Ad Budgets Seen Shifting From Linear TV to OTT

Buyers expect their ad budgets to shift to over the top rather than traditional
(Image credit: Netflix)

Ad budgets will grow for 2021 but spending will shift to digital, particularly from linear television to over-the-top and connected TV, according to a new study from the IAB.

After a difficult 2020, buyers and advertisers expect their ad spending to be up 6%, with digital spending jumping 14% while traditional spending drops 5%. 

Digital share of ad spending will grow to 71%, with a big shift coming from linear TV to digital video, the survey found.

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Among digital channels, social media and paid search were each expected to get 16% of budgets, with 14% going to digital display and 13% to digital video, including over-the-top and connected TV.

When asked where money for OTT and connected TV video was coming from, 60% of buyers said linear TV budgets. The average buyer shifting money to digital video said 21% of their linear TV budgets would be moving to CTV in 2021.

IAB study

(Image credit: IAB)

Buyers said the main reasons for shifting money to digital video from linear TV were targeting and efficiency, incremental reach, the opportunity to optimize creative, cost-effective CPM, proven ROI and better consumer ad experience.

According to buyers, CTV and OTT is better than linear TV for reaching younger audience, its faster to optimize and easier to cancel.

A majority of digital spending (54%) will go through programmatic channels.

Among traditional media channels, linear TV is expected to account for 15% of budgets, with terrestrial radio and traditional out of home getting 4% each.

With the uncertainty surrounding the pandemic, even with vaccines starting to be shipped, advertisers say they want to be flexible, with 38% saying they’re only in a position to make a ballpark estimate as to how much they plan to spend. Just 8% said they had firm full year budgets, while most of the reset wanted their plans to be flexible for the back half of the year.

Buyers said their biggest concern for 2021 was that not all stakeholders understand the ramifications of new consumer privacy regulations and the loss of cookies and identifiers. Other concerns were about not having enough first-party data, not figuring out cross-media measurement, not being set up for eCommerce, the feeling that brands are “non-essential” during COVID and not having budgets or creative capabilities to add to OTT/CTV spending.

The IAB study is based on 15 minute interviews with 266 marketers, agencies, media buyers and media planners from Nov. 12 through Nov. 30.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.