The ad-supported streaming revolution took center stage in 2022, with subscription fatigue prevailing for cost-conscious consumers. The arrival of Netflix and Disney+ ad tiers are further bolstering this trend. Consumers continue to rein in spending as inflation persists and are embracing ad-based streaming services. In fact, more than half (55%) of consumers use at least one free ad-supported streaming TV service (FAST), according to Hub Entertainment Research.
Advertisers have already followed their audiences and ramped up investments in connected TV (CTV) advertising, with spending expected to top $20 billion this year, per the IAB. In Premion's own 2022 CTV/OTT survey conducted by Advertiser Perceptions, more than half of CTV/OTT advertisers said they will increase spending this year, with an average increase of 22%, and with 66% of advertisers shifting budgets from digital, social and linear TV.
In 2023, making ad investment dollars work harder is the name of the game, and CTV is where advertisers are seeing efficiency and outcomes. Thus, while we expect some pullback of ad spending across categories in a challenging economy, we expect CTV advertising will continue to grow in the year ahead.
As marketers continue to navigate an unpredictable economic environment, they’re demanding flexibility with a heightened focus on performance-based media plans and measurability. The data-driven capabilities of CTV is a proven channel for delivering full-funnel brand goals; our study found that 43% of marketers say that CTV/OTT spend increases are driven by the ability to achieve brand awareness and performance marketing goals.
With an eye toward more rigor and accountability with media investment dollars to drive performance, here’s my take on priorities ahead for CTV advertisers in 2023:
1. Reaching precise audiences with efficacy: Advertisers are taking a more focused approach on reaching precise audiences with CTV campaigns. Beyond the ability to target by location, interests and behaviors, CTV advertisers are tailoring targeting strategies to meet specific brand goals, whether it’s driving brand awareness with demographic or contextual targeting or reaching in-market shoppers with intender targeting.
Additionally, we expect that CTV advertisers will pursue a more sophisticated persona-based targeting approach to reach consumers whose lifestyles align well with their brands or services. For instance, advertisers can work with some providers that use an audience-first targeting approach that leverages audience personas, based not only on direct interests but also adjacent interests and behaviors, such as budget-conscious shoppers, young professionals or outdoor adventurers. This gives advertisers additional relevant layers of targeting to capture potential customers missed by a narrower targeting approach.
2. Less experimentation, more outcomes-based performance: With a greater scrutiny on ad budgets, marketers will demand to know exactly how their ad dollars are driving performance-based outcomes. New data-driven capabilities allow CTV advertisers to optimize ad spending and ensure that they’re reaching high-value audiences to drive business outcomes.
Beyond looking at reach and frequency as key metrics of success, advertisers can tie CTV viewership to direct business results. For example, an automotive advertiser can match exposure to CTV ads with sales data to determine how many car sales were generated by a streaming TV campaign. Additionally, marketers can go deeper to understand the true impact of their CTV campaigns on viewer perceptions with brand lift studies, such as which messaging is resonating best with which audience. Many are seeing positive results with ad recall, favorability, brand awareness and purchase intent.
3. Delivering greater ad personalization: Advertisers are demanding more localization to tailor their creative to different audiences in different markets in their CTV campaigns. Beyond this, the introduction of new dynamic creative capabilities is creating more personalization and relevancy for streaming TV ads.
By using dynamic creative, CTV ads can be transformed to deliver messaging unique to each individual household with localized and interactive enhancements. For instance, a restaurant brand can embed a scannable QR code into a CTV ad that enables a viewer to browse the menu, make a reservation and find directions to the nearest location. Aside from making the ad more personalized, this adds an extra layer of ad relevance to drive advertiser results with specific localized and personalized call to actions.
4. Brand safety is table stakes: It’s no longer enough to just work with CTV advertising providers that offer premium inventory. To protect brand reputation and know for certain that ads are running in brand-safe content, advertisers must dig deeper to truly understand the publisher vetting process, inventory sourcing and the reporting provided by their CTV advertising partners.
Above all, advertisers should look for the TAG Brand Safety Certified Seal of approval to ensure they’re working with a provider that operates to a set of rigorous guiding principles to promote brand safety and combat piracy. This is the best safeguard for transparent accountability and brand safety protection.
Trusted relationships are paramount for managing in turbulent times. Choosing performance-driven partners that can deliver brand-safe premium content, precision audience targeting at scale, personalization and proven measurability will be the holy grail for advertisers to win over audiences for the ad-supported streaming revolution in 2023.