Online Video Advertising Starts Looking Good
Turning the volume up
Substantial growth for online video advertising depends on the audience and the inventory—enough people to watch the ads and enough space to encourage mass marketers to buy the ads.
"With 67% of all Internet users now viewing some form of video advertising—in-stream, in-banner or in-text—at least once a month, the audience has reached critical mass," says David Hallerman, senior analyst at eMarketer and author of the new report, Video Advertising Growth Factors. "At eMarketer, we are estimating that by 2012 four out of five Internet users will view video ads, and that means the ads will be ubiquitous."
eMarketer projects that 129.5 million people will view online video ads this year, and that number will rise to 183.3 million in 2013.
"Another key factor in the growth of video advertising will be an increase in the amount of trusted, professional-quality video content,” says Mr. Hallerman, “which will attract a broad base of viewers and give brand marketers the mass reach they seek."
Currently, short-form videos are what consumers respond to online, but the problem is they are typically too short to run along with more than a 15-second ad, and even that can be too long.
"The growth of long-form video online—defined as TV episodes, Web-only shows, complete sports events and full-length movies—will create a wide range of inventory," says Mr. Hallerman.
While long-form Internet video will not supplant television, it supplements it in two key ways:
It shows elements that are not covered fully on the tube, such as with the Olympics or the national political conventions.
It expands the audience. For example, Olympic Website traffic peaked at noon, undoubtedly when many people were at work.
"Even so, even with the positives, media companies' fear of cannibalizing their legacy business model will slow placement of video assets online," says Mr. Hallerman.
Video Ad Spend: Building to Steep Growth
Two-year countdown to massive growth
If eMarketer’s original estimate of $1.3 billion for video ad spending in 2008 appears to have been off the mark, the question is more a change of methodology than of perspective. That is, the basis has changed, but eMarketer’s prognosis for online video advertising has not.
It now appears that the market will take until 2010 to surpass the $1-billion mark. Beyond 2010, huge additional sums will go to online video advertising each succeeding year. Two essential factors will support that growth: more trusted video content to sustain advertising and more large advertisers (brand marketers, mainly) seeing enough scale to enter this market in a big way.
While only 2% of total Internet ad spending will go to video in 2008, that share will be nearly five times higher by the end of 2013.
Further, as total Internet ad spending approaches total television ad levels in 2013, it will become commonplace for TV network ad sales to be a two-way play, with media buyers looking to both online and TV for most campaigns, even in the upfront market.
Agencies and brands from all verticals rely on eMarketer Total Access for analysis and data. Daily articles are just the tip of the iceberg. Find out what you are missing. Learn more about Total Access today. [eMarketer]
Video Advertising CPMs
Bottom line: Video ads generate more revenues.
While the CPM pricing model is the method marketers use the most to buy video advertising, it is necessary to discuss it with a few caveats:
- Advertisers rarely reveal exactly what they pay for ads, and publishers hardly ever let on exactly what they charge.
- The cost of ads is based on at least two factors: the rate card cost and the discounted cost, which changes based on inventory, timing and customer. Typically, the data here does not indicate which cost—rate card or discounted—is being counted.
- Even when the ad prices are essentially accurate, they are averages.
Bain and Company recently polled seven Web publishers for the Interactive Advertising Bureau (IAB) and found that all of them listed higher prices for online video advertising than for display (banner) ads. On average, the video CPM was approximately $43, or about three times higher than the $15 average CPM for display ads.
That basic pricing dynamic is a prime mover for publishers to offer more video content that can support more video ad inventory.
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How Many TV Ad Dollars Can Online Video Advertising Grab?
Focusing closely on spending.
The frequently asked questions swirling around US Internet video advertising can be funneled into two main streams: One, why has online video ad spending not grown as swiftly as predicted? And two, when will it take off?
To answer the second question first, this year's 55.9% increase in online video ad spending is a key indication that the channel is at least gaining speed—accompanied by parallel growth in the kind of trusted video content, such as sports, to support it.
"By 2012—when both traditional and alternative media companies will be distributing far more professional-quality video content online, and when the national elections and the summer Olympics will contribute far more to video ad spending than they will in 2008—annual growth will peak at 78.9%," says David Hallerman, senior analyst at eMarketer and author of the new report, Video Advertising Online: Spending and Pricing.
NBC's results for the Beijing Olympics underscored video's increasingly central place on the Internet and the still-problematic position of video advertising.
"With record traffic to NBCOlympics.com, the online portion of the games looked to be a major success. At the same time, eMarketer estimates that the site collected approximately $5.75 million in video ad revenues, or about 1.1% of this year's $505 million total video ad spending," says Mr. Hallerman. "That revenue—both substantial for one site in only 17 days and insufficient for an event of Olympian magnitude—illustrates the market's growing pains."
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Online Video Ad Outlook Still Optimistic
Increased viewership, tolerance for ads. The online video advertising predictions keep coming.
Video ad company LiveRail predicts that online video ad spending will near $1.4 billion in 2010, up from $619 million in 2008.
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The company said that online video still represents only 2.4% of all online ad spending.
eMarketer's own analysis, which considers predictions by multiple firms, puts online ad spending in 2010 at $1.15 billion, up from $505 billion in 2008. Similarly, online video represents only 2% of total online ad spending as of 2008, but will approach 10% in 2013.
Most online video ad spending predictions released in the past year are at least somewhat optimistic, and it is easy to see why. More than one-half of US consumers currently watch online video, and by 2012 nearly nine out of 10 Internet users will do so.
Online households surveyed by The Conference Board and TNS in Q3 2008 said they watched TV online because it was convenient, it allowed them to watch on their own schedule and (of course) it allowed them to skip commercials.
Read more - eMarketer
Online Video Ad Outlook Still Optimistic
Increased viewership, tolerance for ads
The online video advertising predictions keep coming. Video ad company LiveRail predicts that online video ad spending will near $1.4 billion in 2010, up from $619 million in 2008.
The company said that online video still represents only 2.4% of all online ad spending.
eMarketer's own analysis, which considers predictions by multiple firms, puts online ad spending in 2010 at $1.15 billion, up from $505 billion in 2008. Similarly, online video represents only 2% of total online ad spending as of 2008, but will approach 10% in 2013.
Most online video ad spending predictions released in the past year are at least somewhat optimistic, and it is easy to see why. More than one-half of US consumers currently watch online video, and by 2012 nearly nine out of 10 Internet users will do so.
Online households surveyed by The Conference Board and TNS in Q3 2008 said they watched TV online because it was convenient, it allowed them to watch on their own schedule and (of course) it allowed them to skip commercials.
Notably, the percentage of responding households that said they watched online video to avoid commercials was down from Q3 2007. This may reflect a growing realization that commercials are a fair price to pay for quality content, or it may simply be a function of the growing number of ad-supported online videos.
Agencies and brands from all verticals rely on eMarketer Total Access for analysis and data. Daily articles are just the tip of the iceberg. Find out what you are missing. Learn more about Total Access today. [eMarketer]
TV and Online Video: Friends or Foes?
A new blow to the myth of cannibalization
NBC released data last week about both its online and TV Olympics viewership. Based on the numbers, online video increased the network's TV ratings and vice versa.
One-half of NBC Olympics online viewers said they used the Web to catch up with sports they had missed. Another 40% wanted to watch something again they had first seen on TV. Just 0.2% used only the Internet to follow the Olympics.
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"The Internet hardly cannibalizes; it actually fuels interest," said Alan Wurtzel, NBC's president of research, in a conference call with reporters.
eMarketer predicts online video ad spending in the US will reach $505 million this year and keep climbing through at least 2013. Over 50 million additional consumers will start viewing online video ads within the next five years.
Despite healthy online viewership, NBC focused almost exclusively on TV ad sales for this Olympics. The company said it took in $1.025 billion in advertising sales, with nearly all coming from traditional network TV ads. eMarketer estimates that NBC collected $5.75 million from online ads on the NBCOlympics.com site, making NBC's Internet efforts around 0.5% of its total advertising revenue take. [eMarketer]
Online Video Ad Spending Growth
Get ready for a stream of ad dollars.
eMarketer predicts online video ad spending in the US will reach $505 million this year and keep climbing through at least 2013. Over the next five years, growth will peak in 2012 at 78.9% above the 2011 spending level—reaching $3.4 billion.
The rapid growth means that advertisers will spend more than 10 times as much on online video in 2013 as they will this year.
If the saying "advertisers follow eyeballs" is still true for one medium, it is online video. More than one-half of the US population now watches online video, and eMarketer predicts there will be 190 million online video viewers in the US in 2012. At that point nearly nine out of 10 Internet users will be watching online video.
Read more - eMarketer
Perfecting Online Video Ad Tactics
How much does ad format matter?
"Getting Beyond Pre-Roll" was one of the more challenging panel sessions held at the Online Publishers Association Europe conference last week in London.
Although online video ad standards have been established, at least in the US, many questions remain about how such ads may best be used. Panelists were asked how advertisers could best use video formats to engage audiences. The relative lack of breakthrough thinking in this area made for a somewhat subdued session.
Henrique de Castro, head of European sales for Google, stressed the enormous growth in the online video audience recently, but acknowledged that video search has a long way to go in helping audiences get what they want out of it. Mr. de Castro predicted that proper video search would be "sorted" [out] in the next 12 to 24 months, however.
Nada Stirratt, executive vice president of digital advertising at MTV Networks Digital, emphasized that attempting to decide on the best video ad formats was a red herring, because a format viewers found intrusive in one context might be tolerated or even welcomed in another.
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Online Video to Generate Big Bucks
Informa Telecoms & Media forecasts that by 2013, US online TV and video services will generate revenues of $7.9 billion. In 2007, the market was already worth over $1 billion and by 2008, that figure will leap to $4.7 billion.
Though these figures include a la carte and subscription-based download fees, advertising revenue is expected to account for the largest slice at 63% of the 2013 global total.
"The Writers Guild strike brought much of Hollywood to a standstill for several months. The fact that revenues derived from online TV and video were at the heart of the dispute indicate just how important this sector has become," said Adam Thomas, media research manager at Informa.
The UK and Japan are the second and third largest markets, respectively, in terms of online TV and video revenues. In 2008, revenues are expected to reach $842 million in the UK and $605 million in Japan. [eMarketer]
Casual Gamers Like Video Ads
Video ads are an acceptable and even likable accompaniment to casual games, according to a RealNetworks survey of 1,500 RealGames players.
Nearly 90% of respondents indicated they were willing to watch video ads in exchange for free game play.
Almost one-third said they actually liked watching the video ads for various reasons, including providing a short break from game play and being relevant to their needs. In addition, 34% took further action upon seeing an ad and clicked to find out more about the product or service.
Though 55% of respondents were willing to watch any ad, regardless of topic, when given a choice, 55% preferred entertainment-related ads. Hair and skin-care products were preferred by 30%.
Females comprised 81% of respondents and 65% were in the 35 to 64 age range. [eMarketer]
Video Game Hits Keep Coming
US computer and video game software sales reached $9.5 billion in 2007, up 28% over 2006, according to final data compiled by the NPD Group and announced by the Entertainment Software Association (ESA).As NPD had declared previously, 2007 was a record year for US video game revenues.
The ESA noted that "Halo 3," the best-selling title of 2007, took in more revenue in its first day of sales than the biggest opening weekend ever for a movie ("Spider-Man 3") and the final Harry Potter book’s first day sales.
"On average, an astonishing nine games were sold every second of every day of the year," said Michael D. Gallagher, president and CEO of the ESA.
Approximately 267.8 million computer and video games were sold in 2007.
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US Internet Users Are Glued to Video
Young men are the most frequent online video viewers, but US Internet users of all ages are getting into the act. That is the main finding of BurstMedia's "Online Insights" report, conducted in December 2007.BurstMedia found that more than seven out of 10 adult US Internet users surveyed had viewed online video content. A majority of all age segments had watched online videos, including more than half of respondents age 65 and older.
The good news for advertisers is that more than half of online video viewers recalled seeing in-stream advertisements in content they had watched.
But more than three-quarters of respondents said in-stream advertisements in online video were intrusive, and about one-half said advertisements in video content disrupted their Web surfing experience. Women were more likely than men to say advertisements in video content disrupted their surfing.
One-half of respondents stopped watching an online video once they encountered an in-stream advertisement.
More than two-thirds of respondents said they paid about the same or less attention to in-stream video advertisements than to standard creative units on the same page.
Read more - eMarketer
Mobile TV Subscribers to Number 462 Million by 2012
As mobile TV services expand over the next five years, ABI Research sees the total number of subscribers growing to 462 million, driven in large part by the expansion of 3G networks, and flat-rate plans for mobile video. The build-out of mobile video delivery networks and an increase in the amount of available content will also contribute to the market’s growth.“Mobile operators’ sustained investment in video delivery will continue to be rewarded by subscribers’ growing adoption rates, particularly as they upgrade to new video-capable handsets,” says research director Mike Wolf. “Consumers are being increasingly enticed by better experiences through more powerful and larger screens as well as by a widening array of subscription options.”
ABI Research sees the Asia-Pacific region as the overall leader in the adoption of mobile video services. The number of subscribers to mobile video services in Asia-Pacific will grow from 24 million in 2007 to more than 260 million by 2012. High levels of penetration will occur in both Japan and South Korea, each a leading market in mobile video services, while China and India will both contribute significantly to the overall total due to very large subscriber populations, even though the overall penetration of video services will remain much lower than in more technologically advanced countries.“South Korea and Japan will continue to lead worldwide, while some countries in Western Europe will also continue to see strong growth,” notes Wolf. “North America will also see some strong uptake as more services become available in 2008 with the launch of AT&T’s MediaFLO service, the continued expansion of Verizon Wireless’ MediaFLO subscriber base, and the growth of on-demand mobile video services.”
ABI Research’s recent study “Mobile TV Services” provides an overview of the mobile TV and video industry. It not only illustrates the entire ecosystem, but identifies and addresses the unmade decisions facing all players in this arena. From this analysis, it determines the most likely scenarios and constructs fundamental usage and revenue forecasts.
MySpace Introduces Premium Ad-funded Mobile Service
Social networking website MySpace introduced a free, ad-funded mobile version optimized for all U.S. carriers, calling into question the future of premium MySpace services available via AT&T, T-Mobile and Helio.
According to MobiAD Network, the new service enables users to send and receive messages and friend requests, comment on photos, post bulletins, update blogs and search for friends--while advertising will at first remain limited to sponsorships and banner ads, parent Fox Interactive Media said it will eventually introduce more targeted campaigns based on user registration data as well as local ads based on GPS data.
"Accessing the Internet from your mobile phone will soon be as common as text messaging and voice calling," said Fox Interactive's senior vice president of mobile John Smelzer.
At first, advertising will take the form of sponsorships and banner ads. But in the long run, Fox Interactive hope to sell more targeted advertising, using registration data from cell phone carriers. The company also hopes to send local ads based on a user’s location using GPS data sent by the phones.
According to mobile media market research firm Telephia, 32 percent of American mobile social networkers -- defined in the study as users who upload content captured via wireless handset -- cited MySpace as their favorite service, followed by Facebook at 13 percent and Windows Live Spaces at 11 percent.
In Britain, MySpace Mobile is the favorite among 21 percent of the social networking population, followed by Windows Live Spaces at 11 percent. Telephia adds that mobile social networkers are generally much younger than the average mobile subscriber -- 69 percent of all 15- to 17-year-olds surveyed shared photos, videos and other personal content on MySpace sites. [FierceMobileContent]
TV and Movie Sites Are Prime Ad Turf
They're not just for movies anymore.
TV and movie sites are generating the highest advertising awareness among consumers under the age of 55, according to Myers Emotional Connections' "Report on Audience Attentiveness to Advertising."
Myers said that major portals such as AOL, Yahoo!, MSN and other portals were fifth in ad attentiveness overall.
Ad attentiveness varied somewhat by age. For example, Web sites visited for information were ranked highest among 55 to 64-year-olds, but sixth and seventh respectively among Internet users ages 15 to 17 and 18 to 24.
Film sites were also high on Nielsen//NetRatings' March 2007 rankings of top US Web properties.
The Internet Movie Database (IMDb.com), a repository of production notes, credits, reviews and trivia, came in at number 14, with nearly 20 million unique visitors that month. Disney Online was close behind, followed by the NBC Universal site.
In fact, IMDb.com is the top movie site among US Internet users, according to comScore Media Metrix. The research company said that IMDb.com had nearly 19 million unique visitors in February 2007, up from 15 million a year earlier. The other top-ranked sites were also celebrity-driven portals such as Yahoo! Movies and Hollywood.com.
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