CTV ad spend growth in the U.S. will slow from 18.8% this year to 13.3% in 2025 and will decline through the end of 2028, according to eMarketer. After years of declining growth, CTV ad spend growth got a boost this year from Amazon Prime Video incorporating ads. But now that all the major streamers have ads, there likely won’t be any other big jumps in growth. Still, CTV ad spend will cross the $30 billion mark next year and approach 10% of U.S. digital ad spend.
Moreover, CTV will account for one-third of combined U.S. linear and CTV ad spend this year, up from under one-tenth in 2019, per eMarketer's March 2024 forecast. All growth in the converged TV market will come from CTV starting next year. Come 2028, CTV's share of ad spend in the U.S. will be nearly equal to linear's, per the forecast.
EMarketer also noted that combined ad inventory across CTV and linear TV will shrink by 6.6% annually between 2023 and 2027, according to Madison and Wall. This means that ad slots could get more expensive. Combined CTV and linear ad spend growth will stay within $6 billion over the next four years, per the forecast, but the number of ads slots available is decreasing due to fewer ad loads on CTV. CTV advertisers may find themselves paying more for fewer spots, but CTV’s shopability and targeting capabilities could make it worth the price.
U.S. OTT video subscription revenues (excluding virtual multichannel video programming distributors) will be nearly two times higher than CTV ad revenues this year, according to eMarketer’s March 2024 forecast. Streaming is still a subscription-based business, especially for Netflix, which relies more on subscriptions than any other streaming service that sells advertising. But CTV ad revenues still account for about one-third of streaming revenues, and their share will increase over the next two years.
Also, the company stated that U.S. ad-supported streaming subscriptions will grow by 82.8% this year. U.S. consumers are more willing than ever to adopt ad-supported options, likely because these tiers are cheaper and increasingly available. So even as ad inventory shrinks and CTV ad spend growth slows, the volume of people watching ads on streamers is rising.
Moreover, eMarketer shared that 4 in 10 U.S. agency and marketing professionals have reallocated ad dollars from linear TV to spend on connected TV (CTV), according to March 2024 data by Interactive Advertising Bureau (IAB), Advertiser Perceptions, and Guideline.
39% of U.S. agency and marketing professionals moved funds out of their ad budget for other types of traditional channels, the same report found. U.S. CTV ad spend will grow 18.8% this year, while linear TV will increase only 0.7%, bolstered by the Summer Olympics and elections. CTV will remain an important channel for advertisers, but eMarketer said it expects more moderate growth for 2025 and beyond, after leveling out from a boost driven by the introduction of Amazon’s ad-supported tier.
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