• by Dave Morgan , Featured Contributor, April 11, 2024

Last week I wrote about my perplexity in trying to understand where all of the claimed $25 billion spent on connected TV (CTV) advertising in the U.S. in 2023 actually ended up. See here.

I was hoping to get folks' attention about this and begin some conversations across the industry.

I felt we need to make sure we all dig deeper into the numbers, as this critical market grows and both displaces and wins transference from the linear TV advertising behemoth that has been in the U.S. for many, many decades.

It worked, thanks to all of you who reached out to me directly, in comments here, and in comments in social media.

I learned a lot and believe I can now put a much finer point on understanding the scale of the CTV ad market, who is getting the money, and how much of it is still murky.

Here are some of my takeaways:

I undercounted the TV companies' share of CTV ad spend. (Thanks to John Halley, president of Paramount, for calling it out, and Ross Benes of eMarketer for your help here. Instead of $2 billion, it's much more like $5 billion given the scale of Pluto (Paramount) and Peacock (NBCU), and the growth of Tubi (Fox) and Max (WBD).

How you count YouTube ad revenue swings the numbers the most. Everyone counts YouTube TV (YouTube as a vMVPD -- virtual multichannel virtual programming distributor) as well as studio-produced video on CTVs through the YouTube app, as you would expect.

Some include YouTube's User Generated Content (UGC) and some don't (respectively, eMarketer and Advertiser Perceptions).

It also matters whether you count YouTube's gross or net number (either because Google takes big internal charges for transactions and/or some view YouTube more as a talent marketplace and exclude artist fees).

Thus, YouTube's number could vary from $3.3 billion to more than double that number if you count the gross number and include UGC. 

I confirmed that there is no “long tail” to speak of yet in CTV. I had it confirmed by several analysts that non brand-name streamers are not just a small part of viewership, although Nielsen's Gauge probably undercounts them because they don't have all of the vMVPDs and TV Everywhere apps, but they are not a meaningful part of spend, probably just over 10% in total.

Supply-side platform and demand-side platform fees account for just over $2 billion. (Thanks to Eric Haggstrom of Advertiser Perceptions).  A major issue to watch here is the shift from media-oriented fees (declining as a percentage of spend) to data-targeting fees, which is growing fast.

The Trade Desk is setting the pace here as it becomes a data company, not just a media platform. Verification and standalone ad serving get much smaller pieces of spend.

Still $5 billion-ish of murkiness. Advertiser Perceptions (I came away very impressed by their numbers and precision) sized the total CTV ad market in the U.S. at just under $19 billion in 2023.

The number is lower than eMarketer’s, partly because it does not include YouTube UGC. Everyone wants a certain amount of “Others” in their numbers.

Under any circumstance, there is a lot here for all us to dig into.

How you count and what you count matters is everything. Let’s all dig into the numbers more … as all of us in the industry know, in mystery there is margin.

What do you think?