The time is now for Connected TV - How the acceleration in ad-supported streaming video is fueling new growth for brands - The Trade Desk
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The time is now for Connected TV How the acceleration in ad-supported streaming video is fueling new growth for brands
Table of
Contents
3 Summary
5 Stay-at-home orders usher in a new era
for marketers
8 More streaming means more data-driven media
10 Pause in traditional TV industry fuels
Connected TV’s momentum
12 Connected TV provides advertisers
a flexible, precise solution
13 Key platform benefits of Connected TV
Summary
The abrupt onset of the global Covid-19 pandemic in early 2020 sent
shockwaves through almost every industry. The halt of “business as usual”
threw best-laid plans to the wind, leaving even the most proven brands
scrambling to pivot quickly and shift strategies. At the same time,
consumer adoption of streaming and Connected TV quickly and
significantly accelerated, driving a foundational shift in how — and
how often — viewers interact with TV content.
Today, this disruption has given way to adaptation. As brands adjust to this
new normal, many are taking the opportunity to shift to a more efficient,
data-driven approach to reaching audiences. Brands recognize that, as
the economy starts reopening, there will be a major land-grab opportunity.
And effective marketing will drive share gains. For all advertisers, that
means applying data more aggressively than ever before, and prioritizing
ad opportunities that are measurable and comparable.
This report is meant to assist advertisers in this new era of modern
marketing, with key findings and the latest recommendations for
Connected TV and the broader digital advertising landscape.
The time is now for Connected TV | 3
Key Takeaways
Consumer media habit shifts are accelerating, as nearly
two-thirds of U.S. households don’t have cable or plan
CORD CUTTING to cut the cord to linear TV in 2020.
Inventory With increased consumer streaming trends during the
up 54% Covid-19 period, Connected TV available inventory
has surged by 54 percent in April 2020 versus April 2019.
YEAR-OVER-YEAR
The cancellation of the upfronts and suspension of live sports
are leaving a hole in potential reach for brands, spurring a
LIVE SPORTS
shift to more agile and on-demand Connected TV channels.
Due to data-driven Connected TV, advertisers can achieve
a new level of precision in TV buying, from audience level
MIN MAX
frequency capping to household geographic targeting.
FREQUENCY
Digital, including Connected TV, gives advertisers the
flexibility they need now. As different regions across the
U.S. ease social distancing restrictions, brands can pivot
Connected TV budgets quickly, providing a new level of
CONNECTED TV flexibility in TV buying during a period of great change.Stay-at-home orders usher in
a new era for marketers
The sudden, widespread rise of Covid-19 has caused
myriad changes to everything, from the global economy
to everyday life and beyond. Consumers are spending
time at home — on their devices — which is significantly
accelerating the trajectory of Connected TV. This shift
is driving major implications for brand advertisers.
While traditional TV has been on a steady decline over
the last several years, new research suggests the
number of cord-cutters is growing as a result of
shelter-in-place mandates. According to recent data
from The Trade Desk’s survey with YouGov, 64 percent
of U.S. adults have never had cable, have already cut,
or are planning to cut their cable subscriptions. In the
young adult segment (18- to 34-year-olds), that number
grows even higher to 74 percent.
64% of U.S. consumers have never
64%
had cable, are planning to cut the
cord, or have already cut their
cable subscriptions.
CORD-CUTTERS
Nearly three quarters of 18- to
34-year-old US consumers
74% have never cut the cord, are
planning to cut the cord, or
have already cut the cord.
18-34 YEAR OLDS
The time is now for Connected TV | 5According to eMarketer, the number of cable TV households has been declining since 2016,
dropping 4.5 percent from 2019 to 2020. The Trade Desk’s survey with YouGov found that
11.5 percent of U.S. adults who still have cable plan on cutting the cord by the end of 2020, nearly
2.5 times more than eMarketer’s estimate. The number of those planning to cut the cord rises to
18 percent among 18- to 34-year-old U.S. consumers.
U.S. Pay TV Viewers & % Change
MILLIONS
190 0%
10.81%
-2%
185
-4.0% -4.4%
-4%
-4.5%
175
% CHANGE
VIEWERS
-6.3% -6%
165
-8%
155
-11.5% -10%
145 -12%
2018 2019 2020 2021
Pay TV viewers % Change % Change
eMarketer eMarketer The Trade Desk & YouGov
Source: eMarketer, February 2020; The Trade Desk & YouGov survey, April 2020
In March 2020, after shelter-in-place orders were initiated, streaming minutes jumped significantly
due to content availability and the convenience of online streaming services. According to
The Wall Street Journal, streaming hours increased 12 percent the week of March 23rd over the
previous week, while comScore reported that streaming via Connected TVs in early March was
up 29 percent compared to 20191. This is having a material impact on streaming services as
subscriber numbers have jumped above forecasts.
Q1 2020 Subscriber & Engagement Stats Following Covid-19
TUBI PLUTO TV HULU NETFLIX DISNEY+
25 MM 24 MM 30.7 MM 183 MM 54.5 MM
subscribers2 monthly active users3 subscribers4 subscribers5 subscribers6
1
comScore, March 2020; 2 TechCrunch, February 2020; 3 Variety, April 2020
4
Business Insider, April 2020; 5 Marketwatch, April 2020; 6 The Verge, April 2020With this surge of streaming service options, consumers’ monthly costs are beginning
to add up. Concerns around the cost of video services are uniform across generations —
77 percent of U.S. adults would not spend more than $40 a month on streaming
subscriptions, with 18- to 34-year-olds most cost-sensitive at 80 percent.
Max Willing To Spend On Streaming Services — By Age
What is the maximum amount of money you or your household are willing to spend
on TV streaming services, in TOTAL per month
100%
10.81%
17.21% 21.52%
32.87%
80%
34.2%
30.2%
29.3%
60%
25.0%
40% 26.5% 35.3% 26.9%
20.9%
20%
26.1% 22.2%
21.1% 19.8%
0%
55+ (n=1008) 35-54 (n=814) 18-34 (n=786) Total (n=2608)
$0, Not willing to spend on streaming $.01-$20 $20-$40 $40+
Unweighted base: US adults with at least one screen for TV content (2608)
Source: The Trade Desk & YouGov Survey
With limits on consumers’ willingness to pay for streaming subscriptions, lower-cost and free
advertiser-supported offerings are becoming more popular. According to Integral Ad Science,
78 percent of U.S. consumers are willing to see ads in exchange for free streaming content.7
This illustrates a growing appetite for ad-funded video on-demand (AVOD) services such as
Hulu, CBS All-Access, Crackle, Tubi TV, Pluto TV, and more. Take Pluto TV, for example: The
Viacom-owned, free, AVOD service reported 75 percent growth in 2019 and expects 30 million
monthly viewers by the end of 2020.8
These trends suggest Connected TV, and particularly AVOD streaming, will continue to see
unprecedented growth in 2020, with an expanding audience that is no longer reachable on cable
TV. According to the Integral Ad Science survey, 44 percent of U.S. consumers have added at
least one AVOD streaming service to their viewing habits since the onset of Covid-19, while
another 47 percent plan to use one in the next 12 months. These findings also indicate
advertisers can reach more than 90 percent of U.S. adults with Connected TV advertising.9
7 Integral Ad Science Streaming Wars Wave 2, April 2020
8
Variety, March 2020
9
Integral Ad Science Streaming Wars Wave 2, April 2020 The time is now for Connected TV | 7More streaming means more
data-driven media
Growing Connected TV viewership translates to distancing guidelines, our platform saw a 57 percent
more opportunities for advertisers to stream their increase in daily average available Connected TV
commercials alongside premium content. The Trade ad inventory compared to March 2019. This is not
Desk data illustrates that increased viewership just a short-term fluke: April daily average available
of AVOD services is having a material impact on the Connected TV inventory also rose substantially,
dynamics of the marketplace. In March 2020, when up 54 percent over 2019.
several states in the U.S. began to implement social
60% Increase In Daily Average Available
Connected TV Inventory, YOY
50%
40%
54%
57%
30% 35%
20%
10%
2020
2019 0
February March April
Source: The Trade Desk platform dataA sharp rise in daytime viewing of AVOD services such as Hulu, NBC, CBS, Pluto, and others is contributing
to this rapid increase. According to data from our partner, Inscape, the number of TVs airing ad-supported
streaming services during the workday increased the week of April 25th by 18 percent over the week
starting March 1st.
TVs Airing Ad-Supported Streaming Services,
By Time of Day
Sheltering with TV
Mid-day time with streaming up
April 19–25
+18%
March 1–7 WORKDAY
STREAMING
12 AM PST 6 AM 12 PM 6 PM 12 AM
Source: The Trade Desk analysis, powered by Inscape data
The implications of these shifts are profound for
advertisers that have relied on traditional daypart-
oriented campaigns. The increase in AVOD viewership
and appointment-based viewing overall makes any
time primetime. Modern marketers can lead with
data to target specific customers on Connected TV
instead of falling back on broad assumptions around
daypart viewership.
Smart brands are already seizing the opportunity
presented from these viewer and inventory surges.
One apparel retailer with plans to reach younger
cord-cutting audiences switched budgets seamlessly
to Connected TV. This retailer optimized its
Connected TV campaigns to maximize revenue.
The results were so strong that the brand will shift
more budget from live events and sponsorships
planned later in the year to reach critical audiences
during the pandemic.
The time is now for Connected TV | 9Pause in traditional TV industry fuels
Connected TV’s momentum
The business of cable TV is facing headwinds. Most
of the 2020 upfront season, including possible virtual
replacements, were officially cancelled or postponed.
Two dozen pilots were reportedly in production for the
2021 season, all of which were put on hold in March.
At the time of this writing, it is uncertain when production
will be permitted to resume.
In addition, the cancellation of live sports is estimated to
remove billions of dollars from the market. The Olympics
alone accounted for $1.25 billion in revenue for NBC
Universal.10 While the loss of advertising dollars for cable TV
companies is problematic, the loss of live sports could
substantively impact cable subscriptions overall. 60 percent
of cable subscribers cite live sports as the top reason to
keep their cable package.11
All of this means that advertisers are taking a more agile,
data-driven approach when making media investments.
Budgets originally allotted to the upfronts and live sports
will either fall to one-to-one deals and scatter buys for
traditional TV or migrate to the often more efficient
Connected TV. The “spot market” nature and agility
of Connected TV can help advertisers swiftly reach
engaged audiences. With reach of more than 200 million
viewers in 2020,12 Connected TV is emerging as the
choice of marketers looking for better measurement
‘‘
and brand growth.
“We’re advising clients to take a closer look at
Connected TV as an alternative way to reach
live sports audiences. Connected TV extends
clients’ reach to cord-cutters, delivers with
audience data for frequency and creative control,
and measures with similar granularity as other
programmatic channels.”
— Alexandra Murray,
Supervisor, Programmatic at 360iPlanning Times By Media Type (Average In Months)
MEDIA TYPE PRE-COVID-19 CURRENTLY CHANGE
Linear TV (Broadcast & Cable) 5.3 2.7 -2.6
OTT/Connected TV 4.5 2.4 -2.1
Digital video 3.8 2.0 -1.8
Media type average 4.2 2.3 -1.9
Means reported. Sorted by change
Source: Advertiser Perceptions, The Effect of Coronavirus on Advertising Report; April 2020
According to The Effect of Coronavirus on Advertising report by Advertiser Perceptions, most advertisers
reported they are planning media commitments for no more than three months out. This is a stark
contrast to the “up front” annual planning nature of traditional TV before the pandemic that extended
well above five months. Connected TV represents a new paradigm for advertisers and their planning
cycles: addressing the need for speed, agility, and maximum flexibility with their budgets.
For instance, a large US-based restaurant chain was hesitant to commit millions of dollars to the
upfronts while shelter-in-place restrictions limit its day-to-day business. The brand wanted to shift
its ad spend to be more flexible and more precise in reaching specific locations with appropriate
messaging as restaurants slowly reopen. This agility, precision, and flexibility is simply not possible
with traditional, linear advertising.
Another recent example: A large technology advertiser quickly switched its advertising to boost
awareness for a product that competes with a video-conferencing app. The company activated
against its target audience on premium publishers at scale, and within two days, successfully
delivered the reach and frequency goals of the campaign.
The net: shifting to a solution like Connected TV helps advertisers
reallocate budget from the upfronts and live sports to a more
nimble, efficient, and measurable solution.
10
Variety, April 2020
11
The Trade Desk and YouGov, April 2020
12
eMarketer, November 2019 The time is now for Connected TV | 11Connected TV provides advertisers a flexible, precise solution The future of TV buying has arrived. The Trade Desk platform delivers the large-scale reach and tools required by advertisers for data-driven Connected TV buying. The premium, digital supply on Connected TV allows brands to forecast, activate, and measure spend and impact at scale. According to an IAB survey in March, advertisers are now doubling down on media that allows them to target and segment by interest and device. More than one-third of media buyers will increase investment in over-the-top (OTT) and Connected TV advertising in 2020, due to the importance of efficient audience targeting. Every dollar counts right now for marketers, and many brands can no longer justify less efficient traditional channels. Audiences are already using their dollars to inform For marketers, now is the time to reorient their media companies what they want: better, on-demand strategies and budgets to align to this massive entertainment services with relevant ads. As consumers consumer shift. Past periods of uncertainty have pull back on monthly subscriptions due to economic led to incredible inventiveness and opportunity for uncertainty, free, ad-supported services will continue savvy marketers. Brands that adapt to this modern to increase in viewership, providing even more supply era of marketing, with data fueling an efficient for advertisers. These audiences will be essential for approach, will emerge in the new reality in a better brands looking to drive sales and growth following position to win the hearts and minds of consumers. the economic recovery from the pandemic.
Key platform benefits
of Connected TV
REACH ROBUST MEASUREMENT
Connected TV is in more homes than ever before, • I ncremental reach
reaching over 200 million consumers, as changing media With the rising number of cord-cutters, now
habits move towards cheaper and flexible advertising brands can gather a clear picture of the
supported streaming on demand. incremental, net-new audiences they are
reaching on Connected TV.
• This is not the inventory of last year, or even last quarter
More than three-quarters of viewers are willing • I n-store foot traffic and purchases
to watch ads in return for free content on their Tie Connected TV investment to real business
Connected TVs. results by attributing in-store footfall and visits,
and online and offline sales to commercials
• By the end of 2020, cord-cutters will be the majority
across linear and Connected TV.
During the economic rebound, the vast majority
of consumers will look for cheaper media options
in order to stay entertained within budget. FREQUENCY CONTROL
When buying TV ads on Connected TV with
DATA-DRIVEN TARGETING The Trade Desk, advertisers can control the levers
— empowering brands to decide when, where,
Connected TV offers advertisers an opportunity to layer
and how often their ads appear — in real time
rich first- and third-party audience data on their media
down to the minute, hour, day, or week.
buys — including interests, demographics, contextual,
content, geography, and more.
PREMIUM INVENTORY
• Content and contextual targeting when it’s needed
With the upswell of viewership on streaming
Like traditional TV, Connected TV allows advertisers
providers, broadcasters and publishers are quickly
to reach audiences on selected content — down
shifting content where the eyeballs are moving.
to particular shows, genres, and even times.
Advertisers have the opportunity to run their ads
• Regional targeting precision as the U.S. phases opening alongside major network and cable providers
As the world reopens city by city, Connected TV can around the world.
serve as the engine of growth for brands through
localized targeting.
For more information and tips, download
The Modern TV Buyer’s Playbook
DOWNLOAD
The time is now for Connected TV | 13Methodology
The data highlighted in this report comes from The Trade Desk
platform, publicly available data and a custom consumer survey.
This survey for The Trade Desk was conducted by YouGov.
Fieldwork for this survey was conducted on April 1-3, 2020. It’s a
representative survey with a total sample size of 2,613 adults in
the U.S. The survey was carried out online. The figures have been
weighted and are representative of all U.S. adults (aged 18+).
For more information, contact us today at info@thetradedesk.com.
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