US subscription over-the-top (OTT) platform ad spending is predicted to end the year about 20% higher than last year, according to a recent forecast from eMarketer. This year spending is expected to reach $6.3 billion, up from $5.23 billion. The forecast covers ads in paid subscription services such as Hulu and HBO Max but excludes those in free streaming services such as Pluto TV.
While it wasn’t named in the forecast, Netflix and its decision to offer an ad-supported tier likely figure into the buoyant forecast for next year. Indeed, eMarketer predicts that after rising by 20.4% this year, the subscription OTT ad market will swell by 50.5% next year, reaching almost $10 billion ($9.48).
At that time it’s expected to account for more than one-tenth (10.2% share) of all video ad spending in the US, as well as 3.4% share of total digital ad spending.
This is likely also fueling a bump in US connected TV (CTV) ad spending next year, which eMarketer has revised upwards from its previous forecast. Now, following a 23% hike this year, eMarketer predicts that US CTV ad spend will expand by 27.2% next year to almost $27 billion ($26.92). Growth will then dip below 20% year-over-year in subsequent years, but stay heightened at an 18% rate in 2024, followed by 17.9% in 2025 and 16.4% in 2026.
The CTV ad spend estimate is significantly larger than that of subscription OTT ad spend because it includes all digital ads on TV screens, including those in free services like Pluto TV as well as those on platforms oriented to user-generated content, such as YouTube.
eMarketer projects that US CTV ad spend will grow to be 50% the size of linear TV ad spending by the end of 2024, after being just one-tenth the size in 2019. This is likely the result of rapid growth in CTV advertising as more households watch OTT content on these devices, but also as the growth in CTV budgets often comes at the expense of linear TV.
Given its forecast, eMarketer notes that by the end of 2024, CTV will account for one-third of all combined CTV and linear TV ad spend.
For more, check out the forecast here.
