When was the last time you watched a movie or a series? Or played a video game?
OK, probably not THAT long ago.
But let’s exclude Netflix, HBO, and Amazon Prime. Don’t think about consoles like PlayStation and Xbox as well. No streaming. Only traditional TV. So, when?
We bet that’ll take longer to answer. At least that’s what the rising popularity of connected TV (CTV) shows – and that’s no surprise considering all the handful of video streaming options it has to offer.
Especially during the COVID-19 pandemic, cord-cutting has become a way to go for many wishing to reduce spending on traditional (linear) TV and explore limitless streaming options. No wonder the growing CTV market has also attracted unprecedented advertisers’ attention.
So, what’s been happening in the CTV industry, and what are the forecasts for CTV and CTV advertising?
We’ve gathered a bunch of facts, stats, and trends to cover it all.
Before we jump into facts and numbers, let's quickly run through the essentials.
In short, connected TV is a method that allows users to stream content on their television sets via the internet. It’s connected to the web either through a built-in (smart TV) or an external device like a set-top box, video game console, or a dongle connected to the HDMI port.
Some examples of CTV devices:
Firstly, let’s go through a quick CTV market overview. Hours of connected TV viewing increased 21% in May 2023 compared to May 2022, according to Comscore’s latest State of Streaming report.
The study by Leichtman Research Group (LRG) reveals the latest number of US CTV households, showing consistent growth from 2014.
87% of US TV households have at least one Internet-connected TV device, including connected Smart TVs, stand-alone streaming devices (like Roku, Amazon Fire TV sticks or boxes, Chromecast, or Apple TV), connected video game systems, and/or connected Blu-ray players.
This compares to 80% with at least one connected TV device in 2020, 69% in 2017, and 38% in 2012.
46% of adults in the US households watch video on a TV via a connected device daily – compared to 40% in 2020, 25% in 2017, and 4% in 2012.
While the number of CTV users is constantly growing among younger generations, this type of TV technology is not that popular among Gen X and baby boomers.
In 2022, the number of monthly connected TV users among Millennials reached 60.5 million, and it’s estimated this number will hit 62.6 million by 2025 (+2.1 million growth).
The number of monthly CTV users in Gen Z is forecasted to increase from 49.6 million individuals in the US in 2022 to 56.1 million by 2025 (+6.5 million growth).
Recent consumer research by Leichtman Research Group, Inc. (LRG) also shows younger individuals are most likely to use connected TV devices. Among the ages of 18-34, 62% of people watch video on a TV via a connected device daily – compared to 54% of ages 35-54 and 24% of ages 55+.
In Q3 2020 (in the heat of COVID-19), the top five CTV devices based on the share of streaming hours were:
In this section, we’ll cover the hottest numbers related to connected TV and CTV advertising that naturally goes hand in hand for marketers: growth, performance, ad spend, growth drivers, challenges, and more.
CTV advertising is a developing concept that combines the simplicity of digital advertising with the immense reach of traditional TV.
The Trade Desk study revealed that 87% of marketers find CTV advertising as effective (or even more!) as traditional TV advertising. So, what’s behind the CTV ads that make them so efficient?
Despite these numbers, the IAB claims that the advertising sector hasn’t yet caught up to where viewers are paying the most attention.
Europe as a region for CTV advertising lags behind the US, but in the last 12 months, markets have broken through the glass ceiling of innovation.
The CTV advertising market in Europe is still relatively small. While the United States has seen significant growth in CTV consumption and rapid growth in ad-funded CTV, the pace of change is slower in Europe.
The key motivator in the US has been the high cost of traditional TV services.
In the first half of 2022, a study by FreeWheel revealed that Connected TV (CTV) dominated video advertising views, accounting for 71% of the total. This marked a significant increase of over 10% compared to its share in the same period in 2021. In contrast, mobile platforms, which had held 11% of ad views in the first half of the previous year, saw a different trend.
Moreover, 46% of adults say that they find television advertising to be the most trustworthy ad channel, as compared to social media’s 19%.
Innovid and Digiday compiled a report that reveals even more advantages advertisers see in CTV advertising. Even though CTV is relatively new, marketers surveyed name the plentiful possibilities it brings along:
The ability to effortlessly integrate with an existing omnichannel strategy is one of the major advantages of CTV advertising.
According to Digiday and Innovid, most marketers are employing CTV ads together with traditional media, such as social media (86%), display advertising (78%), mobile video (77%) and desktop video (67%), or linear TV (54%).
The Innovid and Digiday report also looked into the top KPIs that CTV marketers value most: conversions/revenue, reach, and brand awareness.
When asked how investing in CTV advertising influenced business, advertisers surveyed pointed out these aspects:
The report also demonstrated that fragmentation is a significant issue that marketers must successfully address to gauge the effectiveness of CTV advertising.
CTV will likely become more fragmented as additional choices enter the market, from new original equipment manufacturers (OEMs) to ad-based video on demand.
Other significant challenges marketers named when integrating CTV advertising include:
So, why is CTV good?
It acts as a union of linear TV and digital marketing, connecting the best of both worlds into a powerful format. As a result, it’s a TV that functions like a digital ad channel – the powerful storytelling medium of TV mixed with precise audience targeting, more accurate reporting, and insightful analytics.
Veteran Wall Street media analyst Dan Salmon of BMO Capital released a report where he called out four key growth factors for CTV advertising as opposed to traditional TV:
Consumers are more likely to watch an ad all the way through if it’s relevant to the video content they’re interacting with. Contextual ad relevance in streaming content aids in keeping their attention.
That being said, the survey showed that connected TV viewers are quite concerned about their personal data, with 62% of respondents saying they wouldn’t be ready to give it in return for individualized advertising.
So, it’s crucial for all participants in this data-driven advertising ecosystem to prioritize consumers and preserve their privacy in all they do.
Research from ShowHeroes Group used state-of-the-art Tobii eye tracking glasses, along with eSense electrodermal response sensors, to measure the attentiveness of TV viewers, including on CTV (smart TVs and streaming devices) in a home setting.
These biometric results were then combined with a quantitative survey of 2,100 respondents in seven key European markets, in findings that will have widespread implications for the digital ad industry.
Sarah Lewis, the global director, CTV at ShowHeroes Group, said: “This wide-ranging experiment is the first time we’ve seen exactly how user experience manifests itself: both as an emotional and attention-based response in front of the CTV screen, and within a wider mass sample of European viewers. Because of the high attention that users have in relation to CTV content, paired with high engagement levels, our research shows that connected TV really hits the sweet spot when it comes to delivering a positive ad experience.”
Eric John, VP of the IAB Media Center, claimed in the report that “the time is now for brands and buyers to follow consumer attention” and bet it all on CTV. The study listed these motivations behind:
The same report by Innovid and Digiday revealed that new audience engagement techniques and audience growth will be part of CTV's future as marketers increasingly employ it as a constant component of their omnichannel marketing strategy.
Yet, advertisers are also aware of the difficulties they would face in switching to CTV, like inventory fragmentation and inconsistent measurement.
As they try to improve CTV, marketing teams must invest in technology that will allow them to create an omnichannel strategy and efficiently distribute, customize, and measure ads across all screens and devices.
Advertisers that have access to these tools will succeed as TV movies go more and more online, away from the cord.
So, what steps have the surveyed marketers taken so far to measure CTV ad performance better?
Above, we’ve shared a bunch of facts and numbers proving that investing in CTV ads is worth it. Just one last question – how much does it actually cost?
The good news is there’s no minimum. While traditional TV advertising demands large budgets at the front – on average 104,700 US dollars for a 30-second commercial on a national network – CTV gives brands and marketers more flexibility, easiness, and accessibility.
Of course, spending 20 dollars on CTV advertising most likely wouldn’t be the wisest business decision. Advertisers need to evaluate what target audience, when, and where they’re trying to reach.
A very tight target within a clear, specific niche can be reached for a couple of thousand dollars.
All the numbers above indicate that people’s habits are changing and “watching TV” is moving toward a more digital approach. As more viewers turn into streaming or CTV, this change becomes significant for marketers who now have to adapt and find the right balance in navigating between two worlds if they want to match consumers’ media consumption trends.
This is clearly an exciting opportunity with a lot of potential and also many challenges to overcome. However, with the right tools and attitude, advertisers will be able to discover what CTV really has to offer for their businesses' growth.