CTV Wrapped — Your 2023 Connected TV and CTV Advertising Recap and 2024 Forecast

As we welcome 2024, we’d like to take a moment to reflect on the impact Connected TV (CTV) and CTV advertising have made in 2023. Like one of our popular streaming audio inventory partners, Spotify, EMG will summarize and highlight the major shifts, trends, and marketing opinions on CTV and streaming advertising last year. Time to unwrap!

By the end of 2023,

1. CTV is now the projected fastest-growing media channel, with a 39.5% increase in ad spend this year.
2. 88% of U.S. households now own at least one Connected TV device.
3. The average hours of CTV viewing increased by 21% (May 2023 to May 2022).
4. 41% of households watch ad-supported streaming content (up from 31% in Q1 2023).
5. 2-in-3 advertisers using CTV/OTT increased their CTV/OTT ad spend.
6. 46% of adults in the U.S. watch TV on a CTV every day.
7. Millennials and Gen Z are the largest generations using CTV. Among the ages of 18-34, 62% of them watch content on a Connected TV device daily, compared to 54% of ages 35-54 and 24% of ages 55+.
8. Roku holds the most share for CTV devices.

• • Roku — 50% share
  • Amazon Fire TV — 30% share
  • Apple TV — 10% share
  • Google Chromecast — 6% share
  • Android TV — 4% share

Here are the hottest trends and statistics for CTV and CTV advertising right now. Let’s dive in.

1.  Connected TV is gaining momentum (and so is CTV advertising).

Connected TV advertising combines the performance power of traditional TV advertising with the programmatic technology of the digital age. Viewers are cutting the cord (dropping cable TV) and converting to Connected TV at lightning rates.

• At the end of 2023, 88% of U.S. households own at least one Connected TV device, jumping from just 38% in 2012.
• Over 110 million CTV users belong to the Gen Z and Millennial generations.
  • Psst, millennials have become the largest generation of automotive buyers in the U.S.
• Approximately 73% of CTV viewers prefer free ad-supported content as opposed to paid ad-free content (largely due to streaming price hikes and an uncertain economy).

2.  CTV is underutilized, but its ad spend is on the rise.

According to a study by The Trade Desk, an overwhelming 87% of marketers perceive connected TV (CTV) advertising to be as effective as, if not more effective than, traditional TV advertising. Despite this clear success in CTV advertising and a growing, exclusive audience on this medium, CTV advertising spend is still considered underfunded, with advertisers lagging behind current TV viewership habits. However, marketers are starting to align with consumer attention.

• CTV viewership currently exceeds CTV ad spend on many platforms. Disney+, Paramount+, and Netflix have a lower ad revenue share than their “time spent viewing” share.
• CTV’s total viewing share is between 34%-40% of the television market, while CTV ad inventory share is 15%-23%.
• Last year (2022), the annual spend on Connected TV advertising in the United States reached 20.69 billion U.S. dollars. This trajectory suggests that CTV ad spending will make substantial growth, projected to double to 40.9 billion U.S. dollars by 2027.
• 95% of marketers affirmed that their CTV advertising successfully met their desired key performance indicators, according to The Trade Desk.

3.  CTV offers more perks than Linear.

So, why is CTV superior to other advertising mediums?

CTV is the marriage of linear TV and digital marketing, seamlessly blending the strengths of both channels into a potent advertising medium. CTV is able to function much like a digital ad channel, combining the impactful storytelling capabilities of television with precise audience targeting, advanced measurement and reporting, and insightful analytics.

In a report by veteran Wall Street media analyst Dan Salmon of BMO Capital, he identifies four pivotal factors driving the growth of CTV advertising in comparison to its traditional TV predecessor:

• Advanced Audience Targeting: CTV can deliver ads to specific individuals or households in their exact market, moving beyond broad demographic and “channel-wide” categories that linear TV was restrained to. This is particularly attractive to advertisers focused on achieving bottom-of-the-funnel performance for a fraction of the price.
• Programmatic Tools and Automation: These features streamline and automate the entire advertising process, making CTV advertising quick and hassle-free for marketers. Bidding and buying targeted inventory instantaneously on unified platforms while following the advertisers set parameters… sounds like it’s time to say goodbye to human negotiations and bulk inventory contracts.
• Granular Attribution and Measurement: CTV campaigns measure exactly what marketers care about. From online leads, completion rates, and even offline metrics and market share gain (an EMG specialty), marketers know exactly how their campaigns are impacting conversions. This level of attribution is impossible with linear TV’s limited technology.
• Ability to Reach an Exclusive Audience: With 56% of the television market exclusively watching their video content on Connected TVs, CTV dominates the viewership market share (that was once controlled by linear TV). Plus, CTV reaches younger audiences, a demographic that brand advertisers may find challenging to reach through traditional cable TV channels. This is especially important for the automotive industry, given the high amount of millennial car buyers.

4.  CTV Advertising is outperforming mobile.

Advertisers are seeing a substantial performance jump on Connected TV, as opposed to mobile. CTV is the dominant screen, holding 71% share of total video ad viewing, according to a FreeWheel study. CTV viewership share jumped more than 10% compared to 2021’s viewership report, while mobile platforms hold only 11% share. Additionally, CTV’s video completion rates outperform mobile, ranging from 96-98% completion for the past three years.

Video advertising on smaller screens underperforms. Why? Individuals prefer the “leaned back,” “living room” viewing experience on the big screen. This immersive, focused watching experience helps CTV advertising drive the highest engagement and performance for streaming ad campaigns.

Not only is it the top performing video advertising platform, but a noteworthy 46% of adults express a preference for television advertising, considering it to be the most trustworthy advertising channel, in contrast to social media’s 19%.

5.  Advertiser opinions: expecting greater benefits on CTV, as opposed to linear.

Although still relatively new to the scene, marketers are already seeing the benefits of CTV over the limited capabilities of linear TV advertising. Here are some noteworthy benefits expected from surveyed marketers:

• 64% of marketing professionals anticipate a stronger connection between digital and television.
• 63% of marketers believe that Connected TV (CTV) advertisements enable more accurate audience targeting.
• For 51% of the surveyed individuals, CTV can enhance ad relevance.
• Additional expectations from CTV advertising include the anticipation of comprehensive measurement and data insights (44%), the ability to unlock new engaging creative formats (41%), and the potential for time and cost savings (29%).

6.  CTV’s “Halo Effect” — perfect for an omnichannel approach.

CTV has a “halo effect” on other advertising channels, creating a positive effect on the performance of additional channels like social media and paid search ads. CTV easily integrates with other channels in an advertiser’s strategy, reaching new audiences on a highly-engaging big screen.

Digiday and Innovid report that a majority of marketers are incorporating CTV ads into their overall marketing mix, teaming up with traditional media channels like social media (86%), display advertising (78%), mobile video (77%), desktop video (67%), and linear TV (54%). Adding the preferred (and top performing) screen for video consumption to a marketing strategy perfectly complements other forms of advertising, creating an optimal range of exposures and boosting overall performance.

7.  CTV is increasing brand awareness.

The Innovid and Digiday study dove into the primary key performance indicators (KPIs) that are most important for CTV marketers, namely conversions, revenue, reach, and brand awareness.

When asked about CTV advertising’s impact on their businesses, surveyed advertisers highlighted the following outcomes:

• 59% of advertisers reported that investing in CTV advertising elevated their brand awareness.
• For 49% of advertisers, CTV advertising led to a spike in brand engagement, increasing action activities like website and store visits.
• A quarter of the respondents, 25%, asserted that CTV ads resulted in higher conversion rates.
• Lastly, 18% of those surveyed observed a growth in the number of returning customers.

8.  New challenges (and responsibilities) for marketers.

With greater technological power on CTV comes greater responsibility. Many marketers stress about properly curating their audiences, inventories, and attribution models — things they didn’t have to worry about with linear TV advertising’s limited capabilities. While these new advancements are extremely powerful performance drivers, knowing how to use them is massively important for actual success.

As more choices enter the CTV market, inventory fragmentation is a growing concern for many marketers. From new operating systems, streaming applications, networks, bundles, and ad-supported services, the landscape of CTV is expected to become increasingly fragmented, so advertising on all ad-supported inventories is getting harder. This means advertisers need to proactively acquire contracts with inventory publishers to unlock all available inventories, plus be diligent about their inventory auditing to ensure their chosen inventory is properly performing and reaching the right audiences.

Marketers identified additional challenges with the integration of CTV advertising, including:

• Selecting the right audience segments to target, a concern voiced by 53% of the surveyed individuals.
• The issue of unreliable measurement, highlighted by 57% of those surveyed.
• 32% are worried their frequency will be inconsistent with their parameters.

This is a lot to worry about, and many marketers who are already managing other advertising mediums choose to consult streaming advertising experts to see the greatest (and easiest) success.

9.  Marketers are hiring CTV experts.

As you can see, marketers have a lot of new responsibilities with the technological capabilities of Connected TV, from audience configuration, inventory contracts, to internal auditing and optimizing, just to name a few. Marketers are aware of the challenges associated with transitioning to CTV and are increasingly looking for CTV expertise.

As a “do it yourself” effort, marketing teams are urged to invest in technology that facilitates the creation of a seamless omnichannel strategy. This involves efficient distribution, customization, and measurement of ads across all screens and devices.

Success in this evolving landscape, where TV content increasingly shifts online and away from traditional cable setups, requires advertisers to learn and equip themselves with these technological tools or hire streaming advertising specialists.

To combat this learning curve, the surveyed marketers (via Innovid and Digiday) have taken various steps:

• 68% of advertisers collaborated with ad-tech companies (DSP, SSP, ad servers) to enhance the measurement of CTV ad performance.
• A smaller percentage of advertisers opted for alternative approaches to boost their CTV performance, including hiring in-house experts (27%), working with advertising agencies (18%), and engaging a consulting firm (17%).

10.  Marketers want to save money.

Although this statement has always been true, today’s uncertain economy has caused many marketers more worry regarding the cost-efficiency of their marketing dollars.

Luckily for advertisers, there’s no minimum budget requirement for CTV advertising. Unlike traditional TV advertising, which requires substantial upfront budgets—averaging around $104,700 for an untargeted 30-second commercial on a national network—Connected TV (CTV) offers brands and marketers greater flexibility, simplicity, and accessibility.

However, it’s important to note that allocating a mere $20 to CTV advertising won’t move the market. Advertisers should carefully assess their target audience, sales penetration, market size, brand index, and desired marketing goals when determining a campaign’s budget.

A targeted campaign within a distinct and specific niche can be successful with a budget of just a few thousand dollars. Six figure budgets are no longer the minimum.

With our CTV Wrapped for 2023 complete, it’s time to look at 2024. Here’s EMG with the 2024 streaming forecast: predicting clear skies ahead for Connected TV and CTV advertising.

Believe it or not, we are officially in the mid 2020s. The early 20s have been a period of great growth and change in the world of streaming, seeing new popularity and recognition from viewers and marketers alike. Here are some of the major shifts that the video advertising landscape is expected to see in 2024 via Insider Intelligence market analyst Ross Benes, and why marketers should care.

1.  Linear TV is dying, and CTV will grow.

• Since July 2022, CTV streaming has officially dominated the television market. 2024 will see a continual decrease in linear TV viewership, with a predicted 46.6 million total cord-cutter households in the U.S. by the end of 2024.
• By 2027, there will be double the ad-supported streaming viewers than there are linear TV viewers.
• Despite this viewership monopoly, linear TV will still account for two-thirds of total U.S. TV and streaming ad spend.
• Major traditional TV events (the Summer Olympics and election season) in 2024 will temporality boost linear ad spend, expected to reach just over $60 billion in 2024.

2.  Streaming services will continue to raise subscription fees and adopt ad-supported formats.

• CTV makes up, on average, 19% of total CTV and TV ad inventory from 2021-2023, according to Madison and Wall.
• Ad-supported sign-ups are growing at different rates per service, Antenna found.
  •  20% of all Netflix sign-ups are ad-supported, while 69% of all Peacock sign-ups are ad-supported.
  • The majority of Peacock, Paramount+, and Hulu viewers are on ad-supported tiers.
• 25% of U.S. VOD (video-on-demand) services will be ad-supported entering 2024, according to Antenna.
• Steaming services that support ads are predicted to increase their ad load in 2024.
  • Netflix has 3 minutes of ads per hour, while Hulu has 8 minutes of ads per hour. Ad loads will continue to rise to increase profitability.

3.  Streaming CPMs will continue to narrow and ad revenue will continue to expand.

• Disney+ and Netflix’s CPMs (cost per one thousand impressions) have lowered from $50 and $59.50 to $46.64 and $47.05.
• Hulu, YouTube, and Roku have lowered from two-thirds to one-third of total CTV ad revenue.

4.  Amazon’s new ad tier will be big.

• Launching its ad-supported tier in January 2024, Amazon Prime Video is expected to see $3.13 billion in CTV ad revenue in 2024.
• Amazon will become the No. 3 ad seller in streaming in 2024, just behind Alphabet and The Walt Disney Co.
• Amazon is projected to add $2 billion to the CTV market.

Linear TV viewership will continue to fall, more streaming apps will enter the market, ad pricing and revenue will narrow, higher fees and more ad-supported services will emerge, and Amazon will make a big splash. CTV changes every year for the better, and 2024 will be no exception. Advertisers will see increasing value and opportunity in CTV advertising as this exclusive audience grows, prices narrow, and inventory becomes more plentiful. By following viewership preferences (toward CTV), advertisers will see the greatest campaign success.

To join the fun (and success), launch a CTV campaign today with total support from EMG.