IAB: U.S. Digital Video Ad Spending Projected to Hit $55.2 Billion in 2023

Digital video advertising spending is projected to reach $55.2 billion this year, up 17% from $47.1 billion in 2022, according to new data from IAB. The latter was up 21% from $38.9 billion in spending in 2021.

Released May 3 at the 2023 IAB NewFronts, the report, based a proprietary industry survey, found that while there has been real progress in how the TV/video advertising marketplace is transacted, measured, and defined, a number of key issues still lack consensus.

Nearly two-thirds (64%) of TV/video buyers agree that creator-driven video can be considered premium. Two-in-three buyers (66%) use the same measurement approaches for creator economy video as they do for Hollywood-produced video content.

“Beauty has always been in the eye of the beholder,” Eric John, VP, media center for IAB, said in a statement. “That truism is playing out now in the world of video advertising as we see marketers and brands focusing and optimizing their spend not only in the traditional world of premium content, but also in the diverse, multiplatform world of creator content.”

An overwhelming majority (81%) of TV/video buyer survey respondents said they want two or more unified viewer measurements, and among those, 92% estimate that it will happen in the next two years. Yet the lack of buyer consensus on how to define measurement threatens progress.

Slightly more than half (52%) want viewable impressions defined by cumulative view-time, while 48% want continuous view-time. The lack of consensus extends to the number of seconds, with 32% wanting three minimum seconds for viewability, 24% wanting five seconds, and 19% wanting four seconds.

“There’s no question that changing a market as large as video takes time; however, the clock is ticking,” said David Cohen, CEO of IAB.

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Cohen says buyers need to come together and align on what they need, and sellers need to be part of the conversation.

“We are optimistic about the conversations currently taking place and will continue to advocate for universal standards, transparency, interoperability, and collaboration across the industry,” he said.

With TV/video buyers prioritizing media channels where audiences are addressable, connected TV continues to be one of the fastest growing channels in terms of digital video ad spend — up 22% in 2022, and 37% faster than short-form video from web and app-based publishers. Buyers say CTV is a must-buy (65%), as is social video (64%), according to IAB.

The report found that TV/video buyers are increasingly focusing on attention metrics, with more than 93% using at least one method to gauge consumer attention. More than half of buyers are applying biometric attention metrics to their campaigns. The biometric attention metric most utilized is eye-tracking — being used by one-third (34%) of buyers — but other metrics, including thermal scanning, pulse, heart rate, and beyond, are being leveraged.

“Buyers want to know if the viewer is paying attention, and they’re making buying decisions accordingly,” John said. “​”Buyers want engaged audiences watching video content of all stripes, including premium and creator-driven video. They want currencies they can trust.”

Ad Group Plugs Ad-Supported OTT Video

The Interactive Advertising Bureau (IAB) Oct. 10 released new data it claims underscores the value of marketing through ad-supported over-the-top video.

In its study based on a Sept. 25-26 survey of 1,223 consumers ages 18+ in the U.S., results found that the largest audience segment of OTT video is 18-34-year-old adults with household incomes above $75,000.

The audience includes households with kids and skews more male. Nearly 73% of respondents who regularly stream video say that they have watched ad-supported OTT. Moreover, 45% of streamers report that they watch ad-supported OTT the most.

“Advertisers have a real opportunity to make connections with younger consumers, who are likely to have higher-income, through ad-supported video delivered over-the-top,” Anna Bager, EVP, industry initiatives, IAB, said in a statement. “The findings from this study can help marketers navigate their way to valuable and receptive audiences by deploying an OTT strategy.”

Indeed, the report claims respondents are not easily reached through broadcast TV or subscription-based video on demand (SVOD). More than half (52%) of ad-supported OTT viewers are cord-cutters or cord-shavers, largely due to cost (77%), while 42% cite ‘convenience/flexibility’ and 38% cite ‘better content on streaming services’ as a reason. Additionally, they spend less time watching cable than SVOD viewers.

The report found that a higher percentage of respondents also enjoy interacting with ads in comparison to SVOD viewers, providing opportunities to engage and develop one-to one-relationships with these households and consumers.

Ad-supported OTT video viewers are more likely to try new brands, with 36% stating they learn about new brands/products/services from video ads. In fact, respondents said they spend more on online subscription purchases ($119 monthly vs. $89 for SVOD viewers).

“This study showcases the high value that brands should place with increased investment in ad-supported OTT video,” said Sue Hogan, SVP, research and measurement, IAB.