalize on the event’s excitement in a cost-effective manner and are suggested as a strategic move for smaller brands or those with tighter budgets.
Political Ad Spend on CTV
In the 2024 election cycle, political ad investments in Connected TV (CTV) are anticipated to reach $1.5 billion, accounting for 45% of digital political advertising, a notable increase from the 19% in the 2020 cycle. Overall, political ad spending in the US is expected to exceed $12 billion, with a significant shift towards digital mediums, particularly CTV, which is experiencing a 506.3% increase in spending compared to the previous election.
The Future of CTV and Traditional TV Advertising
- Spending on TV ads overall will resume growing in 2024.
After a dip in 2023, combined spending on TV and CTV will grow every year through 2027 and close in on $100 billion.
- A drop in ad inventory won’t stop growth through 2027.
Available inventory on TV and CTV is expected to fall by 24% in the next four years. However, higher ad pricing on CTV will deliver a compound annual growth rate (CAGR) of 3.4% in combined TV and CTV ad spending through 2027.
- The TV ship has sailed.
Linear TV is no longer a growth industry, signaling a clear and slow decline for traditional TV.
- CTV is picking up the slack, resulting in a combined market that will grow from 2024 through 2027.
Spending will grow by around 20% in 2024, and by low double digits through 2027.
- Later this decade, CTV will likely surpass TV in average daily time spent.
CTV is expected to overtake its linear counterpart in ad spending around the turn of the next decade.
