ViacomCBS’s free, ad-supported streamer Pluto TV is projected to net $786.7 million in U.S. ad revenue this year — up 77.7%.
By year-end 2022, its U.S. ad revenue will surpass $1 billion, according to eMarketer estimates, which include digital ads on CTV, desktop, laptops, mobile, tablets and other internet-connected devices.
However, at 45%, the expected 2022 ad-revenue growth rate, while robust, is far below the 2021 projected rate.
All signs point to increasing ad spend on OTT streaming services — including a recent Advertiser Perceptions survey, cited by eMarketer, that found 42% of U.S. agency and marketing professionals saying they will increase such investments over the next 12 months.
Last November, eMarketer itself projected that ad spending in connected TV overall would grow 27% in 2020, to $8.11 billion and 40% in 2021, to $11.36 billion.
Still, as would be expected, the growth rate is projected to slow gradually over the next several years: to 24.2% and 15.8% in 2022 and 2023, respectively, and to 5.4% in 2024 — by which date total U.S. CTV ad revenue is projected at $18.29 billion.
eMarketer also projects ad spending for traditional U.S. TV at $67.5 billion, which would mean that CTV has a 14% share of total U.S. TV ad spend.
While that share will no doubt grow significantly over the next several years, at least at this stage, the available data doesn’t really allow for pinning down what proportion of TV spend should go to CTV based on viewing time, notes Colin Dixon in NScreenMedia.
“Looking at Nielsen data, you might conclude that advertisers have got the balance about right between CTV and traditional TV ad spending,” he writes.
Nielsen reported that the “average” person spent 37 hours and 37 minutes per week watching television in Q1 2020, and that 79% of that time was spent watching live or time-shifted traditional television, and 15% was spent watching CTV.
However, Nielsen’s data doesn’t reflect the sizable proportion of CTV viewing time that goes to ad-free services like Netflix, he points out. And the data is for the average viewer: It does not account for groups that are unreachable by traditional TV (like the three in ten 18- to-34-year-olds who don’t watch live or time-shifted traditional TV).
Also, fragmentation, including more FASTs and growing competition from device manufacturers — who are building their own FAST channels — are likely to affect monthly active users (MAUs) and advertising growth to some extent in the years ahead.
While this year’s subscription growth for key FASTs should remain strong, “it will be harder for brands like Pluto TV, Tubi, and Xumo to maintain the robust growth they have enjoyed over the last 18 months,” NScreenMedia noted in December. “The signs are that growth is already slowing.”
For example, Pluto TV, saw U.S. quarter-over-quarter gains slow from 20% to 30% in 2019 to 10% or lower in 2020.
While ViacomCBS reported Pluto’s global MAUs up 80% year-over-year in Q4 2020 (to 43 million, including 12.9 million international), and U.S. MAUs up 34% YoY (to 30.1 million), the U.S. growth rate versus Q3 was 6%.
ViacomCBS also reported that Pluto more than doubled its ad revenue in Q4 on a YoY basis, although it didn’t break out the numbers.