Digital Video Ad Spending to Reach $50 Billion by End of 2022

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Spending for digital video ads grew 49% in 2021 with an expected 26% increase in 2022 according to the IAB. This growth would put digital video ad spending at $49.2 billion for 2022 and make it one of the most efficient video ads when measured across key KPIs.

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The last few years have come with explosive growth in screen time for the average person. Plus, the increased distribution of smart TVs and other streaming devices means that individuals are now more than ever watching video media in some capacity.

It’s clear that the convenience of streaming, which tends to be on-demand, allows people to view programming on their timetable. Even traditional linear TV programs such as sports or news have migrated to something closer to a streaming style of service, especially for streaming apps on these smart devices.

The research done by IAB shows that advertisers want to capitalize on this trend by investing more advertising dollars into digital video ads. Ads served via connected TV (CTV) has shown the most growth in this space with a 57% increase over 2021 to $15.2 billion.

Spending for digital video ads grew 49% in 2021 with an expected 26% increase in 2022 according to the IAB.

The reason for the growth in CTV ad spend comes down to the cost-efficiency of these ads to positive outcomes for advertisers and their businesses. 18% of the dollar spent on digital video ads goes to CTV ads, but CTV ads account for 36% of total ad watch time across all platforms. Those numbers tell advertisers that the benefits of CTV ads are there.

From what the IAB identifies, three factors push CTV ads over the finish line in the efficiency race:

Location and shopping data are available for serving CTV ads
Factoring in KPIs, CTV ads were better at delivering sales, transparency, and brand perception
CTV ads are more privacy-friendly since they don’t rely on cookies or other similar data

So far, the plan to fund this increase in CTV ad spending comes from reducing linear TV ad budgets across the board. Many advertisers listed these tactics as their preferred route to getting more money into the hands of digital video ad distribution.

Who Would Care About This?

This study holds promise for advertisers, streaming services, and those looking for new ways to build their brands and businesses. The coming growth in video ad spending means that digital ad agencies and independent creators could see revenue growth over the next year, giving them more resources to commit to generating ads and innovating in this field.

Streaming services that already integrate CTV ads stand to benefit, as well. Ad agencies commit to payment contracts to serve ads on these platforms. With the coming growth in ad revenue, streaming services will be able to sell larger contracts based on the projections given in this study.

Source: IAB (Interactive Advertising Bureau)

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