Connect2TV: A Growth Factor in Advertising

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On the slide, we focus on Connect2TV as an interesting growth factor within advertising. We think CTV provides clear advantages to linear when it comes to more advanced targeting and attribution capabilities. In 2022, TikTok overtook Instagram in terms of total hour spent on the app and reached parity with Facebook. Demand for sports betting remains strong this past year, and we estimate that total handle in the US and Canada grew over 80% to over $100 billion in 2022. The next wave of growth in gaming will come from the expansion of diverse virtual worlds.

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This week’s Big Ideas Monday Mini Episode focuses on Digital Consumers.

In 2022, digital leisure spending* totaled $6.6 trillion and, during the next eight years, should grow 17% at a compound annual rate to $22.5 trillion adjusted for inflation. Four trends should contribute to its growth:

Connected TV (CTV): Roughly 85% of US households have access to at least one CTV, but the CTV ad market is only 23% the size of total US TV ad budgets. In our view, CTV is at an inflection point and will take share from both linear TV and other digital ad budgets.

New Social Platforms: Nearly 40% of Gen Z consumers prefer to search on TikTok and Instagram over Google Search and Maps. Social platforms with the best recommendation engines should command the majority of ad budgets, with content-based social media likely outperforming follow-and-feed social media.

Sports Betting: Despite macro headwinds, consumer demand for sports betting remains strong. Legalization of online/mobile sports betting should continue to catalyze growth.

Gaming: The convergence of video games and social media should sustain gaming revenue growth. Video games should provide end-to-end virtual entertainment that rivals physical experiences.

Watch the video version here.

*We define digital leisure spending as the sum of consumer expenditures on leisure-related goods and services purchased online, NFTs, online sports betting, video game software and services, streamed video, and streamed audio. We only estimate online sports betting volume generated in Canada and the US. Sources: ARK Investment Management LLC, 2023. Altruda, C. 2022; Roblox, data as of 12/30/22; S&P Global Market Intelligence, data as of 01/25/23. The World Bank, data as of 12/30/22; Insider Intelligence, data as of 01/02/23; S&P Global Market Intelligence, data as of 01/25/23; Perez, S. 2022; Statista, data as of 01/25/23. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.