New IAB Report: Ad Spend Will Rise Unevenly In 2023

As advertisers reevaluate their budgets and their new priorities in the face of potentially ongoing inflation, they are still growing their ad spend. A new report by the IAB reveals that while advertisers will increase their spend in 2023, the growth will be focused on a few key areas.


Where advertisers will be spending the most

Next year’s overall ad spend growth will drop meaningfully from 2022’s nine percent rise in ad spend over 2021, estimated to reach only 5.9 percent. Advertisers’ biggest increase in spending will focus on four key segments. B2B ad spend will rise by 20.8 percent, travel by 20.6 percent, restaurants/beer/liquor/wine by 17.1 percent and financial services by 11.1 percent.  Not surprisingly, these are among the business sectors most vulnerable to inflation, making the competition for consumer dollars more intense. The report states that other sectors will face only single-digit growth. Digital channels will see positive ad spend growth, with CTV seeing the highest level, at 14.4 percent, while spending on traditional channels will decline. 


Advertisers will focus on customer acquisition and brand equity in 2023

Sixty-one percent of consumers will focus on customer acquisition in their 2023 marketing strategy and ad spend, with brand equity (43 percent) and improving the efficiency of their media efficiency (35 percent). According to the report, between 52-55 percent of advertisers will focus on measurement, marketing mix and modeling (MMM), as well as the use of 1st party data, and investment in creators in 2023. Yet that may change: Sixty-three percent of ad buyers stated that they anticipate changing their media plans more frequently in 2023 than they did in 2022—at least once per month. 


Retail media networks and the metaverse take center stage

The IAB report reveals that sixty-one percent of ad buyers have invested or will invest in retail media networks (RMN) advertising, and investment in 2023 will rise by 28.4 percent. Key areas of advertisers’ ad investment include onsite owned and operated, (91 percent), aggregated marketplaces (82 percent), retailer-owned (75 percent), and e-commerce owned (64 percent). 

The report also showed that 56 percent of ad buyers have invested or will invest in metaverse advertising/marketing, with many focused on building brand awareness (52 percent), engaging existing customers (48 percent), and reaching hard-to-find audiences (42 percent).

Read the entire report here


1. Rugabear, Christopher. How inflation spread across different sectors, making it harder to tame. https://www.pbs.org/newshour/economy/how-inflation-spread-across-different-sectors-making-it-harder-to-tame. October 2022. Accessed November 2022.

Report: Free Ad-Supported Channels On The Rise; Consumers Actually Don’t Mind Ads After All

Findings from Hub’s new “TV Advertising: Fact vs. Fiction” report reveal that consumers love their streaming content enough to stay tuned through—and even occasionally enjoy—ads that punctuate their content experiences.

FAST Channels Like Pluto TV, TubiTV And Others Are Winning SVOD Subscribers’ Attention 

Hub’s report shows a 10 percent increase in consumers using free, ad-supported streaming TV (FAST) channels like Paramount’s Pluto TV. Currently, 55% of consumers report that they get at least some of their video content this way. The rise of FAST channels isn’t due to a lack of paid ad-free alternatives, or even “free” alternatives included with many consumers’ basic internet service. FAST channels may offer consumers the kind of neatly segmented thematic content that doesn’t require fiddling with a queue or relying on an algorithm for suggestions or hunting for options by name. FAST channels are often arranged by theme and provide channels dedicated to single niche-but-popular shows, like Pluto TV’s Midsomer Murders and Narcos channels. Last year, Pluto TV, with 64 million monthly users, managed to top $1 billion in ad revenue. This was a feat that underscores advertisers’ willingness to place their bets on cord-cutters and prestige network subscribers are heading to free alternatives to access content that includes their ads. 

But why are FAST channels so appealing to consumers who are now awash in content choices and channels offering a range of ad-free paid experiences? The Hub report shows that 56% of consumers would rather watch ads and pay $4-$5 less per month to enjoy streaming content, but consumer interest may be driven by more than a desire to save a few dollars on their monthly budget.

First, there’s the element of content choice. Take children’s programming. Pluto TV has one of the only free channel dedicated exclusively to kid-friendly movies out of the 82 channels focused on kids’ programming that previously appeared on TV or platforms like YouTube. With consumers cutting costs due to the specter of inflation, an always-on channel featuring long-play kid’s content can be an enticing alternative to paid services. 

FAST And Paid SVOD With Ads Can Coexist—And Marketers Should Take Note

FAST channels also serve as an enhancement for SVOD services, allowing consumers to prune their subscriptions and keep the ones that deliver the most value or that provide content they can’t find on their favorite FAST channel. For example, 70 percent of FAST channel Xumo’s viewers use streaming services exclusively for video content, with 80 percent of these subscribing to Hulu and 77 percent to Netflix.

According to Amanda Garcia, Senior Director of Partnerships at Paramount+ in a recent report produced by Comcast, “As customers find more ways to watch the content they love across a mix of services, FAST channels have become a key part of our media mix for acquisition and awareness, as well as targeted campaigns to super-serve key audiences.” That’s important, as consumer willingness to stay engaged with paid streaming services is now becoming tenuous due to inflation concerns—and budget-minded viewers are now canceling services at meaningful rates. Even at the height of the pandemic, when millions of Americans were home with more time to stream, consumers were prone to prune their subscriptions in search of better deals or better experiences.

Between July 2020 and February 2021, the number of TV viewers saying they had added a new SVOD service grew from 28 percent to 44 percent, but the share of consumers stating that they canceled a service rose from 18 percent to 25 percent during the same period.

That means consumers’ attention can go either way—more towards FAST channels when SVOD content feels stale (or costs become prohibitive) or back to paid SVOD when engaging original content draws them back.

Consumers Don’t Mind Ads, Just Make Them Worthwhile

The big takeaway here is that ads are not the problem when it comes to consumer engagement and satisfaction. The Hub report states that in its survey, subscribers to the ad-supported tiers of streaming services are, for the most part, “equally likely to feel they get “excellent” or “good” value from the service as those who subscribe to the ad-free versions.” In addition, subscribers to Discovery+ and Paramount+ with ads are “actually five points more likely than ad-free subscribers to feel those services offer excellent or good value.”

According to the Hub report, viewers of content on an ad-supported streaming platform reported distinct differences in their enjoyment of their viewing experience based on the relevance of the ads they remembered. For viewers who remembered ads relevant to their interests, 69 percent said they enjoyed the entire experience of watching programming. For those who didn’t see relevant ads, only 48 percent reported enjoying their experience. Consumers are also paying attention to ads on paid services. The report states that two streamers, Discovery+ and Hulu, led in the amount of attention their users paid to ads during commercial breaks (8-10 on a 0-10 scale).

“Flashback to the late 2000s: take the rapid success of ad-free streaming services like Netflix, add in the gradual erosion of traditional pay TV subscribers, and many industry experts began to predict that ad-supported TV would go the way of the dinosaur,” said Peter Fondulas, principal at Hub and co-author of the study.

“It turns out the issue consumers had with ad-supported platforms was not the fact that they included ads at all, but how the ads were delivered. With reasonable ad loads, more relevant targeting, and a quid-pro-quo agreement (watch ads, pay less), the industry seems finally to have an answer to the question that has dogged it for years: how to get consumers to accept TV advertising.”

Nielsen: Underspending In 50% Of Media Plans Jeopardizing Max ROI

About half of marketers aren’t spending enough in a channel to get maximum return on investment (ROI), according to Nielsen’s inaugural ROI Report. The report identifies the factors that influence a brand’s ROI, how to measure these metrics with precision, as well as strategies for improving them so that campaigns are set up to secure as much value as possible.

If marketing teams committed the ideal amount of resources, their ROI could surge 50 percent, the report says. To understand how advertisers should allocate budgets, Nielsen analyzed its database of nearly 150,000 observations of marketing ROI and database of client-supplied media plans. Here’s what it found:

  • Media spend needs to be between 1 percent and 9 percent of revenue to stay competitive
  • The median brand reinvests 3.8 percent of revenues into media
  • Overspending isn’t as problematic as underspending 
  • Over half of global display and digital video campaigns are underspending

To take the guesswork out of understanding the impact of new media, Nielsen conducted over 1,000 studies on podcast advertising, branded content and influencer marketing. The study found:

  • New media can drive over 70 percent aided brand recall after ad exposure
  • Podcast ads drive familiarity and affinity gains
  • Influencer and brand marketing also drive big familiarity and affinity gains

Nielsen’s 2022 study of 15 brands and 82 digital campaigns in the US showed there’s a very strong relationship between target reach and campaign ROI. For the analysis, Nielsen sourced in-flight target reach metrics from its Digital Ad Ratings and its outcome metrics from Nielsen Attribution, which determines ROI at the impression level. When combining these measurements on a consistent set of campaigns, one clear takeaway emerged: Campaigns with strong target reach delivered better sales outcomes.

The firm’s research also revealed that only 63 percent of ads across desktop and mobile are on-target for age and gender in the US–which means that in the channels with the most exhaustive data coverage and quality, about 40 percent of ad spend doesn’t hit the mark.

View the full report here.

Advertising Leaders Announce Plans To Expand Ad Net Zero Initiative Globally

​​Ad Net Zero—the initiative launched by the Advertising Association, the ISBA and the IPA in the UK aimed at reducing the carbon impact of advertising—will make its way to major markets worldwide, advertising leaders announced at the Cannes Lions Festival.

Global trade bodies including the ANA, 4A’s and the IAB, the WFA, European and global agency associations, EACA and Voxcomm, and the IAA will help the world’s largest agency holding companies—including Dentsu International, Havas, Interpublic Group, Omnicom, Publicis Groupe and WPP, Unilever, Google, Meta and Sky—establish plans to roll out Ad Net Zero in major ad markets with an immediate focus on the US and the EU. Serving as a roadmap, the UK program will help these companies develop market-specific solutions to reducing their ads’ carbon footprint.

The top 20 advertising markets—which account for 89 percent of the global advertising industry’s $594.322 billion spend— will be the focus of the program after the US and EU are addressed.

Launched in 2020, Ad Net Zero includes a five-point action plan that pledges to reduce the carbon emissions from UK advertising operations to net zero by 2030 and to leverage advertising to accelerate consumers’ switch to more sustainable products and services. It also includes the AdGreen carbon calculator, which helps measure and reduce emissions from advertising production.

Unilever has committed to reducing emissions to zero within its own operations by 2030 and to net zero across its value chain by 2039, with the first priority being to reduce emissions in line with the 1.5°C ambition of the Paris Agreement, according to Aline Santos, Unilever chief brand officer, and chief equity, diversity, and inclusion officer.

Ad Net Zero will provide updates on its progress at Cannes Lions each summer and its global summit each November. The next update will be presented at Ad Net Zero’s global summit, which will take place online on November 9 and 10, alongside this year’s 27th United Nations Climate Change Conference.

Ad Revenues Will Grow By 9% In 2022 To $816 Billion

Global advertising growth in 2022 will reach 9.2 percent, or $816 billion—lower than the previously forecast 12 percent, revealed Magna, citing an economic slowdown and growing restrictions to data-driven targeting of digital ads.

“Magna was always expecting the global advertising market to slow down significantly in 2022 following the unprecedented levels of growth observed in 2021 (global +23 percent, US +26 percent) caused by a once-in-a-lifetime “planetary alignment” of factors: the V-shaped economic recovery and the marketing consequences of post-COVID lifestyles,” said the firm’s June 2022 forecast.

Nevertheless, a 9 percent increase this year would remain above pre-COVID growth rates—the average increase between 2015 and 2019 was 7 percent.

Magna anticipates North America to grow the most at 11 percent to a new high of $326 billion—40 percent of the global advertising market. This growth is marginally less than Magna’s prior forecasts for this year of 12.6 percent in March and 11.5 percent in December. Magna decreased its growth forecasts for Q2 to Q4 2022 as a result of the economic slowdown, though this has been somewhat offset by the market’s unexpectedly strong performance in Q1 where it grew by 14 percent and by the greater forecast for political spending of 51 percent. 

Cross-platform video advertising will grow by 8 percent to reach $89 billion while national linear TV’s decrease of 4 percent will be offset by the growth of long-form advertising-based video on demand (22 percent) and short-form pure players (19 percent) in addition to local TV’s record political spend. At the same time, cross-platform audio advertising—including broadcast radio, audio streaming and podcasting—will rise by 5.7 percent to $16.8 billion as cross-platform publishing ad sales fall by 3 percent to $16.2 billion.

One year ahead of previous expectations, out-of-home sales will grow beyond its 2019 pre-COVID high to $8.5 billion. Direct mail will also benefit from political campaigns and revenues will increase by 2.6 percent to reach $17.6 billion.

Following the decrease from Q3 2021 (44 percent year-over-year) to Q4 2021 (19 percent), pure play digital media advertising sales—i.e., search and social media—increased by 16 percent YOY to $42.5 billion in Q1 2022. Social media sales, on the other hand, curbed to an 8 percent increase in Q1 compared to its 38 percent growth in 2021—due primarily to Apple’s updated privacy restrictions. 

Search advertising remained high in the quarter at 24 percent as interest from advertisers shifts from social media to search in light of Apple’s changes. Still, in 2022, pure play digital advertising sales will grow by 14 percent to $195 billion. Search will lead performance at 18 percent to reach $116.7 billion. 

Social media will grow to $67 billion at an 11 percent increase—a downgrade from Magna’s previously forecast 18 percent. Magna cites client saturation, audience saturation and targeting restrictions but the 2022 acceleration is to be expected after social media advertising experienced a 36 percent increase in 2021.

Most industry verticals are expected to stabilize or increase ad spend this year, according to Magna. Travel, entertainment, betting and technology are expected to grow the most while automotive, consumer packaged goods (CPG) and fast-moving consumer goods (FMCG) budgets may be under pressure due to supply chain and cost issues. 

The economic slowdown will start affecting ad markets in Q2 and Q3 and Magna forecasts lower growth over the Q2 to Q4 2022 period, as well as throughout 2023. 

OOH Up 40.5% In Q1 2022—Largest Quarterly Increase In Medium’s History

According to the Out of Home Advertising Association of America’s (OAAA) latest figures, out of home (OOH) advertising revenue jumped 40.5 percent in Q1 2022 compared to the previous year, accounting for $1.8 billion. That marks the largest quarterly increase in the medium’s history.

These first-quarter figures show that OOH is already outpacing the same period in 2019 and that it’s on track to reach or exceed pre-pandemic spending in 2022, according to Anna Bager, president and chief executive of OAAA.

The digital OOH format led total OOH growth with a 57 percent increase over Q1 2021. The billboard category increased double digits while the transit, street furniture and place-based categories all grew triple digits, signaling a strong COVID recovery.  

Led by financial and media and advertising, eight of the top ten product industry categories increased double digits. The public transportation, hotels and resorts industry category surged 58 percent, reflecting a consumer return to pre-pandemic behavior.

As noted below, emerging product categories also helped OOH succeed when compared to Q1 2021:

  • Cannabis spend increased 31 percent 
  • Political spend increased 113 percent (and 90 percent over the last midterm election cycle in Q1 2018)
  • Sports betting spend increased 131 percent
  • FinTech spend increased 22x

OAAA found that the top 10 advertisers in Q1 ranked in order of OOH spending were: Apple, Capital One, McDonald’s, Netflix, HBO, American Express, Amazon, AT&T, Verizon and Universal Pictures. 

Eighty-seven of the top 100 OOH advertisers increased their OOH spend from Q1 2021, and 47 of them more than doubled their spend. Advertisers on this list who didn’t spend in Q1 2021 included: Cirque Du Soleil, Credit Karma, Grayscale Bitcoin Trust, Molson, Monday.com, The New York Times, Not Milk, Peacock, Turner, UiPath, United Artists Pictures, VRBO and William Hill.

And thirty-one of the top 100 OOH spenders were technology or direct-to-consumer brands including these top ten brands according to spend: Apple, Netflix, Amazon, AT&T, Verizon, T-Mobile, ClickUp, Expensify, William Hill and BetMGM.

Global CTV Impressions Outpace Mobile, Accounting For Nearly Half Of Video Impressions

Connected TV (CTV) surpassed mobile as the channel with the greatest share of global video impressions, with 46 percent of all video impressions, up from 40 percent in 2020. Meanwhile, mobile dropped from 43 percent to 39 percent, a sign that consumers keep flocking to streaming devices to get their content.

That’s according to Innovid’s 10th annual Global Benchmarks report, which uncovers CTV’s critical role in the converged TV landscape and outlines deeper measurement and optimization tactics marketers can use to improve their CTV strategies as advertisers shift their spend to the channel. 

In its report, Innovid explains three main findings, including:

  • As CTV takes center stage, plan for streaming dominance.
  • Advanced creative outperforms at engaging audiences.
  • CTV reach and frequency have room to scale.

As CTV Takes Center Stage, Plan For Streaming Dominance

As restrictions eased and the world opened back up in 2021, consumers continued their pandemic-induced obsession with streaming. And as they flocked to CTV.

In 2021, as CTV comprised the largest share of video impressions across all devices, CTV ad spend in the US reached $14.4 billion. And while global video experienced year-over-year (YOY) growth across all devices, CTV earned the highest increase at 47 percent—more than twice the rate of mobile (16 percent) and desktop (14 percent). 

Needless to say, CTV is no longer in its experimental or emerging stage. It’s an integral pillar in the marketing landscape and offers consumers a premium viewing environment coupled with data-informed targeting and captivating ad formats.

CTV outpaced mobile and PC’s growth to secure its position as the medium with the highest impression volume globally considering that more time spent watching CTV meant less time spent watching linear. In 2021 in the US, linear TV declined and is projected to continue that trajectory according to eMarketer. The pandemic also accelerated the rate at which cord-cutters replaced pay TV with streaming. 

According to Innovid’s research, linear and digital viewing are expected to be roughly equal by 2023, so marketers should embrace converged viewing across linear, CTV and digital. 

Innovid also found that every vertical increased its video contribution to CTV ads in 2021. The five leading verticals allocated more than 50 percent of video impression share to CTV. These figures were:

  • Travel, 63 percent 
  • Auto, 60 percent
  • QSR, 58 percent
  • CPG, 52 percent
  • Retail, 51 percent

Programmatic: The Rising Star

As convergence accelerates and brands demand more speed and flexibility, programmatic video advertising is on the rise. According to Innovid, slightly less than 33 percent of CTV impressions were served programmatically in 2021. Programmatic and social buying gained ground as broadcast native publishers lost it. And according to eMarketer, CTV will soon account for more than 20 percent of total programmatic video ad spending for the first time. 

CTV impression share by publisher type in 2021 was as follows:

  • Broadcast, 54 percent (down from 61 percent in 2020)
  • Programmatic, 30 percent (up from 26 percent in 2020)
  • Social, 13 percent (up from 10 percent in 2020)
  • Other, 2 percent (up from 1 percent in 2020)
  • Digital,1 percent (unchanged from 2020)

Advanced Creative Outperforms At Engaging Audiences

As consumers increasingly expect personalization and relevancy from advertising on digital platforms, advanced video creative—including dynamic and interactive formats—has allowed marketers to respond while also delivering higher performance through engagement as well as incremental time earned.

According to Innovid, here’s what engagement rates by device and video format look like in 2021:

Mobile

  • Dynamic video, 0.7 percent
  • Interactive video, 0.9 percent

PC

  • Dynamic video 0.5 percent
  • Interactive video, 1.3 percent

CTV

  • Interactive (non-choice), 0.5 percent
  • Interactive (choice), 23.7 percent
  • Interactive (total), 5.4 percent

Interactive CTV Grabs Top Billing With Engagement, Video Completion Rate And Time Earned

Marketers have more opportunities to monetize through interactive video ad formats. Interactive video creative provides more engagement than dynamic video across mobile and PC. And interactive CTV creative does far better than interactive mobile and PC, at 5.4 percent overall.

Interactive CTV’s performance stands out, in part, due to its ability to drive earned time with consumers. This translates to more opportunities for brand awareness and conversion. Advertisers who engage advanced creative have achieved an additional 47 seconds of time earned in 2021: that’s 11 seconds higher than 2020, according to Innovid. Interactive CTV led the charge by producing an incremental 72 seconds of time earned between brands and potential buyers.

Engagement rates, video completion rates (VCR) and time earned by video ad format included:

  • Dynamic video achieved 0.5 percent engagement, 72.9 percent VCR and 28.9 seconds earned.
  • Interactive video on mobile and PC achieved 1 percent engagement, 62.4 percent VCR and 34.8 seconds earned.
  • Interactive video on CTV achieved 5.4 percent engagement, 94.7 percent VCR and 72.3 seconds earned.

QR Codes Drive Interactive CTV Growth

Quick response (QR) code usage skyrocketed in 2021 given its touch-free, easy-to-use functionality. At the same time, CTV experienced similar growth with the largest activity coming from QR codes, which drive consumers to landing pages with detailed product information and opportunities for conversion. According to Innovid, QR codes have seen impressive engagement, with a scan click rate of 0.02 percent. While low in comparison to display metrics, this incremental engagement reflects high intent and follow-through on the part of the audience.

Here, shorter ads are best at capturing consumers. Across all devices, videos 30 seconds or less produced stronger completion rates of 80 percent or more when compared to longer-form videos, which saw completion rates of 67 and 77 percent. Last year, marketers utilized shorter formats’ successful completion rates as more than 95 percent of all video ads were 30 seconds or shorter. 


CTV Reach And Frequency Have Room To Scale

CTV campaigns in the US reached on average 9 percent of the more than 95 million households with CTV that Innovid can reach. Despite a surge in advertiser CTV adoption, 58 percent of campaigns included 19 million or fewer impressions and reached a mere 3 percent of households on average—representing an opportunity to increase reach.

Here’s what household reach based on impression volume looked like in 2021:

  • Over 100 million, 36 percent
  • 40-99 million, 18 percent
  • 20-39 million, 9 percent
  • Less than 19 million, 3 percent

CTV Frequency Isn’t Maxed Out

CTV’s average frequency of 4.1 exposures shows it’s possible that marketers have greater leeway for reaching new households and can shift investment into CTV without risking oversaturation. But Innovid notes that frequency can be problematic if left unchecked so it’s best for marketers to maintain a holistic household view to understand and manage over-exposure.

On average, only 8 percent of campaigns had a high frequency of over 10 exposures, while 67 percent had a low frequency of one to two exposures, and 25 percent had a medium frequency of three to nine exposures.


Best Practices

Innovid concludes the report with three CTV advertising best practices: 

  1. Plan for streaming dominance. Mobile is giving way to CTV, linear is catching up and streaming remains part of a cast of players. Real-time actionable intelligence is key to maximizing the whole and driving favorable business outcomes.
  2. Enhance engagement with advanced creative. Think beyond awareness and make video work across the funnel through data-driven formats that incite action with geo-targeted relevance and QR codes.
  3. Maximize reach while managing frequency. Gain a unified view of reach and frequency across the converged media landscape by adopting an always-on cross-platform measurement.

The Monumental Opportunity In Video Ad Measurement

Ad measurement is key to proving a strategy is driving business impact, getting C-suite buy-in and optimizing strategies. Yet no more than half of US advertisers are satisfied with their campaign measurement across media types, according to an April 2021 Advertiser Perceptions survey. And only 38 percent are satisfied with their digital video measurement solutions.

A new eMarketer report explores the state of ad measurement, focusing on opportunities and challenges in the video space, including why advertisers are reassessing currencies to measure performance and how video ad measurement is expected to change through 2022 as the industry approaches a cross-screen and cross-platform solution.

The report’s three key findings include: 

  • Video ad measurement is a mess. Third-party identifiers are on their way out, which means greater challenges ahead for digital video measurement. Additionally, the industry is without a Media Rating Council-accredited currency as annual upfronts approach.
  • Video ad measurement is evolving. Advertisers stopped settling for siloed insights into campaign performance across video channels. Instead, they’re employing new directives that are helping facilitate cross-screen, cross-platform measurement by addressing challenges concerning data quality, compatibility and accessibility.
  • Video advertisers need to engage with the measurement problem. Though measurement is complicated, letting agencies, networks, measurement firms and ad tech platforms do the dirty work won’t benefit advertisers in the long run.

This year’s ad measurement discussion would be best addressed through the lens of video. With the 2022 upfronts coming up, there’s plenty of competition in the video ad measurement arena.

According to eMarketer’s 2022 forecast, US advertisers will spend just shy of $346 billion on media. Formats across linear TV and digital video—including connected TV (CTV)—will account for roughly 42 percent of total ad spending at $144.55 billion. 

But without a standardized system of measurement that connects the dots across mass and one-to-one advertising in online and offline ecosystems, it’ll be difficult to effectively allocate video budgets that align with changing consumer behavior.

According to an October 2021 Advertiser Perceptions survey, US advertisers ranked video as the most valuable tool for achieving advertising goals. As eMarketer notes, advertisers won’t stop investing in video while the industry works through the measurement challenge; video buyers and sellers will instead have to collaborate to face video ad campaigns this year, conquering ad measurement obstacles along the way. 

Before the industry can achieve cross-screen, cross-platform currencies (ie: those which allow for a fixed amount of inventory to be purchased in advance), that can facilitate holistic views of video investment, ad performance and campaign attribution, a few issues must be addressed. Until recently, it didn’t seem practical to adopt an alternative to Nielsen’s Gross Rating Point (GRP). Now, as eMarketer points out, there’s an array of alternative currencies.

For a transaction to occur, there must be a currency in place. For example, if a network doesn’t reach its forecasted viewership numbers, more ads are run at no extra cost in order to “make good” on the initial agreement. Measurement comes into play because an ad’s value is partially determined by how many consumers it reaches. Take billboards for example—those in high-traffic areas tend to be more expensive than those in low-traffic areas. Other than reach and frequency, the value determination can become subjective.

To constitute a measurement solution as currency-grade, VideoAmp chief measurability officer Josh Chasin cites two requirements: transparent and justifiable data-based methodology and that the output is perceived by the buyer and seller as fair, objective and as accurate as possible. 

On the other hand, television ad measurement data is typically sourced either from people or from machines. People-based panels are comprised of households and individuals whose viewership data is willingly offered. 

These panels come with their own set of challenges—for one, they’re regularly plagued by compliance issues and two, they’re often too small to correctly measure across all entertainment sources. Also, many advertisers activate against very specific and usually small audience segments. For these reasons, adequate measurement should be based on more than just panels.

Machines, on the other hand, include devices like smart TVs and set-top boxes that can generate massive amounts of second-by-second viewership data. And while big data regularly supplies the type of scale required to support analysis of smaller audiences, it comes with its own set of problems. For example, it must be cleaned and calibrated in order to correct errors, mitigate biases and secure accurate representation.

According to eMarketer, any holistic and useful measurement solution will draw from a combination of big data and panels. But data sources aren’t all advertisers have to go off of. Even given the exact same inputs, two measurement providers could reach two different conclusions. Each vendor uses a unique methodology, solutions for glitches in the data and models to apply to the broader population.

In designing and deploying holistic video ad measurement systems that can serve as a currency, measurement partners face several barriers, including:

  • Convoluted data infrastructures that make it difficult to unify disparate data sets
  • Chaos in identity – i.e., the “connective tissue” of ad measurement – resolution
  • Adaptability to the future of privacy compliance and new, disruptive formats and technologies such as the metaverse

According to eMarketer, there’s a seemingly endless supply of newly released or upcoming measurement solutions, which shows the magnitude of the current ad measurement opportunity.

There are two major cross-platform contenders on the third-party front. The first is Nielsen’s Nielsen ONE, which is set to launch in Q4 2022. The first operating version of this solution, Nielsen ONE Alpha, is in testing as of December 2021. The second is Comscore’s Comscore Everywhere product suite, which is rolling out in phases throughout 2022.

Other solutions can be seen also in linear TV’s move away from ad measurement based on programs to ad measurement based on the actual ad. The industry is also shifting toward outcomes-based measurement. While it’s important to know how many people were exposed to a campaign to contextualize any ensuing lift in brand affinity or sales, lift—not campaign exposure—is what advertisers are chasing in their media investment. 

One thing eMarketer is sure of is that the industry won’t be relying solely on Nielsen’s GRP in time for this year’s upfronts, where it estimates that US advertisers will spend $20.57 billion on linear TV alone. Networks are currently working with partners on in-house currency initiatives that are designed to streamline cross-screen, cross-platform measurement for all properties owned and operated by a single system.

Ad Investment In CTV Grows Faster Than Other Channels Within Digital Video

As viewers continue to increase their use of digital video including connected TV (CTV), social media and short-form, ad investment is primarily following consumer attention. According to IAB’s 2021 Video Ad Spend & 2022 Outlook, ad investment in CTV is growing the fastest within digital video. However, CTV budget allocation continues to significantly lag viewer time spent with the channel. And despite its advantages, CTV comes with its own set of challenges, largely stemming from channel fragmentation.

The study, now in its ninth year, explores why CTV ad dollars aren’t keeping pace with viewer time spent, what’s driving CTV’s growth and the key challenges and opportunities within CTV and digital video. 

To quantify the size and growth rate of the digital video market, IAB, in partnership with Standard Media Index and Advertiser Perceptions, has included in this study the first-ever total US digital video ad spend estimates for 2020 and 2021 and projections for 2022. Here are the study’s four key findings. 

1. Due in large part to CTV, digital video ad spend is experiencing substantial growth, though ad dollars aren’t keeping pace with consumers. 

Digital video ad spending increased 49 percent YOY in 2021 to $39 billion. That figure is expected to increase by 26 percent in 2022 to reach a total of $49.2 billion, according to IAB’s estimates. 

As the fastest-growing video channel, CTV is considered by 76 percent of buyers to be a “must-buy,” the study finds. Spend increased 57 percent in 2021 to $15.2 billion and is expected to grow by an additional 39 percent this year to reach $21.2 billion. Plus, between 2020 and 2022, CTV ad spend is anticipated to increase by a whopping 118 percent.

According to Ayzenberg associate media director Kris Patel, there are a number of reasons for the swift growth.

“Targeting and analytics make CTV a great advantage when it comes to video advertising that reaches an audience as large as and sometimes larger than linear TV,” says Patel. “Because the data and analysis are not panel-based information—it is platform-based digital view information—media planners, buyers and analysts are able to determine optimal marketing mix, audience segments that perform better than others, and user engagement via other platforms like social media.”

This year, the amount of money allocated to CTV today isn’t proportionate to the 36 percent of total time spent with linear TV and CTV combined.

2. CTV’s growth is due to multiple factors, including KPI delivery, data usage, transparency and the fact that it doesn’t rely on third-party cookies. 

Additionally, compared to linear TV, CTV provides a number of advantages for buyers, who rate CTV as 57 percent more effective than linear TV at delivering website/sales actions and 46 percent more effective at delivering brand perception. CTV also offers buyers the ability to leverage first-party brand data (65 percent), location data (61 percent) and shopping data (50 percent) – all unavailable within linear TV buys.

It also provides more transparency into where ads run than that provided by other digital video types. Fifty-nine percent of buyers reported being “very clear” on where their CTV ads ran as opposed to 50 percent for social video and 43 percent for other digital video.

Given buyers’ ongoing privacy concerns and CTV’s mitigation of them, 73 percent of video buyers anticipated reallocating dollars from linear to fund their third-party cookie/mobile ID depreciation CTV spending increases.

3. CTV’s challenges stem mainly from channel fragmentation-related issues.

Over 33 percent of buyers report that the challenges inherent in CTV are caused by difficulties associated with: 

  • the measurement of incremental reach across platforms/publishers (48 percent)
  • the management of frequency across platforms/publishers (43 percent)
  • the lack of transparency/interoperability within walled gardens (42 percent)
  • fragmentation of programmatic supply paths (35 percent)

Additionally, fragmentation-related difficulties further prevent video buyers from using sales and business outcome KPIs within their CTV buys. These buyers regularly cite sales lift as their ideal KPI for CTV despite not leveraging it due to measurement complexity, sub-par tool functionality and data lag, notes IAB.

Leo Hernandez, director of media at Ayzenberg, says this isn’t surprising.

“This is nothing new—new media, new challenges. As we develop new opportunities to connect with consumers, brands need to assess the pros/cons before activating on CTV as they would with augmented reality (AR) or virtual reality (VR) or the metaverse. If we consider paid TV (cable) in its infancy, it too faced fragmentation concerns (the ratings/audience were consistently below those of broadcast, for example). The optimal approach to new media opportunities is to maximize the individual tactic with discipline and understanding. What are the limitations in reach and how can it help with generating consumer responses in awareness/branding/behavior/message retention?”

“Media is grounded on the scientific method,” Hernandez says. “When executed correctly we analyze the opportunity, generate a theory, test the theory, and review the results. Media opportunities will continue to evolve; marketers should not be focused on what these new media cannot do, but rather consider what these opportunities can do for your brand and determine if that is consistent with their objectives.”

4. Buyers are addressing CTV challenges by preparing for a converged linear TV/CTV market and leveraging creative and targeting tactics.

Eighty-eight percent of buyers expect a converged linear TV/CTV marketplace in the foreseeable future – a marketplace that would make the management of cross-platform and cross-channel video buys easier. 

Sixty-six percent of linear TV/digital video buyers currently have a single planning team for the two channels while 25 percent expect to have one in the future, according to IAB.

Buyers are also executing an array of creative and targeting tactics including leveraging multivariate creative to mitigate over-frequency and creative burnout (64 percent). And as many as 52 percent of buyers report increasing their use of contextual signals in place of open exchange-based audience targeting.

CTV will become more widely adopted as emerging ad formats are themselves adopted and finetuned. Of the users of emerging formats, influencer-based and shoppable are performing well across the funnel. Given that buyers have expressed CTV’s KPI delivery rate across the funnel is higher than linear TV, these emerging formats are ripe for CTV.

Advertisers From Pepsi, Allstate And More Join OAAA’s New Brand Council

The Out of Home Advertising Association of America (OAAA) has convened a Brand Council, a platform to encourage collaboration between media leaders in the OOH industry.

The network’s inaugural nine advertisers—from brands including Allstate, Diageo and Pepsi—will advise on and shape the future of out-of-home (OOH) and advocate for its place in an omnichannel marketing mix.

The OAAA Brand Council members include:

  • Cheryl Gresham, chief marketing officer, Visible
  • Greg Hamilton, vice president of media, insights and content strategy, Little Caesars
  • Todd Kaplan, chief marketing officer, Pepsi
  • Sophie Kelly, senior vice president of whiskeys portfolio in North America, Diageo
  • Keith Lusby, vice president, connections and partnerships, Inspire Brands
  • Dave Marsey, senior vice president, media and commerce, Allstate
  • Catherine Schenquerman, senior director of brand marketing and communications, GoPuff
  • Randi Stipes, chief marketing officer, The Weather Company; IBM Watson Advertising
  • Maria Givens, global head of media and digital, Logitech

The news comes as the OOH industry continues its pandemic recovery. According to OAAA research, OOH advertising revenue increased 16.7 percent in 2021 compared to the previous year, accounting for $7.1 billion. Q4 total OOH revenue increased 37.4 percent and in 2021, 79 percent of the top 100 OOH advertisers increased their OOH spend from 2020.