It may be too early to predict whether 2023 will be the year of connected TV as some are projecting, but it’s true that advertisers are beginning to reallocate some of their linear TV spending to keep up with the growth of streaming audiences. 

Media Technology Monitor’s recent report on cord cutting indicates that many Canadians are no longer relying on traditional TV services. When it comes to TV viewing, 97% of Anglophones watched TV on any platform in the past month, 82% watched online and 74% watched linear TV weekly. They are also more likely to watch online (82%) than through a paid service (69%), with 81% viewing via any SVOD subscription.

Programmatic buying is making it easier for advertisers to transition their buys to connected TV and reach that audience. Among the predictions from Samsung Ads Canada is making for next year, Dave Pauk, the company’s sales director, says programmatic buying will continue to grow at a steady pace in 2023. “CTV is available through different purchase pipes but we’ve really seen a steady adoption of programmatic. There’s a couple of reasons for that. In the current economic climate, advertisers are looking for more performance-based media, efficiency, and will adopt measurable tactics and outcomes.”

LG Ad Solutions ran its own survey of Canadians in October to determine consumer perceptions and behaviors related to CTV. It found that CTV is at near saturation in Canada and that ad-supported CTV is preferred, with 60% of households using AVOD apps.

In fact, 18% of consumers have removed a subscription CTV service from their household in the last 12 months while 15% have added a free ad-supported CTV service during that same time. Meanwhile, 20% are planning on removing a subscription CTV service in the next 12 months while 13% are planning on adding more free ad-supported CTV services during that time.

There have been two recent ‘big shifts’ in television viewing habits, said Tony Marlow, global CMO at LG Ad Solutions.

“The first big shift was rapid adoption of streaming content on connected televisions, fueled in-part by stay-at-home guidance at the onset of the pandemic. This was underpinned by subscription-based video content. The second big shift is underway right now. Consumers are drifting away from some of their CTV subscriptions and increasingly preferring free content that is supported by ads.”

Samsung also predicts an AVOD revolution in 2023. Pauk says the revenue growth of advertising-based video-on-demand (AVOD) has already surpassed that of subscription video-on-demand (SVOD), but SVOD will almost certainly continue to hold a greater market share. “More consumers will resort to free, advertising-based video-on-demand solutions, and FAST channels as they tighten their purse strings in the face of rising inflation and recession fears. With the emergence of streaming, the media landscape is changing, and we can expect to see legacy corporations with significant budgets competing to outwit, outplay, and outlast one another.”

Pauk says as the market for streaming services evolves, providers face several obstacles, including heavy competition, high churn rates, and high costs associated with the acquisition of new customers. “Viewers have high standards for the material they consume, which subscription-based businesses like Netflix have mastered. AVOD services must keep enhancing their user experiences if they want to compete with SVOD behemoths like Netflix and Disney+.”

Unlike linear TV, there isn’t a consolidated audience measurement system for CTV, but it’s expected to become more of an issue – particularly with agencies – as AVOD continues to grow. Companies like Samsung are managing their own proprietary first-party data, since there isn’t a Canadian company that has come up with a viable solution for consolidated measurement, but a device-based approach does have advantages.

“We are pulling our own one-to-one ACR [automatic content recognition] data from over five million TVs,” Pauk says. “That’s a pretty powerful proxy when it represents almost half of all CTV households versus a panel or a few thousand digital boxes that are collecting data.”