Nearly 80% of U.S. homes with adults 18-44 are mostly streaming homes, yet 43% of TV ad buying in 2022 will be on old-school linear TV
For all intents and purposes, all TV is now CTV. Sure, there are homes in the U.S. and around the world that don’t have connected TVs and those homes have value in the entertainment ecosystem. But with 93% of U.S. adults 18-49 using connected TVs, and CTV homes now outpacing Pay TV homes in the U.S. by at least 17 million, it’s time for us as an industry to agree: Television is now connected television.
When you consider how much video is also consumed via mobile on smartphones, it’s obvious the sooner and more we all think about connected devices as the primary source for video entertainment, the better the business of TV will run.
For some, this may feel like old news. Unfortunately for the TV industry, specifically the advertising end of the TV business, it remains new news.
Take, for example, the way we measure TV viewership. Despite years of knowing that our audience measurement was decades behind the times, 2021 was the first year the TV industry did anything about it. But after kicking Nielsen to the figurative curb, rather than seek a new uniform metric currency, the biggest players in the system scattered like kids on a playground, each with their own toys in their own measurement sandboxes.
Meanwhile, with the rapid move by consumers and publishers to the CTV platform, there’s one measurement currency available to everyone that measures exactly what people are watching when and how that allows for true apples-to-apples comparisons, and deep insights to the effectiveness of TV advertising.
Automatic Content Recognition (ACR) data is now embedded into nearly all CTV and over-the-top (OTT) technology, including CTVs, connected devices and smartphones. ACR recognizes and identifies streaming content, down to individual objects in video or audio, which allows publishers and advertisers to define where and how content or ads are played — linear, CTV, multichannel video programming distributor (MVPD), on demand, mobile, location data, demographics and IP addresses, and myriad other viewing behavior. ACR is available on nearly all CTVs and connected devices employed right now, and on every new device sold, offering sample sizes in the tens and tens of millions, with real time data, rather than the tens of thousands of households on panels or surveys.
TV tends to evolve as slowly as it possibly can, until disruption becomes blatantly undeniable. Then they change everything all at once, often through overcorrection. See the lack of speed at which traditional media got into streaming, and the similar only-when-threatened nature of Netflix’s move into ads. This is currently true of how we measure. However, our latency in measurement is tied to an even greater and more urgent latency in TV advertising, especially given the pace at which consumption of video has moved and continues to move towards connected devices.
In 2021, $82 billion was spent in video advertising in the U.S. Half of that budget (in a year when the planet was binge-watching streaming TV) was spent on linear TV. No, really. Half. On linear.
When John Wanamaker famously said “half my marketing money is being wasted,” who knew it would still apply to 2021’s TV ad spend? And yet, when you look at where the viewership of TV is happening right now, it’s easy to see just how applicable Wanamaker’s axiom remains.
For homes with adults 18-44, 78% are mostly streaming homes — meaning they watch almost no linear TV (20 minutes or less per day). This is ACR data from 45 million Samsung TVs. (Kinda makes the Nielsen 40,000 sample seem sad, no?)
The data also shows that while streaming homes do watch a good deal of content from the traditional Pay TV ecosystem, nearly two-thirds of viewing time on streaming is content from pure-play streaming outlets such as FAST and AVOD platforms, social video, or virtual multichannel video programming distributors (vMVPDs) like Hulu Live and YouTube TV.
Combine these two ACR data points from these 45 million homes, you can see just how much of the potential audience advertisers are missing with the half of their ad spends dedicated to linear-only TV.
When you dig into who that linear spend actually reaches, the story takes another turn. The following chart is a combination of data from eMarketer and Magnite, about who watches what kind of TV, linear or CTV.
All viewers below the age of 55 under-index for linear TV. Linear audiences are shrinking and aging. Now, the only sure way to reach viewers under 35 is on connected devices and via streaming.
Yet, media and investment intelligence company MAGNA’s projections for how advertisers will buy TV marketing in 2022 is Einstein’s definition of insanity…
Rather than allocating TV spends where the viewers are going and measuring those buys with data direct from the screens on which the video is watched, the TV buying community seems poised to spend 43% of their budgets ($38 billion) on linear TV, where it will be missed by the most attractive viewers and measured by a Tower of Babel.
FAST and AVOD are the fastest growing segments of the TV viewing economy. While many viewers are watching traditional TV, most — and more every day — are watching it on CTV devices. The CTV ecosystem offers substantially more efficient and accurate measurement and allows for better more contextual ad placement for an advertiser’s message. Yet 43% of TV buying in 2022 will be bought on old school linear TV.
So, what’s an advertiser to do? Join the 2020s. Allocate your ad dollars where the viewers are and are going. Send your ads to environments where they can be measured accurately and provide insight on how you should adapt next time. Allocate your video dollars this way…
Advertisers will spend $88 billion on video this year. By allocating advertising spends evenly across the entire video ecosystem, buyers can ensure they’re reaching America’s most attractive demographics, consistently, wherever they watch, in environments where they can tell how effectively their dollars were used.
Evan Shapiro is an Emmy- and Peabody Award-winning producer of TV, film and podcasts. He’s also a professor of Media Studies at NYU and Fordham University.