IAB UK predicts CTV ad growth but wants better measurement

UK digital advertising trade body the IAB forecasts that advertising spend on connected TV (CTV) and gaming will double in the next three years, hitting a combined £4.15bn by 2026. In a new report entitled IAB Compass, the IAB said: “An ongoing shift to streaming among audiences, new ad-based models from the likes of Disney+ and Netflix, and an increase in ad-supported viewing as people look to cut down on subscriptions are set to drive further growth in the CTV market – with ad spend forecast to rise from £1.17bn in 2021 to £2.31bn in 2026 (including BVOD and YouTube).”

Meanwhile, growth in gaming ad spend is being driven by the evolution of ad solutions such as native in-game ad formats and programmatic buying – as well as the adoption of gaming by advertisers across a broader range of sectors, from financial services to healthcare. Current annual spend of £815m is predicted to rise to £1.84bn by 2026.

The report, created with research consultancy MTM, shows that adoption of CTV by large advertisers is now close to that of linear TV and digital video and – with a low minimum spend compared to TV – CTV is attracting a broader set of advertisers. However, despite an average annual growth of 40% since 2017, the IAB says that the CTV market needs to address challenges with fragmentation, standardisation and measurement – particularly beyond BVOD and YouTube – in order to fully mature.

Overall, the report looks at the evolution of four fast-growing digital channels: AR/VR, CTV, gaming and shoppable advertising. Commenting, Hannah Bewley, senior research & measurement manager at IAB UK, said: “Our goal with IAB Compass is to help the industry navigate how four key areas of digital advertising will evolve and diversify over the coming years – from CTV and gaming, which are already well-established options for advertisers, to AR/VR and shoppable ads that are in an earlier stage of growth in the UK market, but with huge potential.”

The IAB predicts that advertisers’ investment in AR is likely to reach between £250m-£350m by 2026, while social commerce sales are predicted to reach £6.8bn in the UK over the next three years. “While we’re under no illusion about the challenges of the current economic climate,” said Bewley, “digital advertising will continue to innovate to offer advertisers unique and creative ways to deliver on brand and performance objectives. Between them, these four digital channels are poised to accelerate growth in digital spend over the next few years as advertisers capitalise on the potential for full-funnel marketing, marrying creative storytelling with actionable targeting.”