Commentary

Q3 Programmatic CTV Ad Spend Flat In N.A., Roku Commands 51% Global Device Share

Global open programmatic connected TV ad spend totaled $5.3 billion in Q3 — up just 2% versus Q3 2022, according to estimates in Pixalate’s Global CTV Ad Supply Chain Trends report for the quarter.

The single-digit growth was in sharp contrast to the 44% year-over-year leap in Q3 2021, which followed 10% YoY growth in Q3 2021.

As the largest CTV market, North America closely paralleled the global results, with Q3 programmatic CTV spend basically flat, compared to 44% YoY growth in Q3 2022 and 11% growth in Q3 2021.

Still, the latest quarter’s performance was an improvement over this year’s first and second quarters, which saw estimated declines of 5% and 3%, respectively, on a global basis. Overall, the first half’s $8.4 billion in global spend was down 4% compared to first-half 2022.

This year’s slowed CTV spend in part reflects a generally softer advertising climate, driven by economic uncertainty and inflation’s impact on disposable income, particularly in the early months.

Difficult comps against last year’s political ad spend for the mid-terms are another factor. “As we ramp towards next November’s presidential election, it will be interesting to see the degree to which ad spend ramps up again,” notes Amit Shetty, vice president of product at Pixalate.

Given that CTV programmatic still has somewhat limited inventory to begin with, has the interruption in the flow of new content due to the writers’ and actors’ strikes also contributed to lower CTV spend?

The dearth of new content in and of itself has probably had limited impact on CTV spend so far, in Shetty’s estimation, but to the extent that it may have been a factor, “we may see lingering effects as we enter the new year,” she says.

Also, combined with media companies’ heightened austerity measures — including cutbacks in marketing as well as content spend — the strikes likely contributed to a more documentable impact: Pixalate’s data shows CTV ad spend in the Movies & TV category down on Roku and Amazon Fire TV by 20% and 24%, respectively, year-to-date through Q3.

“In Q1, 62% of open programmatic CTV ad spend across Roku apps went to apps in the Movies & TV category; in Q3, that dropped to 50%,” Shetty reports.

Still, despite this year’s slump, the global CTV programmatic marketplace spend averages are up 47% since Q3 2021, including 45% growth in the North American market, and 35% and 81% growth in the EMEA and LATAM regions.

The Q3 analysis also found that CTV reaches 99% of U.S. households reachable by any form of programmatic ads.

And in a piece of (sort of) positive news, the global invalid traffic/IVT rate in Q3 was at 15%: the lowest  level seen since Q2 2021, and down 29% from Q1 2023’s 21%.

Among CTV apps, Hulu was Q3’s top-grossing app in open programmatic ad spend across Roku, Fire TV and Samsung in North America in Q3, with Philo, Pluto TV and Tubi also high in the rankings.

As for the big device players, Roku continued to dominate, gaining 11% in share year-to-date to command a 51% share of the global CTV market in Q3 — its strongest quarter since first quarter 2020. However, Apple devices saw the strongest YTD growth rate (39%), for a 7% share in Q3, and LG devices gained 15%, for a 6% Q3 share. On the flip side, Samsung saw its devices share drop 20% YTD, for a 15% share in Q3 — its lowest level since Q3 2019.

The number of apps that support open programmatic advertising grew by 25% YoY in Q3 in The Roku Channel Store, and by 6% in the Samsung Smart TV store, but declined 8% in the Amazon Fire TV store.

For the Q3 report, Pixalate analyzed programmatic advertising activity, from predominantly buy-side open auction programmatic traffic sources, across more than 300 million CTV devices and billions of ad transactions.

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