BIA predicts strong ad growth with OTT in local markets, driving more programmatic buying

BIA Advisory Services has released its latest local ad spend report for 2022, which forecasts ad dollars will reach $167.4 billion for the year. When popped; digital media will generate $79.5 billion in advertising dollars this year and traditional media will total $87.9 billion. Driven by digital media, BIA predicts local ad spend will exceed $200 billion in 2026. By then, local digital ad spend is expected to reach $116.6 billion, compared to $93.6 billion for media local traditions. Thus, by 2026, digital media will capture more than half (55%) of all local ad spend.

This year, with a contentious political landscape and control of both houses of Congress at stake, an expected $8.6 billion in political advertising will be spent on local media. Of this total, broadcasting will receive $3.8 billion.

By far, the fastest growing segment in local media ad spend will be OTT. In 2022, the digital video platform will see a 57.4% year-over-year increase. This year political candidates have invested heavily in OTT ads (in a first, this year CTV will overtake local cable in political ad dollars), the other top product categories advertising in local OTTs are:

Companies in the large general services vertical (i.e. legal services, plumbers and HVAC, utilities, funeral directors, etc.) are the biggest spenders at $337.2 million .

· Automotive ranks second at $273.2 million as automakers recover from global chip shortages.

· Complete the top five restaurants ($203.4 million) followed by healthcare ($202.8 million) and finance/insurance ($182.8 million).

As a result, local OTT ad dollars are expected to exceed $2.0 billion for the year, more than double from 2020. In addition, average annual growth in local OTT ad spend over the next four years is expected to be by 14.3%, ranking second behind television. own and operate streaming and local station websites. OTT advertising dollars are expected to total $3.5 billion by 2026.

(BIA uses the terms “OTT” and “CTV” interchangeably. However, CTV is a subset of OTT video impressions that come specifically from connected TVs. CTV impressions typically account for 90% or more of viewing and viewing. buying OTT ads.)

Additionally, from 2022 to 2026, local TV ad spend as a share of total local video ad spend will increase from 51.2% in 2022 to 41.7% in 2026. Local cable TV ad spend will drop from 16.2% this year to 12.5%. Conversely, in the coming years, each local digital video platform will see its ad revenue increase. For example, video ad spend on laptops/PCs is expected to nearly double from 13.8% in 2022 to 22.6% in 2026.

The shift to local digital video has been driven by several trends; continued cord-cutting, digital’s younger audience profile, ad campaign attribution capability, business outcome measurement and improved targeting capabilities, among other attributes. Additionally, as OTT becomes more scalable, marketers who once used OTT only as a reach extender, are now using it as a standalone component of their overall marketing strategy. Therefore, OTT is not only a complement but also a competitor to other video platforms.

For years, the buying of traditional and linear media in ad agencies and the sales groups in TV stations were separate groups. As OTT continues to grow, that has changed. Today, a local television station can provide advertisers with access to its audience over traditional over-the-air and through its owned-and-operated digital platforms; such as websites, mobile apps, podcasts, CTV or streaming.

To help maximize advertising dollars, local stations are looking for more data-driven advertising negotiations to sell their premium video content on linear TV and digital platforms. As a result, it is expected that by next year, programmatic (automated “real-time”) bidding in local market purchases will triple compared to 2019.

Rick Ducey, Managing Director of BIA Advisory Services, who authored the report, said: “The local CTV advertising market is very dynamic with established SVOD (subscription video on demand) players growing in the AVOD segment ( ad-supported video on demand) with options for new ad-supported tiers. This includes premium brands such as Netflix
NFLX
and Disney. These changes provide marketers and agencies with much broader and deeper access to the CTV audience where more views can now be targeted with advertisements. CTV is a powerhouse combining the data and targeting capabilities familiar to digital media buyers with the premium, long-form, engaging and brand-safe content that consumers love. CTV impressions trade both directly and programmatically to provide buyers with the flexibility to meet their needs. CTV combines the power of digital and television in a way the market is still absorbing. »

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