Five areas underpinning the next phase of CTV growth
Global connected TV (CTV) advertising is set to grow by 64% over the next five years, according to GroupM’s bi-annual growth forecast. That takes CTV to a $42B global industry, making up a quarter of all TV spend. Recent research from Ampere Analysis on the addressable TV landscape corroborates these findings, estimating a 50% growth by 2027.
Either way, CTV investment forecasts are predicted to be at least double the average growth rate for the media market over the next five years, which in the face of global financial challenges, is notable. There is no denying that CTV is a good place to be right now. So where does this next phase of growth come from?
Across our EMEA markets, about 60% of campaign briefs come from TV or audio-visual teams. Although every market is different, there is a tendency to associate CTV with the known quantity which is linear TV. Because we understand that TV is good at building reach and awareness, we apply that theory to the CTV world. As linear TV audiences move to digital platforms media plans are augmented to include CTV to offset the audience movement. This is a great start and has been the driving force for the exponential growth of this medium. However, we’re only just scratching the surface of what’s possible.
The mainstay of TV has always been about driving efficient and effective reach to a mass audience. However, the opportunity that CTV brings to enhance the medium of audiovisual is still building momentum. These hugely exciting opportunities are where the next phase of growth will come from:
- Creative Effectiveness. Historically, effectiveness in CTV has been driven by media placement optimisation. We estimate that just 1% of current CTV impressions have some form of creative messaging optimisation. The opportunity here lies in the ability to target specific messages to specific audiences based on data signals such as lifestyle, demographics, purchase behaviours, etc. Those who can unite media placement optimisation with creative messaging optimisation will be well placed to capitalise on the growth opportunities over the coming years.
- New to TV. Some clients traditionally don’t spend on TV, either because there can be inherent wastage in regional strategies for location-based advertisers or because the cost of entry is simply too high for some brands. CTV offers a new route to TV that can reduce waste by targeting only specific audiences or locations that are geographically relevant or that over-index against certain characteristics. The fact that CTV can be more targeted and use data sets to refine the most appropriate audience strategy means that CTV is an option for a broader group of advertisers, which brings net new money into the medium.
- Redefining performance metrics. Historically the performance of TV has been predominantly focused on upper-funnel, reach or brand-based metrics. The ability to combine TV media activations with new data sets unlocks the ability to plan, optimise and measure the performance of campaigns through a more response-driven lens that has previously been the domain of digital channels. Commerce data, for example, offers new potential for campaign planning and optimisation. From optimising campaigns to individual store location stock levels to tying campaign delivery to sales performance at a geographic level, the opportunity to bring net new investment to CTV is impressive.
- Omnichannel. The promise of omnichannel offers performance optimisation and budget fluidity so that investment can be dynamically allocated to the best-performing channels. Before digitisation and programmatic, TV was never able to respond to real-time performance signals, machine learning and AI. We know that TV offers up to 54% boost to other media channels, so there is a clear opportunity for CTV to gain a share of media spend when considered as part of an omnichannel media plan. At GroupM Nexus we’re investing in this area from a product, and importantly, a measurement perspective. Those who can demonstrate the impact of CTV as part of an omnichannel approach will be well positioned to benefit from the anticipated growth in this area.
- Contextual + Audience. The power of context has long been recognised as a vehicle for relevance in the TV space. CTV, powered by infinite data capabilities has turned this approach on its head in support of a more audience-driven approach. The next phase of growth comes from the partnership of these two traditionally opposing tactics. Combining audience insight with the power of context is an exciting opportunity for those who can get the right data signals in the right place at the right time.
The foundation to all these innovations is that digitisation has moved the game forward. The ability for TV to operate in a world with machine learning and artificial intelligence brings huge growth opportunities, and many of these are still to be realised. The promise of omnichannel brings even greater power to each of these areas and when working in synergy the whole is, most certainly, greater than the sum of its parts.