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Report: CTV, gaming to boost ad spend

February 7, 2023

Advertising spend on connected TV (CTV) and gaming is predicted to double in the next three years, hitting a combined £4.15 billion (€4.66bn) by 2026, according to digital advertising industry trade body IAB UK.

An ongoing shift to streaming among audiences, new ad-based models from the likes of Disney+ and Netflix, and  an increase in ad-supported viewing as people look to cut down on subscriptions are set to drive further growth in the CTV market – with ad spend forecast to rise from £1.17 billion in 2021 to £2.31 billion in 2026 (including BVoD and YouTube).

Meanwhile, growth in gaming ad spend is being driven by the evolution of ad solutions within the channel – such as native in-game ad formats and programmatic buying – as well as the adoption of gaming by advertisers across a broader range of sectors, from financial services to healthcare. Current annual spend of £815 million is predicted to rise to £1.84 billion by 2026.

The findings form part of IAB Compass, a new report created with research consultancy MTM, that looks at the evolution of four fast-growing digital channels: AR/VR, CTV, gaming and shoppable advertising.

The report shows that adoption of CTV by large advertisers is now close to that of linear TV and digital video and – with a low minimum spend compared to TV – CTV is attracting a broader set of advertisers. However, despite an average annual growth of 40 per cent since 2017, the CTV market needs to address challenges with fragmentation, standardisation and measurement – particularly beyond BVoD and YouTube – in order to mature fully.

When it comes to gaming, IAB Compass shows that the continued development of less disruptive ads in the form of native in-game options will continue to boost the market, providing advertisers with the ability to combine brand and performance goals. At the moment, the majority of ad spend is focused on mobile gaming, but if PC/console gaming is embraced by developers and advertisers alike, it would significantly accelerate growth in the sector.

Elsewhere in the report, findings show that advertisers’ investment in AR is likely to reach between £250 million and £350 million by 2026, while social commerce sales are predicted to reach £6.8 billion in the UK over the next three years.

“Our goal with IAB Compass is to help the industry navigate how four key areas of digital advertising will evolve and diversify over the coming years – from CTV and gaming, which are already well-established options for advertisers, to AR/VR and shoppable ads that are in an earlier stage of growth in the UK market, but with huge potential,” explains Hannah Bewley, Senior Research & Measurement Manager at IAB UK.

“While we’re under no illusion about the challenges of the current economic climate, digital advertising will continue to innovate to offer advertisers unique and creative ways to deliver on brand and performance objectives. This report serves to encourage marketers to reassess what digital advertising can do. It’s not solely a performance channel, as has often been the perception. Between them, these four digital channels are poised to accelerate growth in digital spend over the next few years as advertisers capitalise on the potential for full-funnel marketing, marrying creative storytelling with actionable targeting.”

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