Are Streaming and CTV Primed for a Privacy-First Era?

All the privacy reform of the past few years has upended the ad world. Companies from Meta to Twitter are feeling varying degrees of pain from privacy measures. That includes public sector measures like GDPR and public-sector measures like Apple’s ATT and Google-led cookie depreciation.

From all this, one outcome is that some ad formats are privacy-advantaged and some aren’t. Facebook location and behavioral tracking is clearly disadvantaged in terms of handicapping ad targeting. But contextual ad targeting and broadcast media are less impacted, as they don’t use granular user data.

Also on that list is streaming video and connected TV advertising (CTV). Not only are these formats on an existing growth path, but they’re less impacted by things like Cookie depreciation and iOS app tracking restrictions. Ads are rather targeted based on the nature of the content and first-party data.

Localogy 2022 — Privacy 2022


Beyond all these high-level factors that put CTV in an advantageous position in the privacy-first era, we’re seeing signals that validate its rise. For example, the IAB reported this week that digital video advertising is among the fastest-growing ad formats in terms of advertiser spend.

According to its annual report on the state of the video advertising industry (published to kick off the 2022 NewFronts event), digital video advertising grew 21 percent last year. It’s also expected to grow 26 percent this year to reach $49.2 billion in ad spending. And there’s still plenty of headroom.

To that last point, the IAB asserts that even with the above growth, ad spend still has plenty of room to catch up to where users are spending their time. In other words, digital video ad spending’s share of ad dollars is disproportionately lower than digital video’s share of time that users spend with media.

To break down these figures further, digital video ad spend includes several things including online video such as YouTube. But the fastest-growing portion is CTV, which includes ad placement on streaming TV services like Hulu. That spend is expected to grow 39 percent to $21.2 billion this year.

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Further validation for the rise of digital video ad spending in the privacy-first era comes from a survey conducted by Advertiser Perceptions for the IAB. The survey asked brand marketers and agencies to express their interest and optimism for various media formats, given all the privacy reforms.

When looking at net optimism – the difference between respondents who plan to increase versus decrease ad spend – connected TV advertising scored a net-positive 19 percent. This was the leading score, followed by mobile (13 percent), linear TV (-4 percent ), and desktop digital (-13 percent).

Add it all up and CTV is primed to advance in the privacy-first era. In some ways, this can be viewed like the Covid era, in that some businesses were advantaged (SaaS, gaming), while others clearly weren’t (hospitality, travel, etc.). We’ll keep tracking CTV growth to see if it can exploit these tailwinds.

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