Connected TV Q1: Modest CPM Declines, But Higher Revenues

Wondering where traditional TV dollars went in the first quarter, after some massive pullback by TV brand advertisers

They might have moved to connected TV platforms.

Sister digital media platforms -- desktop and mobile -- may give us some signs. For the first quarter, the IAB said total advertising -- from all platforms -- was up 12% to $31.4 billion. At the same time, there's a big 16% decline in overall cost per thousands (CPMs) prices.

Connected TV? Just a 6% sinking of CPMs -- which while not great -- could tell us something about its current status. By way of comparison, digital video ad CPMs were down a big 27% for desktop video ads; 28% lower for smartphones; and a 29% sinking on tablets.

A November estimate last year -- months before COVID-19 took hold, came from eMarketer, which projected advertising revenue on CTV to rise to $8.88 billion in 2020, up 28% from 2019.



We do know major TV brand advertisers, in this unusual time, have been more receptive to buying CTV media deals -- even with measurement and fraud issues dinging at its prospects.

Senior TV network ad sales executives have said as much recently. But this could be just sales talk.

What we do know is that existing advertising clients have been looking to reschedule first- and second-quarter inventory, as well as marketers also making massive 20% or so cancellations of third-quarter media inventory committed to last summer.

Here’s why CTV made some gains: supply and demand. That picture looks even better in this market, given higher streaming usage over the last three months due to stay-at-home orders from many states.

To be fair, don’t look for premium CTV advertising revenue to make a dent in the $70 billion total TV advertising market, or the $40 billion national TV advertising market. Instead, think about those CTV dollars coming at the expense of other lesser-premium digital media platforms.

One indication of where broad premium OTT/CTV platforms might be headed is seeing how NBCUniversal’s Peacock premium streaming service will perform -- the first major wide-ranging ad-supported streaming service. It debuts July 15.

Additionally, wait to see a possible revamp of the ad-supported CBS All Access to possibly include the Viacom cable network content, and perhaps Pluto TV, all housed inside the bigger ViacomCBS.

For all its ups and downs, Viacom has commanded the largest share of national TV advertising impressions -- around 22%, according to Nielsen.

If CTV remains the new shiny object, consider where the shine is rubbing off other media platforms. Pricing trends may offer a clue.

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