CTV is Taking Over Linear: The Breakdown

Nowadays, many people use their internet connection to watch TV rather than a traditional cable hookup or broadcast antenna. Users of CTV devices and smart TVs need to be connected to the internet in order to use Over The Top (OTT) services, which include streaming services like Netflix and Amazon Prime.

It is no surprise that connected TV’s viewership is rising exponentially, which is great news for connected TV (CTV) providers such as Roku, Amazon Firestick, and Apple TV. However, July 2023 marked the viewership of linear television, which includes both broadcast and cable TV, dropping to under 50%. According to Neilson, linear TV’s viewing share dropped from 61.5% of total TV viewing in July 2021 to 56% in July 2022 to 49.6% in July 2023.

Neilson also reported that streaming had a record month in July of 2023, amassing 38.7% of all TV viewing. In addition, many streaming services, including Amazon Prime, Netflix, and YouTube, all hit record highs in overall viewership. Streaming services took the biggest piece of the TV viewership pie in July 2023, followed by cable at 29.6%, broadcast at 20%, and all other at 11.6%. As the data shows, it seems that CTV is becoming the future, while linear TV is slowly turning into our past.

Ad Spend

With streaming viewership up so high, more and more businesses have been buying ad space on streaming services, such as Hulu and YouTube. The money follows the viewers, which is why CTV ad spend is up by almost 400% since 2019, per Insider Intelligence. According to Alexandra Samet of Insider Intelligence, CTV ad spend in 2024 will increase by $13 billion from early 2020.

Advertisers are relocating their advertising budget from linear TV ads to CTV ads. In Samet’s article, Insider Intelligence predicts linear TV ad spend to decrease “$61.31 billion this year to $56.83 billion in 2027,” while their forecast shows an increase in CTV ad spend “from $25.09 billion in 2023 to $40.90 billion in 2027.” Based on the ad spend trajectory of Insider Intelligence’s forecast, CTV ad spend will surpass linear ad spend within the next decade.

Is Linear TV Dead?

Although we are no longer in the record-breaking days of linear TV, cable and broadcast TV are still very much alive. While CTV is growing like cable once did, the 2023 linear TV ad spend is forecasted to be two and a half times the 2023 ad spend of CTV.

It is important to test the waters during these periods of change, such as the one we are experiencing in TV viewership now, so don’t immediately jump off the linear TV ship quite yet. With linear TV, you have local targeting capabilities that will allow you to reach a large audience in your desired location. If your target audience consists of the traditional middle to upper-class adult who is either an older millennial, a member of Gen X, or older, linear TV ads are probably the way to go for you.

The Fight for Football

For the first time in history, a streaming service secured nearly exclusive rights to Thursday Night Football. According to Front Office Sports, Amazon Prime made an 11-year deal for $11 billion starting in 2022. However, real-time viewership numbers on Prime for Thursday Night Football (TNF) did not meet expectations. Amazon’s internal analytics showed an average audience of 11.3 million, while Neilson’s third-party analytics showed an average audience of 9.6 million.

Neilson’s numbers are the industry standard as a third-party entity because of the company’s credibility in media analytics. According to Front Office Sports, the 9.6 million average viewership in 2022 shows a 28% decrease in overall viewership of TNF from 2021’s average viewership of 13.4 million viewers. Although these are decent numbers for the first year of airing, the numbers did not live up to Amazon’s projections, leading them to do some damage control.

Amazon worked to compensate advertising clients for the lack of overall viewership. Front Office Sports reports that damage control “included giving clients inventory on Prime Video streams and other Amazon-owned platforms.” However, Prime was able to provide clients with a younger audience with a median age of 47. According to another Front Office Sports article, that is seven years younger than the median age of 54 on linear avenues.

The Sacrifices for Younger Audiences

Even though the 2022 TNF viewership was down 28%, advertisers are returning in 2023 for the younger audience Amazon Prime attracts. According to Front Office Sports, “Amazon’s average viewership among viewers aged 18-34 [being] 2.11 million” in 2022. Advertisers loved that 22% of their audience was in this age range in 2022. The number of viewers in the 18-34 age group was also up 11% from 2021. In addition, the average viewing time of TNF during the 2022 season was 85 minutes, up 9 minutes from the average viewing time of 76 minutes in 2021.

Thursday Night Football is not the only thing attracting younger viewers. According to Enterprise Apps Today, 31% of daily streaming service users are in the 18-34 age category, which is the category many advertisers are after. Advertisers are putting their money where the quality of users is rather than the quantity. They want to reach an audience in a younger age category, with higher annual incomes, and longer watch time. Even if there are fewer viewers where they can reach these categories, they will likely profit more from a smaller audience of target customers rather than a larger audience outside of their target market.

The Writer’s Strike

There are numerous factors that affect linear and connected TV usership. One of these factors is the writers’ strike, with the viewership of streaming services surpassing the viewership of linear TV in July amidst the Writer’s Guild strike. Though the strike officially ended on September 27, per Vox, the lack of new TV content may have caused TV loyalists to switch from cable to streaming.

Without the presence of late-night shows such as The Tonight Show with Jimmy Fallon, Saturday Night Live, The Late Late Show with James Corden, or Last Week Tonight with John Oliver, people moved to where the content was: streaming services. The 148-day writer’s strike, the second longest in history, may have hurt linear TV more than they realize.

Play the Field

Nonetheless, the world of both CTV and linear is volatile. Although statistics show that CTV took over linear TV in July of 2023, it is still a close race between them. With many companies collapsing their advertising budgets, now is the time to gain market share on both CTV and linear.

When you advertise on Over-The-Top (O-T-T) media, which is what is usually shown on CTV, you can track the IP address of the device your advertisement is run on to see if they completed the call to action or going to your website and possibly purchasing your product or service. With OTT advertising, you can track all that information to view and analyze your ad’s performance.

Although advertising on traditional television broadcast channels is old-school, you can still track the ad by using a tracking number. Then, you can review your analytics to see which gives you the best results.

In times as unpredictable as today, play the field before fully dismissing a valid advertising option. By taking advantage of the open market share on both CTV and linear TV advertising, your commercial could edge out your competitors, exponentially increasing your profit.