There were at least two winners that emerged from the mess that was 2020: connected TV and first-party data, according to new report from the Interactive Advertising Bureau. 

CTV outpaced other categories in video ad spending per advertiser for the first time, with average video ad spend per advertiser climbing by 22% compared to 2019, reaching nearly $20 million. 

In comparison, mobile video spending rose to $17.6 million in 2020, up only 4% compared to the year prior, and digital desktop video increased 3% to $17.6 million. 

“This is a bellwether moment in media that reflects the continued acceleration and shift to digital,” Eric John, VP of IAB Media Center, said in a statement. “While we are seeing growth across all digital video, the movement to more audience-based buying approaches has resulted in increased buyer demand for CTV.”

Advertisers are drawn to connected TV for what they view as premium content and a brand-safe environment, according to the repot. The ability to target audience is also a key benefit, according to 46% of advertisers. Spending increases were driven by auto advertising, consumer packaged goods, retail, and home goods like furniture and appliances, with that category seeing a 105% increase in average CTV spending to $28.9 million.

“Viewers have come to expect optimized video experiences. The days of dog-owner households seeing cat food ads are ending, even on the big screen,” said John. “Flexibility, addressability, and the opportunity to reach specific audiences in real time has put streaming at the big kids table, in some cases at the head of the negotiation table, right alongside traditional linear.”

A surge in quarantine viewing also undoubtedly helped spur these trends, leading to the rise in connected TV viewing of platforms like YouTube. Once dominant on mobile and desktop, YouTube increasingly sees itself as a CTV player, with 120 million monthly viewers watching its content on living room screens.

Other platforms and content providers like Roku, Amazon, Hulu and more are also making CTV the top destination for brands looking to spend their video dollars, a trend showing itself in this year’s NewFronts presentations. 

CTV’s success came at the expense of broadcast and cable, according to the IAB report: 73% of CTV buyers said the dollars they spent in the space came from their broadcast and cable budgets, with advertisers spending $20 million on CTV in 2020 on average. 

More than 35% of buyers said they expect to increase CTV video ad spending in 2021. 

The impending loss of third-party identifiers is expected to further boost CTV. Those that will win in the space must have robust first-party data, with 77% of advertisers saying this will be important when choosing a digital video partner and 28% say leveraging first-party data is a key benefit of CTV advertising. 

User privacy concerns are also an emerging factor for buyers, with 52% of buyers saying they will use first-party data to personalize and target ads, compared to 51% saying they will rely on contextual targeting and 49% of buyers planning to combine contextual and first-party data to personalize and target ads.

One of the biggest challenges to CTV is pricing, with the cost to reach 1,000 viewers, an industry standard known as CPMs, high relative to other forms of video. It must also overcome buyers' roots in traditional concepts of TV delivery and measurement. 

The IAB’s report used data collected by Advertiser Perceptions and surveyed 350 video and advertising decision makers in 2021.