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1. Have CTV Ad Estimates Gone Over The Top?

Big news: Daniel Salmon @ BMO Capital Markets has planted the flag when the connected TV (CTV) ad market will hit $100B.

 

Connected TV ad spend (YoY growth) according to BMO Capital Markets:
1) 
2020 – $14B
2) 2021P – $21B (↑ 54%)
3) 2022P – $29B (↑ 37%)
4) 2023P – $37B (↑ 30%)
5) 2024P – $47B (↑ 27%)
6) 2025P – $58B (↑ 22%)
7) 2026P – $65B (↑ 12%)
8) 2027P – $72B (↑ 12%)

9) 2028P – $80B (↑ 12%)

10) 2029P – $90B (↑ 12%)

11) 2030P – $100B (↑ 12%)

Flashback: CTV Leads Digital Ad Growth

 

Big question #1: How is the pie currently split between TV and digital video?

 

Quick answer: Linear TV still accounts for most (52%) of total video advertising in the U.S., but CTV is the fastest growing screen type (↑ 49%).

 

U.S. video market by screen type according to Cross Screen Media:

1) TV (Broadcast) – 39%

2) TV (Cable) – 13%

3) Digital (Social) –  16%

4) Digital (Mobile/Desktop) – 20%

5) Digital (CTV) – 12%

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YoY growth rate by screen type according to Cross Screen Media:

1) Digital (CTV) – ↑ 49%

2) Digital (Social) –  ↑ 31%

3) Digital (Mobile/Desktop) – ↑ 28%

4) TV (Cable) – ↓ 5%

5) TV (Broadcast) – ↓ 5%

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Quote from Daniel Salmon – Analyst @ BMO Capital Markets:

“The growth of CTV advertising is the answer to the No. 1 topic we’ve been asked over the course our career.  When will the inevitable growth of internet advertising disrupt TV ad budgets? Defined as use of a television to stream video over-the-internet, CTV sits at the crossroads of advertising transformation, bridging the signature traditional channel (television) and the fastest-growing digital format (video).”

 

Mr. Screen’s Crystal Ball #1: The CTV ad market is poised for significant growth if it can accomplish the following two items.

 

Key drivers for CTV growth:

1) Targeting and measurement – Marketers are willing to pay more for better-targeted ads proven (measurement) to improve their bottom line.

 

2) Programmatic “like” access/workflow – More advertisers = higher prices.  Increase access while lowering the entry cost.

Big question #2: What potential roadblocks could keep money away from CTV?

 

Quick answer: Slow progress on the above items, along with a lack of inventory.

 

Mr. Screen’s Crystal Ball #2: This is something we covered @ RampUp NYC  back in 2019.  Due to lower ad loads + a higher share of ad-free viewing on streaming, we see an 8% decline in ad impressions for every 10% shift in viewing time from linear to CTV.  The only way to grow this market is through better ads that marketers are willing to pay significantly more.

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Big question #3: Who is working on this problem?

 

Quick answer: Everyone 🙂

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Big question #4: What do CTV buyers want?

 

Top reasons for shifting budget from linear to CTV/OTT according to the IAB:

1) Targeting and efficiency – 81%

2) Incremental reach – 55%

3) Creative optimization – 27%

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Quote from Irwin Gotlieb – Former Global Chairman @ GroupM:

“The buy-side is either going to be faced with skyrocketing cost per thousands or improved targeting and addressability solves the problem for both (sides).”

 

Video: Irwin Gotlieb Predicts Troubling Tipping Point for TV Ad Pricing

2. The Podcast Wars Are About To Get Loud

Worth the time: Matt Flegenheimer @ The New York Times has a deep dive on the relationship between Spotify and The Joe Rogan Experience.

 

Audience reach:

1) Tucker Carlson on Fox News – ≈ 3M per night

2) Joe Rogan on Spotify – ≈ 5M – 10M per episode (3-5 episodes per week)

 

Why this matters: The podcast market will surpass $1B this year, and companies such as Spotify have made major bets in this space.

 

Big question #1: How important is Joe Rogan to Spotify’s podcast strategy?

 

Quick answer: They have dedicated an entire category to his show!

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Annual deal size for Call Her Daddy according to Lightshed Partners:

1) Barstool Sports offer in 2020 – $500K + bonus

2) Spotify deal in 2021 – $20M

 

Wow: Alex Cooper increased her annual deal size 3,900% by waiting one year!

 

Podcast advertising (YoY growth) according to PwC:
1) 
2015 – $106M
2) 
2016 – $169M (↑ 59%)
3) 2017 – $314M (↑ 86%)
4) 2018 – $479M (↑ 53%)
5) 2019 – $708M (↑ 48%)
6) 2020 – $842M (↑ 19%)
7) 2021P – $1.3B (↑ 60%)
8) 2022P – $1.8B (↑ 30%)

9) 2023P – $2.2B (↑ 25%)

Share of podcast advertising by creative type:

1) Host-read – 56%

2) Announcer-read – 35%

3) Agency produced – 9%

Share of podcast advertising by objective:

1) Direct response – 51%

2) Brand awareness – 45%

3) Product placement – 4%

Big question #2: What is the next battleground for podcasts?

 

Quick answer: Paid podcast subscriptions.

 

Likelihood to pay for podcast access according to YouGov:

1) Not at all likely – 45%

2) Not very likely – 39%

3) Somewhat likely – 14%

4) Very likely – 2%