Commentary

OTT Is Fastest-Growing Local Ad Channel, Set To Hit $2B+ In 2022

Local U.S. over-the-top (OTT) advertising will reach just over $2 billion this year — up by just over $1 billion from 2020’s $991 million, projects BIA Advisory Services, in a white paper on regional and business vertical OTT trends.

That translates to an average compound annual growth rate (CAGR) of 43% between 2020 and 2022 across all the regions analyzed.

The mid-Atlantic region had the highest growth rate, with a 53% CAGR, followed by the Northeast at 47%, the Pacific Northwest and Midwest each at 42%, the Southeast at 40% and the Pacific Southwest at 39%. (Chart above.)

BIA forecasts that U.S. local ad spending across all media platforms will rise to $167 billion in 2022, from $138 billion in 2020 — a CAGR of 10%.

The shift away from traditional media continues: Digital media’s share of total local ad spend is projected to reach 47.5% this year, from 41.7% in 2020.

Mobile and PCs/laptops claim the largest portions, at $10.1+ billion and $7.9 billion, respectively.

The two dominant digital ad platforms are mobile (+$10.1 billion) and PC/Laptop (+$7.9 billion). But OTT and digital radio have surpassed mobile as the fastest-growing channels—with mobile now ranked third for growth rate. 

Video display, search, social and audio ad inventory are the most popular platforms.

And while many local advertisers target OTT viewers across a range of mobile, desktop, tablets and other devices, most of the viewing and monetized ad impressions occur on TV sets.

The top-spending business category in local OTT advertising is the general services vertical (legal, plumbing, HVAC, utilities, funeral homes and other services), with expected revenues of $337.2 million across all U.S. regions in 2022, led by the Southeast ($105.7 million).

Automotive is projected to rank second, at $273.2 million, again led by the Southeast ($90.7 million).

Restaurants are projected at $203.4 million, health at $202.8 million and finance/insurance at $182.8 million — also led by the Southeast.

BIA defines OTT ad spend as spending targeting local viewers of long-form premium video content delivered via the internet.

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