The local advertising marketplace will reach $167.4 billion in 2022. The fastest-growing media segment is over-the-top (OTT), with an annual growth rate of 57.4% in 2022, according to recent data from BIA Advisory Services.
Local TV’s 2022 growth is fueled partly by political spending -- about $3.8 billion of the total $8.6 billion forecast to be spent in this mid-term election cycle.
OTT spending is forecast to exceed $2 billion -- drawing strength from multiple business verticals, including political advertising.
From 2022 to 2026, OTT will grow at a 14.3% compounded annual growth rate (CAGR), and will hold the second spot behind digital TV owned-and-operated streaming and website advertisements sold by local broadcast stations.
Working in partnership with BIA Advisory Services, Madhive -- which supports the programmatic space -- released the report to reveal the opportunities around OTT and its adoption.
It’s important to note that BIA uses the terms “OTT” and “CTV” interchangeably, despite it being a subset of OTT video impressions that come specifically from connected TVs. CTV impressions typically account for 90% or more of OTT viewing and ad buying.
For the project, BIA interviewed executives from local TV groups, agencies and technology solution providers, along with OTT platforms and aggregators.
The areas investigated include how advertisers are shifting budgets from traditional into digital, the pros and cons of programmatic and how it is defined when discussing direct vs platform buying, and programmatic workflow that would explain the importance of tools and analytics. The report also examined where brands make their programmatic media buys, wither directly from the Hulu, Roku, publisher, or programmatic partners.
BIA forecasts that from 2022 to 2026, local TV spend will fall from 51.2% to 41.7% of local video ad spending and local cable will decline from 16.2% to 12.5%.
Video display ad spend on laptops and PCs will nearly double in this period from 13.7% to 22.6% of local video spend.
Digital media spending will rise to 55% of total local ad spending by 2026 as marketers and agencies continue to find value in these channels.
From 2019 to 2022, locally targeted digital sales rose from $55.9 billion to $79.5 billion, while traditional sales declined from $92.5 billion to $87.9 billion. With the lockdown, alongside consumers using online platforms more often, 9.8% of traditional sales shifted toward digital across all TV markets.
From 2021 to 2022, BIA witnessed a slowdown with only 0.4% of traditional sales shifting toward digital, according to the data.
By 2026, BIA forecasts digital spend will grow to $116.6 billion, while traditional spend will rise to $93.6 billion, having digital sales expand by 8% from 2022 to 2026.
The five largest growing sub-verticals using OTT advertising from 2022 to 2026 will be: