December 28, 2020

Connected TV a Popular Ad Buy in These Trying Times

By Jay Bemis | Advertising Systems Inc.
Advertisers generally held back and tightened their budgets during 2020 as the global pandemic unfolded. But there was one advertising arena that became particularly attractive in the United States during the third quarter of the year: Connected TV (CTV), with YouTube advertising leading the way.

The experts at eMarketer recently predicted that YouTube’s gross ad revenues from connected TV will reach $2.89 billion this year, accounting for more than one-third — or 35.7% — of total CTV ad spending in this country.

By 2022, YouTube’s connected ad revenues will reach $5.45 billion, and its share of connected-TV ad spending in the United States will increase slightly to 38.7%, eMarketer says.

YouTube reported this fall that it brought in $5 billion in overall advertising revenue through all of its services during the third quarter of 2020. It was yet another indication that Americans are continuing to cut the cord from cable TV and opting for streaming, via smart TVs and other internet-connected devices, instead.

Starting as an independent video-sharing service in 2005 and acquired by Google in 2006, YouTube has grown to encompass a variety of demographics and now thrives as one of the top leaders in video marketing.

Yes, its prime purpose as a video-sharing service continues to create stars out of once-fledging content creators, such as top earner Ryan Kaji, a 9-year-old whose videos will reap an estimated $29.5 million this year, according to a highest-paid YouTubers report from Forbes earlier this month.

But beyond the stars, YouTube’s expanse also is a prime space for brands to market their products, for media outlets to showcase their video content for the masses, and for musicians and labels to release and market their newest music.

The platform’s users, meanwhile, can rent feature films via YouTube, listen to music through its YouTube Music service, or opt for a subscription to YouTube Premium, which allows access to original content and ad-free viewing.

In announcing its $5 billion in third-quarter earnings, YouTube said it now has more than 30 million music and premium paid subscribers and that its YouTube TV service has more than 3 million subscribers.

“YouTube’s strong watch time growth enables advertisers to reach audiences they can’t reach on TV,” said Ruth Porat, the chief financial officer of YouTube parent companies Alphabet and Google, in summarizing the $5-billion haul.

YouTube Viewers Also Shifting to Bigger Screens

While predicting earlier this month that YouTube’s gross, connected-TV ad revenues this year will reach nearly $3 billion, eMarketer made note of another study in connected TV’s favor. That report shows that YouTube watching is shifting more away from smartphones to connected TV’s bigger screens, be they smart TVs, tablets, laptops or desktop computers — in part because of Americans spending more time at home during these pandemic times.

The screen-size study was conducted by Collab, a digital talent network, which, no doubt, has had some experience with YouTube’s youthful video producers. It says that in the third quarter of 2020, over-the-top and connected TV accounted for 34.4% of time spent with YouTube, up from 27% in the fourth quarter of 2019, or before the pandemic arrived.

“Social distancing has led to real changes in consumer behavior and accelerated the adoption of the CTV platform,” Dave Rosner, executive vice president and head of Collab, told eMarketer.

“That’s not going to snap back once social distancing slows down; a new consumer behavior has emerged,” he added. “People are more comfortable watching YouTube on big screens, and the pandemic has just accelerated that evolution.”

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