Time Is Money: CTV Viewers Are Watching More Ad-Supported Than Ever

It’s a New (Ad-Supported) World for CTV

Good news for brands already advertising on Connected TV: viewers are officially watching more ad-supported CTV content than ad-free. According to data from TVision, CTV viewers spent only 36% of their time on subscription-only, ad-free streaming platforms in H2 of 2022—a decline of 30% since 2020. Time spent on ad-supported CTV, on the other hand, rose 55% (up to a 48% share).

There are a few factors that may have contributed to this change in behavior:

• Users Are Watching More CTV Overall: As viewers spend more time with Connected TV, the ratio of their time spent with AVOD vs ad-free content is bound to change. According to eMarketer, more than two-thirds of the US population will use CTV in 2023. Connected TV will also make up 21% of adult viewer’s digital time this year, bringing time spent with CTV devices every day up to an average of 1 hour and 51 minutes. This is almost double the amount of time viewers spent watching CTV four years ago. 
• There Are More Ad-Supported Options Than Ever: Last year, two of the top SVOD joined the ranks of the ad-supported, increasing the number of ad-supported options that viewers have to choose from. Netflix (a platform which was formerly staunchly ad-free) launched their new ad-supported tier in fall of 2022, and Disney+ did so in December. This has likely helped contribute to last year’s higher numbers of AVOD viewers—eMarketer found that AVOD services added 11.9 million viewers in 2022. And according to a study from Magnite, that interest in ad-supported is expected to continue, with 87% of streamers looking to add a new ad-supported streaming service in 2023.

• Viewers Are Interested in Saving Money: Over the last year, increased inflation and economic uncertainty have driven consumers to look for ways to cut down on their spending. And one of the ways they have done so is by swapping out pricey ad-free streaming services for lower-cost, ad-supported options. A study from LG Ads Solutions found 30% of households removed a paid CTV subscription in 2022, and 25% said they replaced it with a free, ad-supported service. Price-conscious streaming service selection is expected to continue, and one Samsung Ads consumer survey revealed that nearly 75% of users would prefer a free or less expensive tier from a streaming service if they were given the choice.

Advertisers Are Taking Notice

So with more consumers than ever now reachable through Connected TV, how are advertisers reacting to this changing TV landscape? One report from eMarketer estimates that CTV advertising spend overall will exceed $26 billion this year, and reach $37.45 billion by 2025. This is almost $10 billion higher than the source’s estimate in March of 2021. eMarketer attributes that increase to the growing number of streaming services with advertising, and the fact that mid-tier streaming services experienced more ad growth than expected. 

Another source has an even more bullish outlook on the future of ad spend on streaming. TVREV projects that streaming spend will pass linear by 2025, and account for 68% of ad spend by 2027. The report attributes much of that expected growth to FAST services, which they believe will reach $33.7 billion, or 35% of total ad spend, by 2025—surpassing cable, broadcast, and SVOD services. Ultimately, TVREV projects that both FAST and SVOD services will continue to increase their share of ad spend in the future as linear TV channels shrink, as seen in the chart below.

Conclusion

The world of Connected TV has hit a turning point, with consumers spending more time with ad-supported content than ever before. As more CTV viewers make the switch to AVOD and ad-supported subscription streaming due to growing availability and economic concerns, it’s clear that this is the moment for advertisers to reach the growing user base of this channel—and they’re already starting to capitalize on that opportunity.