Media consumption is shifting. And advertising dollars are moving with it.

The glut of streaming services in the market — with their on-demand nature, unlimited DVRs and exclusive content offerings — has pushed connected TV (CTV) into the top-tier of solutions in the digital media market. It's a trend that is affecting not only the revenue of regional cable television giants, but also the number of dollars brands invest in internet search.

Amidst all this, companies are trying to make sense of the changes. Considering a new era of options, how do they make informed decisions about where to invest their ad dollars?

Ad spending and content creation show an exodus to CTV 

Viewers are cutting the cord and moving to CTV and streaming services.  

“Less than half of all households watch linear TV,” said Aaron Grote, vice president of digital products at Stirista. “We see it across all age ranges.”

CTV ad spending rose in 2022, while traditional TV ad spending continued to fall. 

“Traditional TV ad spending fell by 23% year-over-year in Q3 — and overall ad spending across media types dropped by 5% — whereas CTV ad spending rose by 39%, according to Standard Media Index, a research firm that compiles advertiser spending and pricing data from agencies,” Digiday reports.

Along with that shift, publishers continue to invest more in content creation for streaming purposes. Content spending for streaming platforms grew by 25% in 2022, according to research by Ampere Analysis.

“When consumer desire aligns with financial interests, that’s indicative of a fairly sticky trend,” Grote said.

Coupled with this development, earnings reports reveal that brands may be pulling away from search while allocating more of their budgets to CTV ads.

Google recently reported its first-ever drop in paid spending. In 2022, Google and Facebook comprised 48.4% of digital ad spending in the U.S., according to research firm Insider Intelligence. The companies’ combined U.S. market share hadn’t fallen under 50% since 2014. That number is expected to drop even further to 44.9% this year.  

In the past, Google paid search was considered a safe haven, protected from budget cuts. However, companies are now looking for alternatives when choosing where to deploy performance dollars.

How to decide where to allocate your ad budget

As brands consider where to allocate their ad dollars, Grote suggested starting with the consumer behavior you want to drive. 

“Hold off on the how-and-what decisions,” he said. “Find your audience, then build a media plan. Measure at every step. Optimize as you go. If you do this, you will see growth.”

When spending on CTV ads, focus on programmatic buying, Grote said. Consider how to maintain the freedom and flexibility to choose networks and specific audiences. This approach allows for optimization.

Brands that plan the most carefully see the greatest return, Grote said. 

“Companies that start with a goal but are flexible in how to get there are more successful, versus those that come in and say, ‘I want to do this thing — and here’s how I want to do it,’” he said.

The value of the right CTV ad partner for brands

One approach to address the challenges and rewards of CTV advertising is to work with a partner that understands the space and provides accurate reporting.

“You want a partner that is doing the right thing, as the steward of a brand’s budget,” Grote said.

And because CTV advertising is still such an open space, advertisers can get transparent and granular reporting while also maintaining power and choice, he said.

"They still have the freedom and control to deploy that visibility and the insights they gain from it as optimizations within their campaigns," Grote said. 

Check to see if your CTV partner is proactively keeping up with the technology to support you, he said, and don’t be afraid to ask questions of your provider.

"There are definitely those in the CTV space that are just getting into attribution,” Grote said. “There is a risk of finding the wrong partner.”

The benefits of CTA advertising go beyond traditional television, he said.

“CTV offers everything that we’re used to when thinking about television as an awareness platform — but now you get the added benefit of direct response,” Grote said. 

Attribution for CTV is on par, but the transparency, granularity and control allow you to enhance the performance versus more constrained channels.

“CTV is doing a great job of driving behavior in the most cost-effective ways,” Grote said. 

The future of CTV ad spending

CTV ad spending is the future, but making the best decisions about where to allocate funds will continue to challenge brands. 

Choose a partner that understands the space and can help by being a trusted steward of your budget.