The dramatic rise in connected TV (CTV) adoption, accelerated by the pandemic, has ushered in new commercial models that are fragmenting the landscape in much the same way that the myriad viewing options are, Nielsen affirms in its latest report. Until recently, traditional commercial models have determined the value exchanges within the media industry. These models have been steadfast for decades, but the widespread adoption of internet-connected devices and accompanying services to meet growing demand have opened new commercial opportunities that did not exist in traditional linear experiences.
“The implications here are significant, as monetization opportunities are no longer limited to the buying and selling of ads within a scheduled, linear program. That is not to say, however, that these opportunities no longer exist. Linear television remains the best way to reach a mass audience, and global ad spending on traditional TV has rebounded stronger than other media spending has. That spending now has company, but it is all still connected to the physical television set—the most valuable 52 inches of real estate in the home,” the report says.
CTV, defined as content delivered to the television set through an internet connection, has significantly broadened the commercial opportunities within the video realm—and for more parties. CTV is also nearing ubiquity in certain markets. In the United States, for example, Nielsen data shows that CTV reaches nearly 142 million adults each week. In Western Europe, eMarketer forecasts that OTT subscribers will reach nearly 187 million in 2022.
With direct access to consumers, networks, broadcasters and new media companies are investing in building and acquiring direct-to-consumer offerings, following in the well-established footsteps of Netflix, which pioneered subscription video on demand back in 2007. Today’s OTT and CTV options span beyond SVOD, also encompassing ad-supported VOD and live streaming, either through a multichannel video programming distributor (MVPD) like Comcast and Verizon, or a virtual MVPD (vMVPD) like YouTube TV, fuboTV and Sling.
Outside of traditional SVOD platforms, CTV and addressable advertising represent budding opportunities, but they remain largely unfamiliar to many marketers. Media investment company GroupM forecasts that CTV ad revenue will grow to exceed $31 billion globally by 2026, but the newness of the multifaceted advertising options outside of traditional models has many marketers unsure of their footing.
In Nielsen’s “2021 Annual Marketing Report,” the researcher noted that 46% of marketers across brands with small, medium and large budgets reported internal knowledge gaps with respect to adopting CTV marketing strategies. Beyond adoption, nearly half (47%) of marketers at brands with large budgets ($10 million or more) say they are facing measurement challenges in the space even though an equal percentage say real-time targeted ads in linear programming is important moving forward.
“Digital truly represents a new frontier for the television industry, and answers a nagging question that comes up from time to time as new innovations arrive: ‘Is TV dead?’ The answer is a resounding ‘no’. It’s alive, well and introducing a wealth of opportunity for content creators, distributors, advertisers, OEMs, agencies and consumers,” Nielsen concludes.