CTV Advertising Moves Towards a Performance-Driven Model, But Brands Face Strategic Hurdles

Even as CTV viewing has become dominant on both sides of the Atlantic, European marketers are still in a phase of testing performance marketing methods to traditional video ad buys and creative compared to the U.S.

CTV spend is growing faster than Traditional TV spend, Dentsu reported in its 2023 ad forecast. Traditional TV expenditures were flat in 2022 and are expected to fall by 1.9% this year. As a relatively new category reaching maturity, CTV is predicted to grow by double digits, with gains of 23.7% in 2022 and 20.2% in 2023.

Those increases are likely to be fueled by premium CTV platforms like  Netflix and Disney+, which are just rolling out their respective ad models.

The US is further along in viewers. It is predicted that this year, 230 million US citizens – 67.8% of the population – will use CTV. By the end of 2026, that number is expected to rise to 70%.

As the shift in viewing accelerates, brands, agencies, and platform companies will feel the pressure to adapt from standard brand marketing messages and ad buys to more targeted advertising that drives specific outcomes.

Laying the foundations

After chatting with James Collins, SVP, Media Network at Rakuten Advertising, it became clear that CTV advertising on a performance basis is far more advanced in the US than it is in Europe. James clarified that there is a lot of experimentation taking place. But there isn’t a defined path for a solid performance-led approach that will look the same across the globe.