According to a survey three-quarters of advertisers that planned to spend on streaming this upfront … [+]
With the newfronts coming to an end and the upfronts approaching, the ad industry is gearing up for another $20 billion “spend fest” over the next few months. Surveys and interviews indicate connected TV benefitting from more premium content and the growing adoption of AVOD, marketers will continue to allocate a greater share of their total video ad budget on the platform.
Despite lingering concerns about a soft ad marketplace, an upfront survey among 500+ ad professionals from iSpot found a large majority (74%) of marketers will year-over-year maintain or increase their ad budget this upfront when compared to 2022. Of the 74% planning to maintain or increase their upfront budgets, 21% said they expected to increase their upfront dollar commitment, with 16% responding a “bit more” and 5% “much more”. One reason for the unexpected bullish upfront is advertisers will be investing more dollars on streaming video. The iSpot survey found 30% of respondents expect to spend at least one-fifth or more across streaming platforms.
Despite Netflix
NFLX
In another upfront survey of 300+ advertising and marketing executives, Advertiser Perceptions found 27% of respondents expected to increase their upfront ad budget this year with another 67% expected to spend roughly the same amount of dollars. Only 5% of advertisers expected to spend less money this year compared to 2022. Advertiser Perceptions noted for the 2022 upfronts 51% had increased their ad spend year-over-year. The Advertiser Perceptions survey also found CTV will be a popular platform in this year’s upfront as advertisers expected to allocate 40% of their upfront buys on the platform.
In an interview with Cynopsis, Tony Marlow, chief marketing officer at LG Ads, says,“In a rapidly changing media landscape, this year’s upfronts and NewFronts promise to be a game-changer, with ad-supported CTV emerging as the change agent we need right now. As ad dollars continue to flow from linear TV to digital platforms, it’s evident that CTV’s winning combination of reach, engagement and flexibility will solidify its position as the go-to-choice for advertisers.”
Jason Fairchild, co-founder and chief executive officer at tvScientific adds, “This year will be one of the last years where we can see large direct-to-consumer (DTC) brands will not participate in the upfronts. We are currently seeing that CTV is evolving into a performance-based medium that has more appeal to direct-to-consumer companies.
In an email, Stephen Magli, CEO & Founder, AI Digital, says, “Given changing consumption behavior, we will continue to see more dollars pushed to streaming as linear TV ratings and viewership continue to decline. However, linear TV still remains a powerful tool marketers can leverage as part of a holistic video strategy. This can be achieved by aligning with culturally relevant tentpole sports & award show events that are typically consumed live and deliver mass reach.”
In an interview on The Current Podcast, Kari Marshall, VP, Media at T-Mobile said, “Streaming has fundamentally changed the brand’s upfront strategy.” Marshall added, “Linear plays a role for sure, but even linear is more of a seasonal role. [With the] NFL, you’re going to be linear — we still need the scale for our business. But [with] OTT [over-the-top] and what connected TV provides, not only do we have to be there because that’s where consumers are, but it presents an opportunity and presents a challenge for mass advertisers.”
The increase in CTV ad spending forecast for this year’s upfront follows a trend. According to eMarketer, ad spend for CTV has grown from $2.8 billion in 2017 to $21 billion in 2022. In 2026 CTV ad spend is forecast to total $43.5 billion. For the 2917 upfronts eMarketer reported CTV ad dollars was $1.06 billion it is projected to reach $8 billion this year.
eMarketer also projects that by 2024, there will be 115.1 million CTV households in the U.S., more than double the number of pay-TV subscribers which will drop to 56.6 million households. CTV households are also subscribing to AVOD platforms. In 2022 AVOD viewers grew by 11.9 million and is forecast to grow another 13.3 million this year. To no one’s surprise, time spent with CTV has also been on the rise. The average daily time spent on CTV for adults is now 1 hour and 51 minutes and is expected to surpass 2 hours each day in the near future.
In an email, Andrew Feigenson, Chief Executive Officer, Vivvix wrote, “While the 2022 measurable media landscape ended flat, there was notable movement in some media sectors —particularly video — which increasingly dominated the landscape as viewer preferences evolved. Online video grew 5% year-over-year and ad-supported video on demand — the fastest-growing medium within video — was up a substantial 79% from 2021 to 2022.”
According to a recent survey conducted by Cint, nearly half (47%) of respondents have subscribed to 3+ streaming services, with 66% of consumers paying for an ad-supported tier on 2+ services. Of those seeing ads, 58% of respondents say they actually pay attention to them.
As such media companies such as Paramount, Warner Bros. Discovery and Disney see their market value drop as they focus on streaming, they run the risk of alienating AVOD users by running more ads a sure fire revenue producer. Typically, most AVOD providers run between four to five minutes ads each hour, less than half the ad load of many linear TV programs. As Wall Street looks for profitability in the streaming sector and as demand for the platform builds, one solution is to increase the ad load.
The Cint survey found 40% of AVOD subscribers would “likely” or “very likely” cancel a service if there were too many ads.
Source: https://www.forbes.com/sites/bradadgate/2023/05/05/2023-will-be-the-connected-tv-upfront/