Connected TV (CTV) ad spending will be the fastest-growing medium in the US this year, growing 21.2% to reach $25.09 billion, according to our forecast.
Despite this ad surge, CTV faces the same challenge as traditional TV: getting consumers’ attention.
Better together: Nearly 80% of CTV viewing is shared, meaning two or more people are watching together at the same time, according to August 2022 research from Amagi as cited in Forbes. While this practice of co-viewing isn’t new, it “majorly undermines CTV’s tightly targeted value proposition,” said David Bloom of NextTV.
Or does it?
“I have to disagree with Bloom on this one,” our analyst Paul Verna said on a recent “Behind the Numbers: The Daily” podcast episode. “I don’t think it’s anything at all. In fact, it may even enhance [CTV viewing].”
Verna said CTV advertisers are smart enough to know that TV is not like a cell phone where only one person can use it at a time—and that can be an advantage.
“[My wife and I], we’re different genders, but we’re in the same demographic. We have similar tastes, we share a budget. So you could argue that an ad targeted to me is actually getting more views when my wife or even my daughter are watching with me.”
The sweet spot: CTV ad attention peaks at six to 10 exposures, with 12 to 24 hours between each exposure, according to a study from Yahoo and Publicis Media.
“That means you would be seeing the same ad once or twice every day for several days. And [I think] by the time you’ve seen it three or four times, unless it’s a really brilliant ad, you’re going to start tuning it out.”
Also according to the survey, only a third of CTV ads draw two or more seconds of active, eyes-on-the-screen attention.
“Just because you’re watching CTV, it doesn’t mean you’re not going to do what you’ve always done, which is tune [commercials] out, walk away, or mute,” said Verna, suggesting that advertisers should be aware that ad repetition may further turn consumers’ attention away from ads.
Streaming wars: One thing everyone can agree on is it’s a crowded field. Hulu sits at the top with $3.63 billion in CTV ad revenues this year, followed by YouTube ($2.89 billion), and Roku ($2.19 billion), according to our forecast.
Verna said that Disney+ and Netflix, which have just recently launched ad-supported tiers, will both be short of a billion dollars in CTV ad revenues this year.
The Yahoo/Publicis study found viewers pay more attention to ads on paid, subscription-based apps and ad-free/ad-supported tier hybrids (like Hulu) than to ads on free ad-supported streaming TV (FAST) services, like Tubi, or smart TV channels on FASTs, like Amazon’s Freevee.
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