CTV Trends For the Year 2024

In 2023, the advertising industry will rise. The global advertising revenue will experience a growth from US$763.7 billion to US$952.6 billion between 2022 and 2027, indicating a 4.5% Compound Annual Growth Rate (CAGR). In 2025, advertising will be on track to become the largest category, nearly reaching a trillion-dollar market, surpassing consumer spending and internet access. This can be clearly seen in the following diagram.

And if we talk about CTV, it is poised to exceed $25.9 billion in global revenue. This continued growth in connected TV is driven by three key factors: the surging popularity of CTV, precise targeting capabilities, and, as a consequence, impressing cost-effectiveness. It is worth anticipating that CTV advertising spending will exceed $42 billion by 2028. As we head into 2024, the future of CTV ads looks promising. So, let's take a closer look at this bright area.

CTV: an Emerging Performance Advertising Channel

Television advertising has traditionally focused on building awareness, but Connected TV has revolutionized how advertisers utilize this medium. The year 2023 marked a significant shift towards CTV, with advertisers earmarking almost half of their budgets for this channel, amounting to a substantial upfront investment of $8.14 billion.

Today, advertisers can approach television advertising from two angles: branding and performance marketing. Of these, the latter is gaining considerable traction. While traditional TV advertising was primarily centered on creating awareness and often came with a high price tag that deterred smaller brands from participating, CTV has democratized the television advertising landscape, making it more accessible to a wide range of advertisers.

It's important to highlight that CTV advertising provides broad targeting capabilities. Brands can customize their ads for specific audiences, utilizing demographic, interest, and behavior-based targeting. This level of precision distinguishes CTV advertising from traditional TV ads, which typically reach a broader, less specific audience.

Performance television, a strategy that delivers direct, measurable outcomes through Connected TV advertising, ensures that your message resonates with in-market viewers. Earlier, we wrote about measuring the effectiveness of video advertising. The ultimate objective of performance television is to boost website traffic, drive conversions, increase revenue, and correlate these metrics with your advertising initiatives. CTV delivers the quick setup and real-time results advertisers expect from performance-focused digital channels like search and social media.

Moreover, it offers several key features:

• Pinpoint audience targeting
• Rapid creative adaptability
• The capability to create tailored campaigns for distinct markets and demographics
• Instantaneous reporting in real-time
• A selection between two ad lengths (15 or 30 seconds)

Traditionally, brands have primarily allocated their television advertising budgets at upfronts. One of our previous articles discusses these Media Showcases. However, the landscape is evolving, and as Connected TV (CTV) viewership surges, so does the approach to ad spending. A growing number of brands are now choosing programmatic spending to optimize television as a performance-driven channel.

The data project that the total upfront TV ad spending in the USA will reach almost $20 billion this year. In line with this shift, a recent survey indicates that buyers intend to allocate just 49% of their budgets to the traditional upfront model and are increasingly embracing the concept of Performance Television Advertising.

Rising Influence of Ad-Supported CTV

The evolving dynamics are prompting the television advertising landscape to anticipate a surge in programmatic advertising. Before the onset of the pandemic, programmatic advertising accounted for 53.5% of CTV ad spending. Nonetheless, the projections for 2023 anticipate a remarkable surge to 74.4% for this percentage, which equates to a substantial $14.04 billion in CTV ad investments. This shift towards programmatic ad purchases aligns seamlessly with performance advertising, marking a pivotal development in the growth of performance marketing on CTV.

Now, let's dive into the "Popular Television Choices" chart. The data reveals the following preferences: paid streaming services dominate the landscape with a 73% share. Ad-supported streaming follows closely behind at 51%, traditional TV service maintains a solid 41% share, and broadcast antenna, while smaller, still commands a notable 18% of the viewership.

As viewership numbers grow, more advertisers focus on Connected TV to achieve their desired results. The upward trajectory of CTV viewership is particularly prominent in ad-supported content, a development that doesn't come as a significant surprise, given the presence of ad-supported options across all primary streaming services. The following data from TVision underscores this shift, revealing that in the latter half of 2022, CTV viewers dedicated just 36% of their time to subscription-only, ad-free streaming platforms, marking a 30% decrease since 2020. In contrast, time spent on ad-supported CTV has surged by an impressive 55%, now claiming a 48% share.

This surge in ad-supported CTV is not merely a trend but an integral component of modern marketing strategies. A recent survey from Advertising Week found that 81% of marketers utilize CTV to enhance brand visibility, with two-thirds categorizing it as a performance-driven marketing channel. Furthermore, numerous brands are leveraging CTV to drive specific outcomes, with over half of respondents stating that they employ CTV to achieve measurable goals such as increased web traffic, conversions, and revenue generation. This underscores the pivotal role ad-supported CTV plays in the ever-evolving advertising landscape.

Top CTV Trends 2024

Performance-driven CTV marketers not only boosted their revenue and conversions but also witnessed a remarkable 21% year-over-year improvement in their average conversion rates in 2022. During the holiday season, as MNTN Research says, the return on advertising spend (ROAS) experienced substantial growth, soaring by 26% in November and 18% in December. To expand their consumer base and engage potential customers, advertisers strategically employed third-party audiences in prospecting campaigns. Furthermore, to maintain a strong presence in consumers' minds, they effectively utilized retargeting to deliver CTV ads to website visitors. So, let's look at what other factors will be crucial for Connected TV next year.

Precision targeting fuels the rise in programmatic CTV advertising expenditure. Apart from the statistics provided earlier, it is essential to highlight that CTV revenue in 2024 will likely reach $29.6 billion – consumers' widespread embrace of streaming services attributed mainly to this surge.

The momentum in CTV viewership shows no signs of slowing down. Anticipate that CTV-equipped households will soon surpass those relying on traditional linear TV, more than doubling in number. Most American households with televisions are equipped with internet-connecting devices, encompassing smart TVs, popular streaming gadgets like Roku and Amazon Fire TV, video game systems, and Blu-ray players. Additionally, the CTV user base across different generations is on a continuous and upward trajectory.

Connected TV will play a central role in cross-channel advertising strategies. One of its alluring attributes lies in its seamless integration within established omnichannel approaches. The convergence of CTV with cross-channel campaigns empowers advertisers with a potent tool to reach their desired audiences more efficiently and gauge campaign effectiveness across all channels comprehensively.

Enhanced targeting in Connected TV advertising presents advertisers with a formidable instrument to fine-tune their advertisements for distinct audience segments. This precision empowers advertisers to serve exceptionally pertinent ads to their viewers, thereby notably elevating the prospects of viewer engagement and conversion rates.

Shoppable advertisements are gaining a growing following in response to the burgeoning trend of online shopping. Consumers condense the purchasing journey by enabling direct acquisitions of the products that pique their interest. On the business front, shoppable ads wield the potential to augment sales and bolster brand recognition, all while offering valuable insights into consumer behavior. This dual appeal makes them a pivotal tool in the contemporary advertising landscape.

Trends to Watch for in CTV Advertising for Marketers

In CTV advertising, success relies on staying ahead of evolving trends. The following list provides insights to navigate the dynamic Connected TV market more effectively.

• Enhanced Prospecting.?

Prospecting campaigns yielded slightly higher average conversion rates, underscoring the importance of targeting suitable TV viewers and optimizing for specific performance outcomes.

• Retargeting Success.

Retargeting played a crucial role in generating a higher return on ad spend (ROAS) and reducing the cost per acquisition (CPA) by reinforcing brand familiarity among audiences.

• Leveraging CTV Growth.

While adopting a new advertising channel like CTV may seem daunting, the good news is that numerous advertisers, possibly within your industry, are already achieving success. Rather than reinventing the wheel, consider drawing inspiration from their successful strategies.

• Patience Pays Off.?

In the early phase of any campaign in Connected TV, maintaining a steady effort is crucial for achieving peak performance. Over the initial 75-90 days, you can expect to see substantial growth in your Return on Investment (ROI). This is made possible because of continuous learning and auto-optimization, ultimately improving outcomes over time.

• Direct-to-Glass strategical approach.

Leverage the inherent advantages of a Direct-to-Glass CTV strategy for enhanced household engagement and comprehensive performance assessment. This strategy boasts several strengths, including access to deterministic audience data, advanced targeting capabilities, and the ability to derive actionable insights through precise measurement techniques.

• Dual Approach for New Advertisers.

Advertisers new to Connected TV can benefit from both prospecting and retargeting. Launching campaigns with both strategies increases site traffic and better ROAS than prospecting alone.

• Consistency is Key.?

Top advertisers succeed by employing evergreen strategies, where prospecting and retargeting campaigns run continuously. This approach allows advertisers to maximize campaign optimizations over time and is particularly valuable for capitalizing on key business moments, such as holidays or relevant seasonal periods. Brands that maintained evergreen campaigns during these times observed an increase in ROAS, even with heightened investment around holidays.

To Wrap it Up

In summary, CTV advertising is rising with a significant shift towards performance marketing. Ad-supported CTV is gaining prominence as viewers turn to this platform. The precision targeting of CTV drives programmatic advertising expenditure, and its revenue is expected to reach $29.6 billion in 2024.

CTV viewership is increasing, and it plays a central role in cross-channel advertising strategies. Enhanced targeting and shoppable ads are becoming essential components of CTV advertising. To navigate this dynamic landscape, marketers should focus on enhanced prospecting, retargeting, leveraging CTV growth, and maintaining consistency in their strategies. These trends will shape the CTV advertising landscape in the coming year.