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With connected TV ad spend on course to be 35% larger than that of online video (OLV) this year, the IAB now reports that programmatic buying is the chief activation method for the digital channel.
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Three-quarters of CTV buys are now done programmatically, according to findings in the second part of the 2024 IAB Digital Video Ad Spend & Strategy Report.
The study also revealed that media buyers place most value on metrics for reach, ad quality, and measurement as top criteria for investing in video channels and when it comes to determining success and top KPIs the industry is “heading towards one that places a higher premium” on delivery of business outcomes.
As previously reported total digital video advertising spend is projected to grow 16% in 2024 — with CTV, OLV and social video all projected to see double-digit spend increases. CTV specifically is expected to grow 12% in 2024 to reach an estimated $22.7 billion. The report noted that investment in free ad-supported streaming TV (FAST) services has increased 7 percentage points year over year to 51% and is now nearly on par with ads purchased on virtual MVPDs (55%) and streaming platforms (53%).
And it is programmatic buying which has emerged as the preferred method for CTV transactions, accounting for 75%, with buyers engaging in various programmatic activation avenues that are getting roughly equal attention (such as real-time bidding/open exchanges (36%), private marketplaces/preferred deals/programmatic guaranteed (34%) and ad networks (30%)).
The IAB predicts that as programmatic proficiency increases, more CTV dollars will flow to these automated channels.
One statistic to back this up: Advertisers increasing CTV spend this year are 61% more likely to use programmatic compared to those keeping CTV spend flat.
The top three reasons given to buy CTV programmatically tied to functionality or performance and include: Easier campaign optimization; better return on investment/return on ad spend (ROI/ROAS); and because it’s easier to achieve scale.
Roku is among platforms which have been building their programmatic capabilities. During the Q1 earnings call Roku CEO Anthony Wood identified programmatic ad capabilities as a key focus for accelerating platform revenue growth in 2025. Its strategy has focussed on expanding relationships with third-party demand-side platforms (DSPs), and has already seen positive results, notably an increase in programmatic ad spend as a percentage of total video investment on the platform in Q1 2024.
It partners with more than 30 third-parties and DPS including recently with The Trade Desk, Google Display & Video 360 and Yahoo DSP. Last month Roku debuted Roku Exchange which aims to provide a direct path between programmatic demand and the streaming platform’s ad inventory and data. Roku said DSP partners benefit from customized programmatic signals that Roku Exchange can send to drive more success of Roku Media on their platforms.
Business outcomes now top KPI for most CTV investment
Per the report, business outcomes are now the top Key Performance Indicator (KPI) in determining success with a digital video channel – with social video rated higher (64%) than online video (58%), and CTV (54%).
The IAB recommends that buyers prioritize channels offering capabilities for outcome-based measurement, such as sales, website actions, and customer acquisition. It says these are more likely to be assigned to social “due to its inherent nature to engage users in customized feeds and the ability to shop directly within the platforms.”
It also suggests buyers set clear “outcome based” KPIs for all video campaigns with impact tracked and measured.
Cintia Gabilan, VP, Media Center at IAB said in a release attached to the report, “The industry has bought, transacted, and measured against reach since the beginning of time. But now business outcomes are the most important metrics to assess success, with reach and frequency coming in second. However, measurement is not yet where it needs to be. Two-thirds of buyers cite issues across nine key areas of measurement.”
While most advertisers are set to increase digital video ad spend “by double-digits” in 2024 the IAB reports that Consumer Packaged Goods brands and those in retail are leading the way.
CPG brands are “leveraging CTV’s increased scale, ability to connect with consumers directly, and streaming companies’ partnerships with retail media networks,” states the IAB.
Measurement continues to be a concern for as many as two thirds of all advertisers, per the study. Smaller brands in particular are said to be “significantly more likely” to cite issues with viewability, standardized targets, currency, and obtaining sell-side data. IAB also found that measurement issues vary significantly by channel, especially with CTV as well as OLV.
“Online video struggles with inconsistent publisher-level measurement frameworks, making it hard for buyers to understand placement, viewability, and guarantees,” wrote IAB in the report. “CTV faces similar issues due to a lack of shared show-level data and inconsistent measurement approaches.”
Also evident is that the market is in the process of moving towards transacting with multiple currencies.
Nearly 90% of TV advertisers per this report have embraced alternative currencies in some form – either via transacting, testing, or having discussions with alternative currency measurement vendors. More than one in four buyers (28%) are already transacting on alternative currencies.
David Cohen, CEO of IAB, said in the release, “With the continued impressive growth of digital video comes demands for better measurement, viewability, standardized data, and placement transparency. The video ecosystem must fully commit to innovation, especially in measurement.”
To create the report, IAB partnered with Guideline, which leveraged ad billing data, other market estimates, and an IAB-commissioned Advertiser Perceptions quantitative survey of TV/digital video ad spend decision-makers.
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