Television Update, Fall 2018

Executive Summary

Advanced TV advertising—including addressable, programmatic and over-the-top (OTT)—continues to gain traction. Changes in how TV is viewed and granular measurement are transforming the TV marketplace. Standardization of audience and performance measurement and reporting is a tall order for addressable TV, programmatic TV and OTT initiatives but would drive more ad dollars to these advanced TV offerings.

How much ad spending will go to addressable TV?

Addressable TV advertising spending is expected to grow from $2.06 billion this year to $3.37 billion in 2020, fueled by new sources of ad inventory and more efficient pricing. Addressable campaign execution may become easier as MVPDs Comcast, Cox and Charter set up a central organization for selling addressable inventory. Xandr, a4 and Frontier are also putting together a joint offering.

How much ad spending will programmatic TV get?

Programmatic TV (PTV) ad spending is on track to reach $4.7 billion in 2020 from a current level of $1.7 billion. Front-end PTV ad inventory avail systems for advanced targets are now being used for developing TV schedules. Connection with order placement and financial systems will likely take three to five years. For the foreseeable future, most PTV deals will be made privately, with agreed upon transaction rules—and pricing and inventory guarantees—between select buyers and sellers.

What is driving OTT ad spending?

OTT TV ad spending growth is in hyperdrive as more ads become available through a diverse group of OTT purveyors, including MVPDs, OTT pure plays, connected device companies and TV manufacturers, like Samsung, that are now selling advertising through smart TVs. Marketers are being drawn to the OTT space to achieve granular, digital-like targeting in a low ad-clutter environment; they’re also looking for younger viewers who are watching less linear TV.

WHAT’S IN THIS REPORT? Growth estimates and the key drivers for addressable, programmatic TV buying and over-the-top (OTT).

KEY STAT: Addressable TV advertising spending, fueled by new sources of ad inventory and more efficient pricing, will grow to $3.37 billion in 2020.