The connected television advertising market reached $56 billion last year as more marketers shift their spending away from traditional television toward streaming platforms and similar services.
According to research firm Ampere, television ad products brought in $195 billion around the world in 2022, with connected TV platforms capturing around 28 percent of that revenue.
Most marketing dollars are still flowing to traditional TV advertising, including broadcast and cable networks, but traditional TV’s portion of the pie is expected to shrink considerably over the next five years, according to Ampere.
By 2027, $87 billion will be spent on connected TV, or “addressable,” advertising inventory, Ampere says, representing nearly 40 percent of the $222 billion in advertising spend that year. Traditional TV advertising is expected to fall from $139 billion spent in 2022 to $135 billion in five years.
Marketers are showing favor toward connected TV because the platforms allow them to reach traditionally underserved audiences, including younger viewers who have more disposable income compared to adults.
“This research illustrates the inherent potential of addressable TV as a powerful tool for targeted communication with previously hard-to-reach audience segments,” Kristian Claxton, the managing partner at Finecast, which worked with Ampere on the report, said in a statement. “The seamless integration of such capabilities with the storytelling possibilities and brand protection mechanisms inherent in broadcast TV is well demonstrated.”
The data underscores why a number of streaming services that have typically focused on building out premium experiences have shifted some of their investment toward ad-supported tiers. Those services include Netflix, Disney Plus and AMC Networks, which have either launched or plan to launch plans where lower prices are subsidized by short commercial breaks.
Other services, including Comcast’s Xumo Play, the Roku Channel and Fox Corporation’s Tubi, have invested more money in acquiring and licensing content to make their free, ad-supported streaming services even more attractive to subscribers. Their strategy appears to be working: All three services have found themselves reported by name on Nielsen’s The Gauge report, which requires services to cultivate at least 1 percent share of the domestic streaming market space before being broken out from the “other” category in its reports.
Hardware makers are also taking notice: Vizio, which has manufactured and sold low-cost television sets for more than two decades, has concentrated its business efforts on building out its Platform Plus streaming platform, which serves up access to premium streaming services like Netflix and Amazon Prime alongside free, ad-supported content aggregated by Vizio itself. Another hardware maker, called Telly, recently announced plans to offer a free smart TV set that pays for itself by showing persistent ads on a secondary screen.