Marketers once feared that streaming would be the death of television advertising—but the opposite is now proving to be true. As more consumers turn to ad-supported connected TV (CTV) models, advertising revenues are actually enjoying a surge. A recent study from Advertiser Perceptions and Hub Research revealed this duality: while more viewers welcome the presence of ads, media buyers are increasing spending to satisfy that demand. Here’s what else you need to know.

Wallet-Friendly Figures
It’s no secret that many countries around the world are currently facing economic hardship. Inflation is at an all-time high in the US, while workers in the UK are struggling with the largest wage drop in over two decades. Russia’s invasion of Ukraine further served to destabilize global economies, so it’s perhaps also unsurprising that savings, savings, savings are top of mind for almost every consumer. Given that reality, 72% of study respondents said they’d watch ad-supported television if it saved between four and five dollars a month. Some participants self-identified as “ad intolerant”—yet 30% of that group still claimed they’d switch to an ad-supported model to save the aforementioned sum. “The best days of ad-supported TV are ahead of us, not behind us,” said Jon Giegengack, principal at Hub Research. “Significantly more people watch ad-supported than ad-free platforms, and the combination of exclusive content, lower cost and a less disruptive ad experience will keep ad-supported audiences high.”

While costs undoubtedly matter, the types of ads shown are also an important factor. 44% of respondents who watched a show on a platform that supports advertising reported being “highly satisfied” with the experience—and 60% said they were highly satisfied when ads were “customized for me.”

Advertisers Increase Spending
CTV viewership is projected to rise from roughly 218 million viewers in 2021 to 228 million in 2023 as U.S. streaming services search for ways to make their content more affordable and personal. It therefore follows that over half of advertisers will increase their CTV spending by an average of 22%, according to a new 2022 CTV/OTT Advertiser Survey commissioned by Premion and Advertiser Perceptions. What’s more, 66% of marketers are shifting budgets away from social, digital, and linear TV to fund CTV growth, while 30% report that backing will come from an overall spike in ad budgets. “Advertisers have embraced CTV and they’re shifting bigger budgets to the medium as an essential buy for driving brand awareness and performance marketing,” said Tom Cox, president of Premion. “Our study validates that CTV has become an invaluable channel for brand marketers and agencies to follow their audiences, plan with data-driven targeting, and measure with outcomes-based performance.”

Audience targeting ranked among the most important reasons for ad spending increases. Of the advertisers surveyed, 56% said the ability to precision target consumers was their top motivation for increasing CTV budgets this year. Nearly 70 percent agreed that CTV lets them target consumers in ways that weren’t previously possible with traditional TV. “Advertisers should get out of their comfort zone and explore all the innovative ways to advertise on CTV,” said Erin Firneno, VP at Advertiser Perceptions. “Publishers can grow the category by promoting their unique offerings, whether that’s scale, unique audience, exclusive content or shoppable ads.”

Netflix Jumps into the Ad Pool
Despite recent financial woes, Netflix still remains the world’s most widely used streaming platform. Which is why the content giant’s announcement to introduce a lower-cost ad-supported option in the fourth quarter of 2022 made big news—especially after analysts revealed the company’s potentially $4 billion advertising revenue opportunity in the US. In mid-July, Netflix further shocked marketers by selecting Microsoft as the best advertising partner to build the streamer’s ad-supported platform. That’s because despite having key ad technology infrastructure, Microsoft is still a relatively new player on the connected TV scene. “It’s a surprise upset win for Microsoft,” said Kevin Krim, president and CEO of data and measurement firm EDO. “It’s not very often that a potentially huge source of premium video advertising comes on the market.”

This move is yet another example of how streaming is now one of the most desirable places to buy ad space. Additional cases include Amazon’s plan to show NFL games this fall, along with Disney’s upcoming introduction of an ad-supported tier to Disney Plus. Warner Bros. Discovery, Paramount and NBCUniversal are examples of three more traditional broadcasters currently developing their own streaming ad channels. In the US alone, CTV ad spend is projected to grow from $19 billion this year to nearly $39 billion by 2026, according to eMarketer experts. By that time, CTV will also account for 10% of all digital ad spend, which means the future looks ever brighter for marketers and ad supported streaming platforms. As linear TV and digital video truly converge, brand marketers are challenged by the increasing complexity of managing creative assets and activating omnichannel campaigns. Read about how Extreme Reach helps brands around the world simplify workflows and ensure campaigns launch on time—every time.