U.S. digital video ad spend increased 21% in 2022, to $47.1 billion, and is projected to rise 17% in 2023, to $55.2 billion, according to an Interactive Advertising Bureau (IAB) report released during Wednesday’s NewFronts.
The digital video ad spend market size and growth rate estimates are based on Standard Media Index’s (SMI’s) pool of ad billing data. The report also includes results of an online survey of digital video decision makers at agencies and brands conducted for IAB by Advertiser Perceptions.
Digital video — meaning connected TV (CTV), social video and other digital video — is expected to gain five points of ad-spend share in 2023 and account for 47% of the total TV/video market, which also includes linear TV. Between 2020 and 2023, total TV/video ad spend share is projected to shift nearly 20 percentage points toward digital video. IAB cites a Moffett Nathanson estimate that Q3 2022 marked the first time that the percent of streaming households without a pay-TV subscription (44%) outnumbered streamers with pay TV (38%).
CTV continues to be one of the fastest-growing segments. It increased 22%, to $18.6 billion, in 2022, making it three times the size of social video ($6.2 billion). This year, it’s projected to grow 21%, which is 61% faster than the growth projection for other digital video (short-form video from web and app-based publishers).
About two-thirds (65%) of buyers consider CTV a “must-buy” — virtually tied with social video (64%). The next-closest medium is national TV (38%).
Among those who spend $50 million or more per year, CTV is valued even more, and fewer consider social video a must-buy.
Additional investment is coming primarily from reallocation from linear TV and other types of digital/mobile TV.
Targeting capabilities are buyers’ most-cited reason for increasing CTV spend, followed by reaching audiences no longer on linear TV” and overall reach/scale.
Those not increasing CTV spend cite financial challenges including economic headwinds, high CPMs, and budget constraints.