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Despite rumblings out of the US that marketers are moving spend away from connected TV (CTV) and back to linear, Australian advertisers are embracing the medium with enthusiasm as inventory grows and costs drop.
More than half (51%) of those surveyed in the Myers Report annual survey said they expected moderate growth for CTV/streaming/OTT video, while WARC forecasted that CTV is on course to be worth $35.3bn to advertisers this year, with spend expected to rise 19.6% and account for two-thirds of all growth in the video (linear + CTV) market this year.
By 2026, CTV is projected to account for almost a quarter (23.9%) of all video ad spend, at $46.3bn.
Closer to home, the frequency of using CTV advertising has increased over the last year and for the first time, more respondents have CTV as a significant part of advertising activity (55%) than mobile (46%) or computer (47%), according to IAB Australia’s Video Advertising State of the Nation Report.
Agencies seeing strong demand
Magna’s head of product and innovation, Ros Allison, said that the broad trend for Australia will see spends continuing to follow audiences to CTV, alongside channels and content where agencies can deliver audience reach in quality content and with impact.
“For linear TV, a tipping point was evident in early 2023; a shift in historically inelastic demand in response to a weak ad market, spiralling audiences, new ad supported options and a retreat to performance channels,” she said.
“2023/4 has seen multiple consecutive periods of revenue falling faster than audiences and a headline deflationary market.
“With some green shoots of consumer and brand confidence in H1 2025 and consumer inflation easing back into the target range, we do expect to see a small degree of natural correction back to linear TV, but the general trend will be to follow audiences regardless of complexity of currency and measurement.”
Yahoo AUSEA MD John McNerney said not only is his company not seeing a shift from CTV back to linear in Australia, but CTV is continuing to grow at a rapid pace as marketers embrace the flexibility and precision that the impactful buys of the format can bring.
“There are fundamental differences between the US and Australian markets, one being that the US is far more fragmented, with 10x more streaming providers; many of these platforms hold licensing rights for live content, blurring the distinction between CTV and linear,” he said.
“In Australia, this fragmentation is less pronounced and while I’m sure there will be changes in the market, we’re not seeing any significant movement back to linear here, and neither do we expect to.”
Frontier Australia MD Daniel O’Brien, said his agency is seeing spend increase in CTV across all inventory sources, however it’s not all necessarily spend shifting from linear to CTV.
“I'd say it’s also an increased interest in CTV overall through recent advancements in targeting, more inventory becoming available and costs starting to improve, slightly,” he told AdNews.
Enigma’s GM of media, Amy Dascanio, said that the consistent year-on-year decline in linear ad expenditure, based on SMI data, highlights advertisers are increasingly leaning towards CTV, rather than moving away from it.
“That said, it’s the fragmentation of TV in general that is the hardest element for us all to manage,” she said.
“As consumer behaviour continues to shift and the growth in smart TV penetration continues, the time consumers are spending watching a ‘screen’ is actually growing. However, for agencies, it’s navigating this with the old traditional buying metrics of reach and frequency, that as an industry we need to shift perceptions.
“From a measurement perspective, initiatives such as VOZ are great, but it just feels a little late to market, and it’s allowed the streaming services, such as Prime Video, Disney and Netflix, time to catch up and start to build their advertising services.”
Dasciano did caution, though, that buying CTV on its own means targeted audience-focused buys don’t create the same high level of brand awareness as linear TV can achieve, and as an industry, there’s no standardised way this is measured.
“With Foxtel’s decision to pull out of VOZ, this continues to create a separation of these measurement solutions,” she said.
“Therefore, it does beg the question: do we need to be discussing a new overall standard measurement for TV that is more reflective of the complexities of modern viewing behaviour versus the traditional ‘reach’ discussion?”
Half Dome’s head of strategy, Adrian Cosstick, also agreed that said CTV in Australia faces a different set of challenges compared to the US.
“Compared to linear TV, CTV in Australia is easier to buy and has greater opportunities for personalised messaging or dynamic creative,” he said.
“While tracking and measurement can be complex for some clients, if CTV’s impact on business outcomes is unclear then the same issues will apply to linear TV. There’s plenty of measurement solutions like market mix modelling (MMM) which can address any omnichannel attribution problems.
“These are becoming more cost efficient for clients by the year and there are less complexities in scale versus the US.”
Cosstick said CTV’s challenge in Australia, however, centres more around supply and demand - in MMM models, CTV often shows as the most effective channel by business outcomes per thousand impressions, but its cost can hinder its ROI.
“Given CTV’s limited supply, mass-market brands needing high national reach each week should use CTV alongside linear TV,” he said.
“It’s not a viable replacement at this stage. With further supply opening from AVOD providers in the near future, such as Disney+, any reductions in Australian CTV spend are likely to be short-term. CTV is a ‘must have’ as part of a total screens stack if you’re targeting includes an under 30 audience.”
The Media Store’s head of digital, Nick Hayes, said that while his agency is seeing a decrease in linear TV investment and an increase in CTV, in line with how audiences are shifting their viewing habits, it’s not as clear cut as budgets moving from one to the other in Australia.
“The impact on media investment during and post-COVID continues to be felt,” he said.
“As Nine’s Michael Stephenson noted, $600 million worth of investment moved into the bottom of the funnel over the last two years. Many industries paused advertising and almost all retailers diverted spend into performance channels as consumers, stuck at home, reduced their boredom by reducing their savings.
“Most digital buying also came with the luxury of not having to work through cancellations with publishers, giving clients the power to easily pause or adjust their advertising investment based on immediate market feedback.”
Hayes said that media investment further cooled as the country transitioned from the pandemic into the edge of recession, meaning that as consumers tightened their wallets and SMEs felt the impact, linear TV investment plummeted further.
“It’s interesting to note that digital display fell too, as channels like search and social continued to grow, and clients and advertisers further mined the lower funnel, ensuring every dollar spent could be rationalised from a maximum ROI perspective,” he said.
“With all of this said, there is optimism that the period of rate hikes is behind us, and 2025 will see a right sizing in media investment prioritisation, bringing more spend into the upper funnel. Further supporting this is the fast-growing accessibility of SaaS-based MMM tools, largely aided by the AI boom.
“This is giving brands tools that were once unaffordable and allowing them to better understand the role screens play in increasing their base sales.”
Hayes said that while linear TV viewership is in decline, it still reaches over 4 million households across Australia, with the generation that grew up with linear TV trusting it above all other media while possessing the attention span for a 30 second ad spot.
"That’s a lot of people and a lot of attention,” he said.
“It’s also still more affordable than CTV at scale. While I don’t believe it will grow at the cost of CTV, I think it makes sense for linear investment to remain stable or grow if advertisers embrace true Total TV planning, planning to a unified CPM.”
Partnerships helping to drive uptake
Part of the reason advertisers are leaning into the CTV channel heading into 2025 may come down to the raft of recently announced partnerships by adtechs and broadcasters alike.
This year’s Upfronts season saw Foxtel Media announce a partnership with global TV advertising platform tvbeat to convert linear TV spots into digitally tracked and reported impressions, while Paramount used their annual showcase to roll out an expansion to their KERV partnership, scaling the CTV advertising opportunity across key tentpole programs including Australian Survivor and MasterChef Australia.
In recent months, unified advertising technology platform Nexxen has partnered with both music network Vevo - granting a wider variety of advertisers access to its premium inventory, particularly across CTV - and The Trade Desk, allowing advertisers access to automatic content recognition (ACR) data segments, available exclusively from the adtech platform.
Elsewhere, adtech Kargo partnered with Samba TV to enable advertisers to target, measure and optimise reach and frequency across mobile and CTV, building upon Kargo's launch of its CTV advertising solutions in April, and Nielsen expanded its YouTube CTV ads measurement to include deduplication with mobile and desktop devices in Australia.
CTV ‘love affair’ set to continue
Dascanio said that Australia's love affair with CTV will continue in 2025, as adoption has grown significantly in Australia.
“The TV networks at their 2025 upfronts are continuing to announce investment into expanding or bolstering their CTV offerings from SBS OnDemand, Nine Now, and Foxtel,” she said.
“What I feel will impact CTV growth the most is that consumer experience increasingly drives CTV’s adoption, so the issues of frequency capping and ad load are critical.
“Advertisers and platforms need to balance engagement with viewer satisfaction, as there is appetite from consumers to pay a premium to avoid ads, which could limit CTV’s growth if left unaddressed, and I’ll be very interested to see how the networks address this while competing with SVOD giants.”
O’Brien also said that momentum surrounding CTV investment will “surely” carry into next year, with Frontier already planning CTV activations for a number of clients aiming at early 2025.
“One of the driving factors is that demand for CTV is coming from both historic linear TV spenders and also advertisers who had not previously considered TV at all,” he said.
“For example, we are talking to brands that are big TV spenders looking to continue to diversify investment across new VOD sources. Beyond this we are also more and more frequently in consultation with brands looking to test TV for the first time, given the addressability benefits and innovative targeting capabilities now found across CTV.
“CTV measurement is certainly still a sticking point, but it’s improving.”
Hayes said that client investment tends to follow consumer eyeballs and CTV consumption continues to grow rapidly in Australia.
“Smart TVs are now in 78% of Australian households and video advertising grew almost 20% in 2024,” he said.
“We’ve seen big moves on the publisher side to capitalise on this growth. Both Netflix and Prime introduced ad-tiered subscription offers – and in the case of Netflix it reversed stagnant subscriber and revenue growth - and Ipsos iris expanded to include YouTube viewing data in Australia, a global first for independent measurement across the platform.
“I think how we buy in 2025 will be the big difference. While some might argue that the boom in programmatically traded CTV in the last year has underscored a number of trading complexities and hurdles, I think this is merely the teething problems of a fast-growing CTV market.”
Hayes said he feels that the industry has a “bit of a mental block” as to how it approaches digital media that lives in a traditional media space.
“When CTV was an emergent technology, our approach was a tactical one; test and learn budgets focussing on addressability, automatic content recognition etc,” he said.
“While addressability in CTV has felt like a long promise (remember the good old days of exceeding your BVOD weekly frequency cap in one ad break?), the IAB’s Ad Creative ID Framework will build on the great work that the OpenRTB project has done in making the ad experience across VOD a far better one.
“In 2025, those buying CTV will continue to embrace the tactical and addressability opportunity CTV offers, but also grow the investment better aligned with reach and frequency across all screens.”
Hayes said that the The Trade Desk’s growth into independent agencies, alongside products like Nexxen’s Converged Planner, will give more indies new tools and technology to simplify and better plan CTV, making these easier and more accessible than ever.
“And Foxtel’s move away from VOZ will set a change in motion in the inventory we consider for total TV planning,” he said.
“FAST channels like Samsung TV and AVOD channels like Tubi will see a growth in investment as we let go of what we prescribe as premium and embrace essentially what is consumer taste. I think considerations like ad load and new placements like high impact TV will further expand inventory choice as dollars grow.
“Consumers turn on their TV and select the channel app they want to watch. They aren’t sitting there thinking ‘I’m going to engage in some ad-supported, live linear-streamed sport’ - they simply want to watch the Eurocup. I’d bet you most consumers selecting a BVOD app on their smart TV don’t know there’s a difference between that and linear. They’re simply watching Nine. I think our buying in 2025 will start to reflect this.”
Allison said MAGNA expects the market to increase spend on CTV as advertisers seek incremental reach in quality content.
“As the CTV market matures and scales with new entrants we’ll also see CTV costs drop from the initial inflated range,” she told AdNews.
“We expect growing buyer confidence to navigate new measurement and currency methodologies, and increasingly rely on outcome based planning to support new CTV trading and cross screen optimisation.”
McNerney said Yahoo also expects continued growth in CTV ad spend heading into 2025, as with US-based streaming platforms expanding locally and the rise of ad-supported streaming driven by subscription fatigue, CTV consumption will keep increasing with spend expected to surpass that oflLinear by 2028.
“In Australia, innovations around ratings and measurement with VOZ and ACR are giving marketers a more holistic view of audience reach across both CTV and linear,” he said.
“But that’s not to say there aren’t still a number of established broadcasters that continue to rely on legacy demographics. These companies have made significant investments in linear TV, especially in markets like the US.
“In Australia, however, the focus is clearly shifting towards CTV, and we expect that trend to continue for the foreseeable future with premium and live content coming through FAST players.”
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