Dive Brief:
- Connected TV (CTV) media spending will surge 38% to $6.94 billion in the U.S. this year as advertisers work to reach audiences on streaming services like Hulu, Roku and YouTube, researcher eMarketer shared with Marketing Dive. The firm estimated that CTV ad spending will hit $14.1 billion by 2023.
- CTV usage is forecast to grow 5.3% to reach 195.1 million viewers by the end of this year and will surpass 200 million by 2020. Roku is the most popular streaming device with about 44% of viewers, followed by Amazon Fire TV (33%), Google Chromecast (16%) and Apple TV (13%), and there is some overlap among users of multiple devices.
- YouTube is estimated to have 198 million U.S. viewers, making it the most popular over-the-top (OTT) video service that runs advertising, followed by 75.8 million for Hulu's ad-supported tier and 7 million for Sling TV, eMarketer estimated. Netflix, which is ad-free, had 60.6 million U.S. subscribers at the end of Q3, per a quarterly report.
Dive Insight:
EMarketer's estimate on CTV ad spending arrives as the OTT space goes through one of the most disruptive periods in the history of the fledgling industry. Media and tech giants are launching a slew of new services that aim to reach viewers who connect their TVs directly to the internet instead of relying on a cable or satellite TV subscription. As eMarketer notes, a key challenge will be developing more reliable viewership metrics that can be verified by a third party and urge more advertisers to shift media spending into CTV.
Roku is well positioned to boost ad revenue on its devices, having grown its active accounts by 39% in the past year to 30.5 million at the end of the Q2, per its earnings report. The company last month acquired Dataxu, a demand-side platform that lets marketers plan and buy video ad campaigns. Roku also updated its operating system to show interactive pop-up ads that run during commercial breaks, giving marketers a chance to drive a direct response from viewers through more dynamic ad formats, Cord Cutters News reported.
Ad-supported services like YouTube and Hulu will see greater competition as Comcast's NBCUniversal launches a streaming platform called Peacock, which also will have an ad-free tier for paying subscribers. Ad-free services like Apple TV+ and Disney+ this month are launching services that will compete directly with Netflix for subscribers, and the market will get more crowded with AT&T's launch of HBO Max next year. Amazon bundles its video streaming platform with Prime memberships, and currently doesn't have an ad-supported tier, although it does have video ad placements on Fire TV.
