Where Did The $25 Billion Of 2023 U.S. CTV Ad Spend Actually Go?

There is no question that the connected TV (CTV) advertising market in the U.S. is big, growing fast and is a major disruptor -- and likely complement -- to its older, still much larger legacy sibling: linear TV advertising.

When people talk about how big the CTV ad market is in the U.S., they tend to throw around numbers like $25 billion for this past year, and project $30 billion-ish for 2024.

It’s hard to know where those numbers come from first, but eMarketer, which tends to be viewed as a bible in the business these days by practitioners and analysts, has published numbers along those lines.

However, when you dig a bit into the numbers, some things just don’t make sense. First, let’s try to figure out what each of the major CTV platforms are doing in capturing CTV ad spend.

eMarketer’s January 2024 “Guide to Connected TV” projects Hulu at $3.84 billion and YouTube at $3.29 billion as #1 and #2 in the U.S. market. Parsing Roku’s public numbers, $2.5 billion seems to be pretty close and Amazon’s 2023 CTV numbers suggest something under the $1.5 billion range.



For Netflix and Disney+, eMarketer projects $830 and $750 million respectively in 2024 -- each up significantly from 2023.

The remaining major TV companies, Warner Bros, Discovery/Max, NBCU/Peacock, Paramount/ParamountPlus/Pluto and Fox/Tubi probably capture around $2 billion as a group. The major CTV manufacturers -- Vizio, Samsung and LG -- probably capture just in excess of $1.5 billion collectively.

If you add up all of the numbers above, you get approximately $16 billion. If $25 billion was spent on CTV ads in the US in 2023, and the major players who account for 95+% of CTV viewing according to Nielsen’s Gauge got something in the ballpark of $16 billion, where did the other $9 billion go?

CTV Long Tail? Nope. Not only does Nielsen confirm that the big players listed above constitute almost all CTV viewing, but all of the companies with CTV viewing data concur. Small publisher CTV viewing in the US is under 10% and has much lower pricing than the large, premium players, so they can’t (legitimately) be capturing billions of dollars of ad revenue.

MFA’s & Outstream? Probably. As we’ve learned from analysis from groups like the VAB, Adalytics and the ANA, “made-for-advertising” sites are being programmatically inserted into the buying supply chain across all media types. No reason not to expect it is impacting CTV ads. We also learned that many publishers and platforms have mislabeled (fraudulently?) their “outstream” web video ads as “instream” to capture the significant premium CTV ads command over web video.

Mysterious margin capture. As they say in the world of ad tech, “In mystery there is margin,” and there is a lot of opacity in the CTV ad world. First, there is margin being captured by SSP’s, DSP’s, ad verification and data targeting, but a decent chunk of that is already reported in the supplier/platform revenue numbers, since many of them get paid gross and then pay out the tech and data vendors.

Also, agencies are certainly taking a good piece, but their client agreements are typically only paying them low/mid single digit percentages of spend. But since we're not so naive, we know that there are lots of methods for agencies to capture more money if they want.

Is it possible that 40% of CTV ad spend is disappearing in the nooks and crannies of the adtech world? It might be. If so, I suspect that the large suppliers will increasingly go direct, cutting out the middleman and the margins.

Or, instead, maybe the gross market projections are not right.

Maybe the CTV ad market is significantly smaller than many like to think it is? What about that? The amount of $16-20 billion is nothing to sneeze at, and maybe it's much more realistic, particularly when trying to understand how each company is doing. Maybe the players listed above have more market share than they’re being given credit for.

What do you think?

14 comments about "Where Did The $25 Billion Of 2023 U.S. CTV Ad Spend Actually Go?".
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  1. Ed Papazian from Media Dynamics Inc, April 4, 2024 at 4:30 p.m.

    Dave, not to defend some of the estimates that are, indeed puzzling, but what about local ad spend? Couldn't that account for part of the difference?

  2. Dave Morgan from Simulmedia replied, April 4, 2024 at 4:43 p.m.

    Ed, their is not the same local/naiotnal bifrication, because they go to the same supply in almost all cases in CTV - YouTube, Roku, etc - and the agregate of local TV station O&O inventory run separately is very, very small. The local enabler/aggregaors of local CTV sales who work on behalf of the local broadcast and cable comapnies buy it from the large sources and large platforms.

  3. Howard Koval from TravelSpike, April 4, 2024 at 4:59 p.m.

    Dave, Ed, I'm sure local avails factor in some for sure. But there are also intermediaries that are making huge up front commitments via PMPs and use their buying power (clout) to get most favorable and competitive pricing and pass that along to their advertiser/brand partners. These are ad tech businesses that have built robust platforms (not programmatic exchanges) and offer top shelf solutions and of course are entitled to a margin by providing such service. The major players mentioned only account for/realize net rates in this scenario. I believe this model accounts for a good chunk of the missing $$$.

  4. Ed Papazian from Media Dynamics Inc, April 4, 2024 at 5:09 p.m.

    Thanks, Howard. I've seen estimates as high as $3-4 billion for local buys, which is why I raised the question. Your point offers an additional insight.

  5. Dave Morgan from Simulmedia replied, April 4, 2024 at 7:50 p.m.

    Howard, very good points. No question, that there is a fair amount of locally targeted spend. However, unlike linear TV of old, measurement of ad viewing isn't silo'd. THe CTV ACR data sees it all, and the major players are the only ones with scaled inventory.
    The question relative to local, I beileve, is might it be possible that sellers of local CTV ads are taking money from the clients and keeping 80% of the money and only spending 20% wiht the inventory owners, taking arbritrage knowing the low sophistication of local ad buyers/sellers and the fact that local v. natoinal TV invenotry has multiples ini price differnce because of local versus national distrbution dynamics.

  6. Augustine Fou from FouAnalytics, April 5, 2024 at 6:42 a.m.

    agreed, Dave, the numbers don't add up; similar things have happened over the last 20 years with the rest of "digital ad spending"

  7. Dave Morgan from Simulmedia replied, April 5, 2024 at 10:05 a.m.

    Augustine, yep. We've seen this movie before and we haven't liked haw it ended.

  8. Dave Morgan from Simulmedia, April 5, 2024 at 5:23 p.m.

    I'm getting lots of inbounds folks with their analysis on stuff I may have undercounted or ideas of where some of the money is leaking ... keep them coming. I'll do a follow up column next week.

  9. Jim Meskauskas from Media Darwin, Inc., April 6, 2024 at 11:22 a.m.

    It's like the Colorado River as it travels through the aqueducts of LA: evaporation. Only the dollars are evaporating into the myriad platforms and operators of those platforms. Just like display before it, the dollar at the front end of the daisy chain becomes 50-cents at the back of it.

  10. Gabe Greenberg from Octillion Media, April 6, 2024 at 2:18 p.m.

    Great article Dave, it's no surprise with the number of companies not audited for transparency by TrustNet that the sheer volume of ad-tech tax is no doubt where a fair amount of this, along with mid-tagged/targeted buys that found their way to OLV and similar places you reference! 

    I applaud your continued effort to draw attention here. It's precisely why Octillion was one of the first, if not the first to be willing to be audited. You can't hide from truth - and maybe someday soon buyers will demand more truth and ethics from their partners! 

  11. Dave Morgan from Simulmedia, April 8, 2024 at 11:54 a.m.

    Thanks Jim, I love the Colorado River comparison!

  12. Dave Morgan from Simulmedia, April 8, 2024 at 11:55 a.m.

    Thanks Gabe, I am convinced that we can make the industry better with more folks asking questions? And with more transparency.

  13. Jack Wakshlag from Media Strategy, Research & Analytics, April 10, 2024 at 2:50 p.m.

    There are few around that keep fighting the good fight while there are plenty of folks with fear of finding out (FOFO) lest their bosses see and understand how they have allowed companies to be fleeced.  Keep up the good fight!!

  14. Dave Morgan from Simulmedia replied, April 11, 2024 at 12:54 p.m.

    So true Jack, Thanks!

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