IAB Says Digital Video Ad Spend Surged 49% in 2021

May 04, 2022
IAB Says Digital Video Ad Spend Surged 49% in 2021
Streaming video ads is an ad format that most radio stations have yet to capitalize on.

Streaming video ads is an ad format that most radio stations have yet to capitalize on. A new report from the Interactive Advertising Bureau may hasten efforts to make video part of industry offerings to advertisers. Digital video advertising spend surged 49% in 2021 and is expected to increase an additional 26% to $49.2 billion in 2022, according to IAB’s “2021 Video Ad Spend and 2022 Outlook” report.
Released at the 2022 IAB NewFronts, in conjunction with Standard Media Index (SMI) and Advertiser Perceptions, the report found connected TV (CTV) ad spend increased 57% in 2021 to $15.2 billion and is expected to grow an additional 39% in 2022 to $21.2 billion. Between 2020 and 2022, CTV ad spend is projected to more than double (+118%). In fact, three out of four video buyers (76%) label CTV as a “must buy” in their media planning budgets.
“Digital video is a driving force for buyers and will continue to be in 2022,” said Eric John, VP, IAB Media Center. “However, while CTV leads the substantial growth of digital video ad spend, the amount of dollars currently allocated to CTV is not proportionate to the amount of viewer time spent with the channel. The time is now for brands and buyers to follow consumer attention.”
Although CTV will account for 36% of total time spent with linear TV and CTV combined in 2022, the amount of dollars currently allocated to CTV doesn’t line up with this viewership. Only 18% of total video ad dollars are being spent on CTV vs. total video spend, which includes CTV, linear TV, social, and short-form video.
When comparing CTV to traditional, linear TV, buyers found data usage, transparency, and no reliance on third-party cookies as distinct advantages. For example, CTV enables buyers to leverage many types of data not available within linear TV buys, including first-party brand data (65%), location data (61%), and shopping data (50%). And buyers felt CTV provided more transparency into where ads run with 59% of buyers stating it was “very clear” on where their CTV ads ran vs. only 50% and 43% for social video and other digital video, respectively.
As CTV continues to gain momentum and enable opportunities to better target, reach, and scale, more than a third of video buyers cite multiple challenges in CTV around cross-platform campaign activation, management, and measurement.
To address the challenges of CTV, buyers are preparing for a converged linear TV/CTV market that would ease management of cross-platform and cross-channel video buys. In fact, nearly nine out of ten buyers (88%) anticipate a converged linear TV/CTV marketplace in the coming years, two in three (66%) linear TV/digital video buyers now have a single planning team for the two channels, and another quarter (25%) expect to have one planning team in the future.
An earlier report from Borrell Associates found streaming video advertising is already the largest source of digital revenue for 17.7% of local media companies. Yet Borrell said only one percent of the radio managers it surveyed said streaming video ads were their top source of revenue last year.
Those numbers could change when Borrell asks the same question a year from now since streaming video ads are seen as the hottest-selling digital product so far this year. More than a third (36%) of the media managers surveyed in April said no ad format had more action among local clients.