At the risk of stating the obvious, TV isn’t what it used to be. The way we consume video entertainment has changed considerably over the past two decades, largely thanks to the advent of connected TV (CTV). Not only has CTV transformed viewership, but it’s also had a seismic impact on the advertising industry.
In the coming months, we expect CTV to become even more ubiquitous. And, we expect to see further evolutions in its ad-supported content model. As we head into the new year, it’s crucial for marketing teams to understand CTV’s most salient trends.
Defining CTV
First and foremost, it’s important to have a clear understanding of what CTV actually is, particularly in relation to other models like over-the-top (OTT). Here’s a breakdown:
- OTT is a category that encompasses any kind of content that’s delivered independently of a cable or satellite subscription. OTT content can be viewed on any Internet-enabled device, including smart TVs, mobile devices, desktop computers, gaming consoles, and set-top boxes like the Roku or Apple TV.
- CTV is a narrower category, denoting content that is specifically viewed on an Internet-enabled, large-screen TV. This might be a smart TV with streaming software embedded, or a TV enhanced with a third-party device like the Amazon Fire Stick.
CTV Dominance
That’s the basic definition of CTV. Now we turn to the question of its dominance. Simply put, CTV has surpassed both cable and broadcast television in terms of total viewership, and the chasm between them is only going to become vaster in the years to come.
As of 2023:
- A little bit shy of 39 percent of TV viewing time was devoted to streaming content.
- By contrast, about 29 percent of TV time was spent watching cable.
- Only 20 percent of viewing time was spent on broadcast TV.
If anything, it may be surprising that CTV’s dominance is relatively recent; CTV only surpassed the popularity of cable in 2022. Still, it seems obvious that this genie isn’t going to be put back in the bottle: Antiquated methods of delivering TV content are on their way out, while the popularity of CTV is going to continue its surge.
Some additional statistics that are worth highlighting:
- Subscription to OTT video services is projected to increase by more than six percent between now and 2027.
- Right now, more than two-thirds of all U.S. viewers own a CTV device. Again, this number is projected to climb.
- CTV’s ad spend is projected to reach more than $40 billion by 2027. Right now, the number is around $25 billion.
- By 2027, CTV will account for roughly 42 percent of the combined CTV/linear TV ad spend, compared with 29 percent right now.
The bottom line: According to every conceivable metric, CTV is ascendent, both in terms of viewership and in terms of ad delivery. Needless to say, this has big implications for marketing and ad budgets everywhere.
Trends for 2024
So what specific trends should marketers be looking for in 2024? There are a few major shifts that the enCOMPASS team has our eye on.
- As streaming services seek sustainable profitability and growth, they are going to increase subscription costs across the board. We have already seen this happen with a few major streamers, including Apple TV. But as subscription costs go up, we also think more and more viewers will opt into ad-supported service tiers. (And some of the streaming services that don’t already have an ad-supported option will unveil them.)
- We also think that the CTV advertising ecosystem will become more diverse and competitive. We’re seeing prices flatten out across different platforms, providing advertisers with a wider range of options as to where they spend their budgets. Indeed, just a couple of years ago, there were only three streaming services with billion-dollar ad revenues. Now there are quite a few, with more expected to pop up in years to come.
- We predict that more viewers will seek content on free, ad-supported streaming services, especially as platforms like Apple and Disney raise prices. Some free streamers to keep an eye on include Pluto, the Roku Channel, FreeVee, and Crackle. All should be on your CTV advertising radar.
- Finally, we predict that Amazon will become more dominant in the streaming ad world, as they have already begun injecting more ads into some of their Amazon Prime content. Within the next year or two, Amazon may crack the top three ad sellers in the streaming world.
These are just a few of the trends to keep an eye on as we head into 2024. To summarize, CTV is not just the future of TV, but more specifically the future of TV advertising. With any questions about what that means for your ad budgets, reach out to enCOMPASS Agency any time.
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