Market growth always brings new opportunities for advertisers, and Connected TV (CTV) is no exception. As streaming services become the go-to choice for viewers, this shift is driving a significant increase in CTV ad spending—a trend poised to accelerate.

According to eMarketer, U.S. CTV advertising spending is expected to nearly double over the next five years, from $24.6 billion in 2023 to $42.4 billion by 2027.

Source Emarketer

This surge reflects the rise in CTV viewership and the changing landscape of video consumption. During Q2, 2024, U.S. consumer spending on video services grew by 1.2%, with streaming services seeing a remarkable 27% increase. (data from Madison and Wall). Meanwhile, traditional pay TV continued its decline, signaling new CTV challenges for some advertisers (at the same time digital-firs advertisers will likely embrace it) as traditional TV's penetration rate drops below 50% of U.S. households.

However, market growth doesn’t just create new opportunities—it also intensifies competition. Staying ahead in the CTV space means understanding what will shape the future of connected TV and how to build a successful CTV ad strategy for the years ahead.

Streaming trends

First, let’s talk about the trends that are here to stay.

As we look ahead, it’s clear that certain patterns in the Connected TV (CTV) space persist and accelerate. The numbers tell the story—consumer spending on streaming services is rising, and advertisers are increasingly leaning into CTV's advanced targeting capabilities. Streaming apps are nudging consumers to AVOD models and increasing ad loads. But what does this mean for the future of your campaigns?

We’ve analyzed the data, and based on these insights, here are our key predictions for what’s next in CTV. Let’s dive into the trends that are driving the future of connected TV and how they will continue to shape the landscape.

The future is personalized: targeting and engagement in CTV

Ad personalization in Connected TV advertising transforms how brands engage with audiences, offering tailored experiences that resonate more deeply with viewers.

Making generalizations based on broad demographics and reminding them about a previous purchase is not enough anymore. You need to understand much more—life stage, the number of family members, current needs, etc. As consumers seek content tailored to their preferences, CTV’s advanced algorithms and user-friendly interfaces provide personalized viewing experiences that meet this demand, further fueling market growth.

According to an IAB report, 84% of advertisers believe that CTV offers superior targeting capabilities compared to traditional TV, Now they can leverage advanced targeting techniques, including demographic, geographic, behavioral, and contextual targeting, to deliver personalized ad experiences at the right time for the right viewers with the message that works best for them.

The rise of data-driven insights in CTV allows advertisers to track and analyze viewer interactions, allowing for real-time campaign optimization. Dynamic creative optimization (DCO) further enhances personalization by tailoring ads based on viewer data, such as local weather, time of day, or specific interests.

However, it’s crucial to develop a strategy that reaches a broader audience—helping to enhance brand awareness and visibility and discover new customer segments—while still maintaining a personalized approach. Balancing outcomes, relevance, and reach will be critical for staying competitive in this evolving landscape. As a result, the “brandformance” approach is set to continue growing in popularity.

Why programmatic buying is the new normal

The traditional upfront model is increasingly viewed as rigid and outdated, primarily due to its lack of flexibility. In a rapidly evolving world, adapting strategies to current events is critical for success. Once ad space is secured through upfront deals, it becomes challenging to adjust campaigns based on real-time factors such as product launch delays, shifts in consumer behavior, or unexpected market changes.

Advertisers are now seeking continuous, data-driven planning that allows for real-time adjustments, aligning more closely with the demands of modern marketing strategies. This shift towards programmatic buying reflects a broader trend toward agility and responsiveness in advertising.

As programmatic advertising gains traction in CTV, its appeal lies in the ability to automate and optimize ad buying using real-time data. This approach not only enhances efficiency but also enables advertisers to refine their campaigns based on performance metrics. As technology advances, programmatic CTV is poised to become the dominant method for purchasing ad inventory, offering the flexibility and agility that modern advertisers require.

Metrics that matter: measuring what counts in CTV

As CTV evolves, advertisers emphasize measurement and analytics to evaluate campaign performance. However, it’s not enough to simply track a list of metrics like CPM (cost per thousand), CPA (cost per action), or CPR (cost per unique reach) every month. Success depends on understanding which metrics are most valuable to your specific goals and knowing which ones may not warrant as much attention.

This approach helps focus on data-driven insights, enabling advertisers to make smarter decisions and optimize their strategies for better results. You can learn more about how to build your ideal TV ad strategy using CTV metrics—along with a detailed analysis of the pros and cons of different metrics

Developing standardized measurement practices tailored specifically to your needs will help unify CTV with other digital advertising channels. This allows advertisers to track performance more consistently across platforms, leading to more informed decisions and more effective strategies.

CTV ads for all brands and why watch sci-fi? Our predictions for CTV’s evolution

We sat down with Simulmedia's Executive Chairman, Dave Morgan, to peer into the future of Connected TV and explore the trends that will reshape the market. From game-changing technology to evolving viewer behaviors, Dave shares his insights on what brands and advertisers need to prepare for and how they can stay ahead in a rapidly transforming industry. Curious about what’s coming next? Read on...

What are your predictions for Connected TV in 2025?

“By 2025, the shift from traditional TV to streaming will continue, especially with advertising. Streaming allows for better targeting, personalized ads, and real-time measurement. This means digital advertising strategies can now be applied to TV advertising. Large brands are already on board, but what we’ll see more of in 2025 is the growth of small and mid-sized advertisers.”

What are the biggest risks and challenges for Connected TV in 2025?

“The biggest risks are fragmentation and fraud. The connected TV market is new, and many advertisers will be unfamiliar with how to navigate it. Education, automation, and analytics will be key to helping brands understand the space. Additionally, fraud is a big concern, especially with cheaper advertising options. Trust will be crucial in ensuring advertisers feel confident about the value they’re receiving.”

How will technological advancements, like AI, impact the Connected TV market?

“By 2025, generative AI will have a huge impact on advertising. AI will make it much cheaper to produce high-quality ads, allowing brands to create more personalized ads for different audiences. AI can now generate ads from minimal input, and while it’s not yet perfect, it’s already producing decent content at a fraction of the cost of traditional ad production.”

“But simultaneously, both short and long formats will grow. Short-form content is great for quick engagement, while long-form content serves more significant purchases or decisions, like buying a smart TV or booking a vacation. Depending on the part of the funnel, both formats will have their place.”

Looking further into the future, what are your predictions for the next 5 years in Connected TV?

“Advertising will become more integrated into the viewing experience, with ads being more personalized and relevant to viewers. Shoppable video ads, like those on mobile platforms, will become more common. Over the next five years, we’ll see more seamless and interactive ads, better integration with other devices, and even the possibility of personalized versions of content created in real time.

Much of what we’ve discussed will happen, but there are always surprises. The rapid advancement of technology, especially AI, means we might see developments we can’t even imagine yet. Science fiction often offers a glimpse into what’s possible, and many of the things we see in sci-fi, like personal AI assistants and medical scanning devices, are already becoming reality.”