Report: Addressable TV ads set to boom
December 11, 2019
Addressable TV advertising will leap from $15.6 billion (€14bn) in total worldwide revenue in 2019 to almost six times that value at $85.5 billion by 2025, according to a Rethink TV report. This reflects advertising dollars switching to addressable as the platforms mature and better understood by the advertising community.
This boom in addressable TV advertising will occur in all sectors of pay-TV and all major geographies over the next 6 years, engaging viewers, driving response for brands and boosting revenues for video service providers.
Aggregation of inventory will be a key driver by increasing the size of addressable targets, making them viable for larger brands and overcoming fragmentation within the ecosystem. The main boost for broadcasters and pay-TV operators is that these adverts fetch higher CPMs (Cost Per 1000 impressions) than general spots broadcast to all viewers of a programme.
The rise of Connected TV (CTV) is also a major driver and has propelled much of the early growth in addressable TV advertising, especially in North America and the larger economies of Asia Pacific. This reflects lower barrier to entry since ads can be targeted more easily to TVs that are directly connected to the internet, avoiding the need for a dedicated platform. CTV advertising will continue to account for most of the growth in addressable TV advertising, but coming from a lower base linear and VoD TV advertising within the traditional broadcast service will actually register larger percentage gains over the period until 2025.
The boom in addressable TV advertising coincides with a decline in traditional pay-TV viewing in some of the leading markets, including the US. This is reflected in addressable accounting for an increasing proportion of total TV advertising revenue over the next 6 years. In terms of impressions, addressable accounted for just 2.4 per cent of total TV advertising in 2019, rising by about 3.5-fold to 8.5 per cent by 2025. But because addressable ads cost more their revenue contribution is greater, reaching 32.8 per cent or virtually one third by 2025.