Online video advertising is growing faster than China’s Olympic medal tally. Spend on online video in the US hit $2 billion last year, according to eMarketer. Forecasts for this year range from $3 to $4 billion. So what is driving this explosive growth?
Break Media is a creator, publisher and distributor of digital entertainment and a video advertising network (VAN). Their annual look at online video advertising trends
tries to get to the bottom of the growth story by surveying ad execs to find out why and how they are turning to video. So what did they find?
Video is stealing share from other display formats - even TV
29% of advertisers spent more than they planned to on video in the last 12 months. Overall video now represents 35% of display spend, vs. 27% in 2011. Of those who spent more on video than they expected 32% of that increase actually came from TV. Here at Videomind we don’t think this will be the last we hear of this convergence story. TV currently rakes in around $70 billion a year vs. online video’s $2-$4 billion, so there’s plenty of headroom for further growth.
Video ad networks are growing in popularity
Last year 65% of advertisers used a video ad network (VAN) to buy their online video; this year it’s 73%, and next year 92% plan to. What’s more, last year advertisers only placed 20% of their online video spend through a VAN, whereas this year it’s 41%.
According to comScore’s June online video report
BrightRoll, Adap.tv, TubeMogul, Tremor and SpotXchange are the five biggest ad networks and exchanges in the US. But Google Sites and Hulu still outgun most of them in terms of video ads viewed, at positions one and three, respectively, in the ranking. So the race is on between the content owners doing their own thing and the ad networks looking to aggregate advertising to be served across sites.
Pre-rolls are winning. But for how long?
Pre-roll remains the most popular format with advertisers, with 63% of advertisers using it. But this is flat on the previous year, whereas other formats -- particularly midrolls -- saw some impressive growth. (See VideoMind’s recent interview with Freewheel VP JoAnna Abel
.) Notably, mobile, ad selector and connected TV formats saw big increases in advertiser use.
Pricing and ROI measurement options: Advertisers don’t know what they want, or can’t figure out how to get it
The study found that advertisers demonstrate no strong preference for pricing models, and that pricing model selection therefore tends to be driven by what is readily available. It also found that ten different measurement methods were used by between 17% and 39% of respondents. Unsurprisingly, given this variety of metrics and pricing options, the three most common reasons advertisers gave for holding back on video were 1) difficulty of ROI measurement 2) lack of transparency on ad placement and 3) lack of standardized metrics.
Expect more growth with online video advertising as the devices, content and ad infrastructure matures in the coming quarters.