From Anthony Susi, Director, Marketplace Development, Xandr
2022 was a transformative year for ad tech with significant developments in Connected TV (CTV). The advancements in the channel will continue to shape the future of advertising as we know it, making it the channel to “watch” in 2023.
Consumers are cutting ties with linear and cable TV in favor of streaming platforms at increasing rates. In July, streaming viewership exceeded cable usage for the first time, according to Nielsen. Advertisers are following the eyeballs, investing more money in the channel in order to reach viewers in powerful, premium TV environments. In fact, eMarketer has forecasted that US CTV ad spending will exceed $26 billion in 2023, up from $21 billion in 2022. This year, we saw two major players, Netflix and Disney+, rolling out their less expensive, ad-supported tiers. From an advertising perspective, the availability of valuable, previously untapped premium inventory that these advertising-based video on demand (AVOD) options bring to the market is leaving advertisers eager to take advantage of highly engaged audiences, especially as viewership across generations continues to grow. AVOD is a big win for advertisers as it allows them to target more specific audience segments and helps avoid wasted ad spend that tends to be associated with linear buys.
Although CTV is relatively nascent and faces supply fragmentation, streaming platforms are partnering with ad tech companies, like Xandr, to help ease the programmatic buying and selling of inventory. Programmatic buying of CTV offers many benefits including shorter purchase cycles and more controls to deliver targeted and optimized advertising, combining the guaranteed delivery of a direct buy with the transparency and real-time insights of a programmatic buy.
From a consumer perspective, new subscription options bring additional benefits. Currently, US households are signed-up for an average of 4.7 streaming subscriptions. In a challenging economic environment, many households may choose to streamline their content providers and AVOD tiers are in prime position to pick up and retain subscribers. Additionally, some streaming platforms, like Netflix, have placed an emphasis on viewer experience, including ad load and frequency, to limit disruption.
Overall, the excitement that this new supply is bringing to the market means that there will be increased attention on the channel in the coming year. And while there is still work to be done to address measurement and reporting, we expect that premium AVOD offerings will drive greater CTV adoption and inspire more collaboration to provide the best experience for consumers and advertisers.