Connected TV ad spend is expected to grow 39% this year to $21.2 billion, according to a new report out of the Interactive Advertising Bureau, with three out of four video buyers surveyed noting that it is a "must buy" in their budgets this year. 

One of CTV's biggest differentiators over linear TV is the ability for advertisers to leverage things like first-party data, location data and shopping data, according to the survey, which was conducted in partnership with Standard Media Index (SMI) and Advertiser Perceptions. This comes as brands need to shift reliance from things like third-party cookies, which help advertisers target consumers as they move through the internet. 

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Among users of the following KPIs, 57% felt CTV was more effective than linear TV at delivering website and sales actions, and 46% more effective at delivering brand perception. With no reliance on third-party cookies, buyers are turning to CTV as a privacy-safe way to spend ad dollars efficiently and effectively. 

With respect to transparency, the report found that the connected TV category offered a clearer picture of where ads run, particularly when compared to social and other digital video. 

The expected growth in CTV in 2022 comes following a 57% increase in 2021. 

Even as buyers see connected TV as a huge ad opportunity, IAB’s report found that dollar spend in the category is not on par with the viewership taking place on these platforms. The report asserted that just 18% of spending is being funneled into CTV when looking at the total video spend for CTV, social, short-form video and traditional linear TV.

While connected TV “leads the substantial growth of digital video ad spend, the amount of dollars currently allocated to CTV is not proportionate to the amount of viewer time spent with the channel,” Eric John, VP at IAB Media Center, said in a statement. “The time is now for brands and buyers to follow consumer attention.”

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At the same time, the survey identified a number of pain points for buyers with respect to connected TV. Some 48% cited tracking incremental reach across platforms and publishers as a challenge, while 43% said managing the frequency in these categories was also an obstacle. A lack of transparency and interoperability within walled gardens was cited by 42% of respondents, while fragmentation of supply paths was identified as an issue by 35% of buyers surveyed.

“Fragmentation continues to be the Achilles heel for buyers,” John said. “From the study, we learned that video buyers most often cite sales lift as their ideal KPI for CTV, but they are not leveraging it due to measurement complexity, sub-par tool functionality, and data lags. As the industry continues to advance and CTV prevails, advertisers are looking toward a converged marketplace that addresses these issues and helps measure the implementation of a variety of creative and targeting tactics.”

TV Upfronts and Newfronts 2022 calendar