Connected TV ad spending is still a drop in the bucket compared with what marketers spend on traditional television, but the number is growing rapidly, increasing 38% to a projected $6.94 billion this year, according a new eMarketer forecast.
That connected TV (CTV) ad spend will top $10 billion by 2021 and reach $14 billion by 2023, when it will account for 4.7% of total media ad spending.
These numbers grow as more viewers use connected TV devices—including smart TVs, Roku and Apple TV—to stream content on YouTube, Hulu and Roku.
(For its CTV tally, eMarketer includes digital advertising that appears on connected TV devices, including display ads on home screens, and ads that stream during programming on platforms like Hulu, Roku and YouTube. It doesn’t include network-sold inventory from traditional linear TV advertising and addressable TV advertising.)
“When looking at ad revenues, YouTube, Hulu and Roku are the leaders in this market,” eMarketer forecasting analyst Eric Haggstrom said in a statement. “Users of these platforms are likely either cord-cutters or cord-shavers. That means some TV ad buyers are willing to pay a premium to reach users who are difficult to reach via traditional TV ads. These platforms are also bulking up their targeting, programmatic and attribution capabilities in order to attract buyers from the digital world.”
Hulu said in January that it raked in nearly $1.5 billion in ad revenue in 2018, close to a 50% increase over its 2017 haul.
Still, that $7 billion CTV figure for this year is just 6% of 2019’s projected traditional media ad spend of $109 billion. Overall digital ad spending this year will top $129 billion, according to eMarketer.
Measurement concerns are keeping some marketers away from CTV.
“There is no single, commonly accepted measurement across platforms like there is in TV,” said Haggstrom, adding that targeting, attribution and programmatic capabilities for connected TV are “significantly behind” those of other major digital ad platforms.
This year, 195.1 million U.S. viewers will use connected TV devices at least once a month, a number that will top 200 million in 2020.
YouTube has the most overall OTT video viewers in the U.S., with 198 million, followed by Netflix (158.8 million), Amazon Video (96.5 million) and Hulu (75.8 million).
Among connected TV users, Roku is the most popular platform, with 86.2 million users, followed by Amazon Fire TV (64.6 million), Google Chromecast (31.6 million) and Apple TV (24.6 million), though eMarketer noted that some users have access to more than one platform.
Connected TV usage is expected to grow as new streaming players enter the space. While it’s unclear how successful the new offerings will be, Haggstrom said, ad-free offerings like Disney+ and Apple TV+, which are both under $7 a month, “will likely make platforms that do have ads less attractive to consumers than they currently are.”