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Digital Video Ad Spend to Reach Nearly $50B in 2022

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NEW YORK—Digital video advertising spend surged 49% in 2021 and is expected to increase an additional 26% to $49.2 billion in 2022, according to IAB's newly released "2021 Video Ad Spend and 2022 Outlook" report.

The report, which was released at the 2022 IAB NewFronts, in conjunction with Standard Media Index (SMI) and Advertiser Perceptions, found that Connected TV (CTV) ad spend was the largest segment in digital video advertising. 

CTV advertising increased 57% in 2021 to $15.2 billion and is expected to grow an additional 39% in 2022 to $21.2 billion, the IAB is predicting. Between 2020 and 2022, CTV ad spend is projected to more than double (+118%). 

The IAB report also found that three out of four video buyers (76%) label CTV as a 'must buy' in their media planning budgets.

"Digital video is a driving force for buyers and will continue to be in 2022," said Eric John, vice president, IAB Media Center. "However, while CTV leads the substantial growth of digital video ad spend, the amount of dollars currently allocated to CTV is not proportionate to the amount of viewer time spent with the channel. The time is now for brands and buyers to follow consumer attention."

Although CTV will account for 36% of total time spent with linear TV and CTV combined in 2022, the amount of dollars currently allocated to CTV is much smaller than CTV audiences, the IAB reported. Only 18% of total video ad dollars are being spent on CTV vs. total video spend, which includes CTV, linear TV, social, and short-form video.

The IAB also found that buyers cited CTV ad campaigns offered a number of advantages. These include: 

  • CTV enables buyers to leverage many types of data not available within linear TV buys, including first-party brand data (65%), location data (61%), and shopping data (50%).
  • Among users of the following KPIs, 57% felt CTV was more effective than linear TV at delivering website/sales actions, and 46% more effective at delivering brand perception.
  • Buyers felt CTV provided more transparency into where ads run, with 59% of buyers stating it was 'very clear' on where their CTV ads ran vs. only 50% and 43% for social video and other digital video, respectively.
  • With no reliance on third-party cookies, buyers are turning to CTV as a privacy-safe way to spend ad dollars efficiently and effectively. Nearly three in four (73%) video buyers doing so expect to fund their third-party cookie/MAID deprecation CTV spend increases by reallocating dollars from linear TV.

But the report also found that the CTV ad sector still faces a number of challenges around cross-platform campaign activation, management, and measurement. Challenges cited by buyers include:   

  • Measuring incremental reach across platforms/publishers (48%)
  • Managing frequency across platforms/publishers (43%)
  • A lack of transparency/interoperability within walled gardens (42%)
  • Fragmentation of programmatic supply paths (35%)

To address the challenges of CTV, the IAB founded that buyers are preparing for a converged linear TV/CTV market that would ease management of cross-platform and cross-channel video buys. Nearly nine out of ten buyers (88%) anticipate a converged linear TV/CTV marketplace in the coming years, two in three (66%) linear TV/digital video buyers now have a single planning team for the two channels, and another quarter (25%) expect to have one planning team in the future.

"Fragmentation continues to be the Achilles heel for buyers," added John. "From the study, we learned that video buyers most often cite sales lift as their ideal KPI for CTV, but they are not leveraging it due to measurement complexity, sub-par tool functionality, and data lags. As the industry continues to advance and CTV prevails, advertisers are looking toward a converged marketplace that addresses these issues and helps measure the implementation of a variety of creative and targeting tactics."

"2021 Video Ad Spend and 2022 Outlook" can be downloaded here.

George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.