OTT Advertising to Double by 2025, BIA Says

(Image credit: iStock)

CHANTILLY, Va.—Advertisers are following viewers’ eyeballs and spending more on OTT spots, with substantial growth expected over the next few years, according to BIA Advisory Services, which projects that OTT local ad spending will jump from about $1.18 billion to $2.37 billion by 2025.

These projections were discussed during BIA’s webinar, “All Eyes on OTT—Breakout Media Category in 2021.” In addition to OTT advertising estimates—which include Connected TV numbers—the webinar featured a panel discussion with industry experts sharing important trends and challenges surrounding OTT advertising.

BIA specializes in local advertising, so its projections of OTT ad spending refers to local. For 2020, the total ad spending number for OTT came in at $990 million; BIA expects that number to cross the $1 billion mark in 2021 with a total of $1.176 billion. Increased growth is expected over the next few years, culminating in the $2.373 billion projected OTT ad spending in 2025. All told, the Compound Annual Growth Rate during this period would be 19.1%.

It’s not just the total that is increasing, OTT’s share of the total ad spending is slated to increase over the same time period. Linear TV is still the largest sector for ad spending, but its lead is dwindling due to the rise in OTT ad spending, as well as increases in online and mobile.

The webinar also featured a presentation from Justin Fromm, executive vice president, Business Intelligence, for Advertisers Perceptions for BIA, who detailed results from an annual survey showing that video is still considered the most important media type by a healthy margin of advertisers (49%) to meet their goals and that OTT is becoming a popular new resource for them.

(Image credit: Advertisers Perceptions)

Forty-one percent of respondents said that they increased their ad spending for streaming services (CTV/OTT) over the last year, the largest increase of any other digital video tactic. It was a 42% increase for TV Tactic ad spend; linear came in at a 26% increase, but also saw the largest decrease in spending at 14%.

In terms of frequency of buying addressable advertising, streaming was the third highest outlet for doing so “all or most of the time,” behind social media and DSPs. Linear, meanwhile, was the least likely to do this all or most of the time, and the most likely to do it less than half the time or never.

Still, linear TV is considered a top-five video advertising tactic by the highest percentage of advertisers (65%), but streaming is closing in on it, with 57% ranking it among their top five resources.

The presentation also touched upon important factors to consider when it comes to selecting an OTT advertising partner. More than half (55%) of respondents said that audience reach was most important, with quality of programming (43%) and quality of advertising opportunities (38%) rounding out the top three. Reach was also a top factor for CTV ads (50%), just behind targeting capabilities (53%) as the most important.

There is still a need for advertisers to understand what they are getting with OTT or CTV advertising. When given a statement saying that adding OTT to a linear buy is just buying impressions without knowing the reach, frequency or effectiveness of the campaign, 58% of advertisers agreed.

The survey also showed that ad fraud was the top cited concern from advertisers, with ad fraud in digital video leading the way at 36% and ad fraud in OTT at 29%. However, despite recent examples of CTV ad fraud cases, many of the panelists agreed that the perception is greater than the actual risk.

The BIA “All Eyes on OTT” webinar is now available to watch in full on YouTube