2022: The Year of CTV – or Not?

06 January, 2022 

Most predictions for the year ahead forecast another strong year of growth for ad revenues – and TV is expected to benefit from this rise. But how much of this growth will go to CTV in particular?

In his monthly column for VideoWeek, analyst Ian Whittaker argues that while 2022 will likely be a strong year for CTV, the picture is more mixed than it might initially seem. Interestingly one of the strongest restraints on CTV might actually be a resurgence in linear spend – which could have longer term impacts if it dampens the broadcasters’ push into CTV.

I was reading the fascinating predictions by ad tech CEOs for 2022 on VideoWeek, and one of the more consistent and strongest messages that came across was that 2022 would see a breakthrough in CTV revenue growth, after what has been a perhaps slower than expected adoption by advertisers. 

For what it is worth, I think this messaging is broadly right. After many years of indecision over whether to adopt programmatic (not least because of concerns about whether it would mean that broadcasters would lose control over the pricing of their premium inventory), there has been a noticeable shift in the mood music, both amongst the North American and European broadcasters.

Last year, the US Broadcasters pushed their integrated linear and AVOD pricing strategies in the Upfront season and, while there were many grumbles amongst media buyers and claims that they would not allow it to happen again, I personally think this will now become the norm. Meanwhile for broadcasters in Europe such as ITV, programmatic is now a key part of their messaging, not least to investors (though it has had limited success so far on that front).   

However, there are possibly three flies in the ointment that may complicate CTV’s progress in 2022. The first is the unexpected renaissance of TV advertising in 2021, particularly in linear TV. Broadcasters such as ITV in the UK are set to report record advertising revenues – and this phenomenon is not confined to the UK, with broadcasters in France, Germany and Italy seeing recoveries back to or exceeding pre-pandemic levels. And while AVOD has played a significant part in this growth, linear has also grown significantly.

That is a good thing for the medium but it may bring an unexpected downside for CTV, namely whether it takes some of the urgency away from the broadcasters’ to push more aggressively into the CTV space. Broadcasters, particularly in Europe, tend to be rather conservative in their thinking. And if the core market continues to do well into 2022, the urgency to push CTV solutions may diminish, although it would still be present. 

That leads onto a second point, namely that for many of the new advertisers coming onto TV, particularly in the direct-to-consumer space, it is television’s wide audience reach that is the appeal. And, if that is the case, then that would seem to lend itself naturally to focusing on traditional linear advertising (with AVOD thrown in) and not towards more targeted solutions such as CTV.

That is particularly the case for those advertisers whose aim is to scale up quickly and aggressively to beat the competition – there is a reason why, according to Nielsen, the food delivery services saw a 194 percent increase in linear TV advertising in the UK from Jan to July 2021 vs Jan to July 2019. Other sectors such as car dealerships have similar characteristics (think of the amount of advertising from the likes of Cazoo, Cinch etc). However, even the “traditional” online players such as Amazon and Google – whose aim is to burnish their brands – probably have a greater need for wide reach than for a targeted approach. 

The third issue is where the money comes from. Despite the reduction in the use of silos for advertising spending, many media buyers and advertisers still are either set up or have the mindset that there is one pot of money for TV, one for online etc. There is no doubt that one of the key hopes of the broadcasters is that they can use AVOD and CTV to take money from the digital advertising pot and so expand their potential revenue sources. If that is the case, then there is an obvious benefit to pushing CTV. Yet, if CTV money was seen to be coming from mainly TV advertising budgets, then that clouds the question for broadcasters. There is also then a further question: if linear and AVOD are sold as a bundle, what revenues are attributed to which part?

Despite all this, CTV is set to grow. GroupM predicts CTV global ad revenues will grow over 22 percent in 2022 to over $20 billion, against a global TV ad market set to grow 1.8 percent ex-US political spending or 5.5 percent including it (it is not entirely clear from the GroupM numbers whether the CTV revenues are adjusted or not, or even whether political spending makes much difference to CTV revenues).

So this is not a message to say that CTV will not succeed; it probably will. The question is whether 2022 really will be its breakthrough year.  


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