The CTV Honeymoon Isn’t Over: A Path to Renewed Growth
Connected TV advertising has been the darling of the ad industry in recent years. However, recent forecasts indicate a slowdown in spending growth. By 2028, year-over-year spending growth will move into the single-digit territory.
The unique nature of CTV, straddling traditional TV and digital advertising, is the channel’s bane just as much as it was its boon in early years. While it offers premium video content and a targeted audience, it also presents challenges in measurement and buying. As a result, advertisers are increasingly turning to social media, a channel that may be less premium, but offers the tracking solutions they need.
The honeymoon doesn’t have to be over. Let’s look at the current headwinds facing CTV advertising and several key areas where realignment could jumpstart growth again.
The Forces Slowing CTV Ad Growth
As linear TV watching slowly wanes, many anticipated that linear ad budgets would naturally flow into CTV along with viewership. However, the reality hasn’t been nearly that simple. Even though linear TV and CTV deliver the same premium viewer experience to coveted audiences, the buying and measurement mechanisms that underpin the two channels look entirely different. As a result, the responsibility for managing CTV buys and budgets varies by organization, often representing a complicated interplay of linear TV buyers and digital teams.
But it’s not just an internal politics issue—not by a long stretch. The simple fact is that today’s ad buyers face immense pressure to deliver outcomes, and that’s where social shines. In 2024, U.S. social network ad spend was expected to reach $82.89 billion—$7.81 billion higher than eMarketer originally forecast. The well-established buying and measurement capabilities that underpin social spending are particularly appealing to brands looking to pivot their linear dollars to more performance-oriented digital channels, but who are leery of continued limitations within CTV’s infrastructure.
The CTV Buying and Measurement Enhancements Advertisers Require
A lot of media buyers today view CTV as being too expensive. However, that’s largely because CTV still struggles to demonstrate the full breadth of its ROI. To compete with social media and other lower-funnel tactics that are clamoring for shifting linear budgets, CTV needs to demonstrate that it’s performant.
CTV is prized for the premium nature of its inventory, and that’s a benefit that must be preserved at all costs. Ultimately, however, advertisers demand streamlined access to inventory and the ability to understand the results being driven by their CTV dollars.
CTV stands to benefit greatly from enhanced buying and measurement capabilities. Simplifying buying processes can make CTV more accessible to a wider range of advertisers, while accurate and comprehensive measurement can deliver data-driven insights to advertisers who want to better understand their CTV campaigns’ impact on their bottom line. In both cases, moving more CTV inventory into programmatic pipes could help media companies meet these advertiser demands. That said, this transition should be measured to ensure transparency, control, and quality are maintained for content owners and buyers alike.
New Opportunities to Ignite CTV Growth and Performance
Solving basic infrastructure challenges related to buying and measurement will go a long way toward accelerating ad spend in CTV. However, there are also emerging opportunities to take the channel even further.
One path to reinvigorating CTV growth resides within another ad industry darling: commerce media. Marrying premium CTV inventory with commerce and first-party data promises to open a new phase of growth and enhancements within the CTV space. Those that can successfully combine these two industry superpowers will be able to unlock a deeper understanding of CTV through a performance lens, thereby enabling the channel to compete more effectively with social platforms.
All emerging media channels eventually plateau when it comes to the rate at which they attract new ad dollars. However, the slowdown in CTV spending growth comes prematurely—a reflection of the need for the industry to evolve versus an actual peak in the opportunity. To bring ad growth back in line with CTV’s potential, our industry needs to start treating it—and building for it—like the performance engine it is.
[Editor's note: This is a contributed article from PubMatic. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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