Marketers Slicing from TV Budgets for Online Video in 2012 Brace yourselves, TV networks. About two-thirds of marketers say they’ll increase their budgets for online video advertising in 2012, and some of them will be snagging that money from the TV ad budget.

1. Digital Video
Advertising Trends:
2012
An annual study examining growth in
digital video advertising
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2. About the Study Executive Summary
Digital video advertising is growing strongly with Forrester predicting U.S. online video ad spend will reach › Nearly 3 in 10 advertisers spent more than they planned on video ads in the past 12 months.
$5.4 billion by 2016 (from $2.0 billion in 2011). As audiences flock to content offered by digital video
› In the coming year, 68% of advertisers will increase the share of online display advertising devoted to video ads—from 27% to
platforms, marketers are increasingly under pressure to find and reach this new breed of consumer by 35% of their online display budgets.
utilizing innovative technologies, tactics and creative executions. As such, video
“
› Advertisers increasing spend in the next year say the dollars will come from non-video display budgets (45%), overall advertising
advertising has become a driving force behind the ongoing metamorphosis of the
Break Media budget growth (38%), and television budgets (32%).
digital media landscape.
partnered with › Awareness of individual video advertising networks (VANs) has increased dramatically in the past year with a concurrent
market research increase in usage; 73% now use VANs compared to 65% last year.
leader Advertiser Break Media partnered with market research leader Advertiser Perceptions Inc. for its
› Over 90% of advertisers plan to use VANs in the coming year and increase the share of spend placed with these entities, from
Perceptions Inc. second in-depth study of digital video advertising. Our goals were to look how advertis- an average 20% to 41% of total video dollars.
ers planned video ad spend in 2011 compared to their actual spend, what formats
› VANs are viewed as strong in the areas of Reach, Campaign Performance, Targeting, Creative Optimization, Cost, Reporting
and practices are growing, and how and where advertisers plan to place video ads the next 12 months. Tools, ROI Metrics and Innovative Video Ad Formats. VANs weaknesses are viewed as publishers strengths—Content, Inventory
Quality, Client Service and Inventory Transparency.
The past few months has produced a wealth of studies on the video ad industry. Each focuses on a › Use of mobile, full-screen expandable banner, videostitial and ad selector formats increased two-fold in the past year; mobile, ad
different aspect of the industry including how advertisers use digital video in their overall advertising selector and TV box formats are slated for big gains again in the coming year.
strategy, how publishers partner with video advertising networks to better monetize inventory, and how › Advertisers continue to be strongly wedded to pre-roll preferring it by a 3:1 margin over the next most favored format.
advertisers view television ads vs. digital video ads. We’ve chosen to focus on larger trends affecting the
› The pricing models available for video ads are equally preferred by advertisers, yet Cost per Thousand (CPM) and Cost per Click
video ad industry and how tastes and preferences are changing the advertising world. (CPC) are the models most often offered.
› Use of Cost per View (CPV) increased two-fold in the past year to 40%, but many say they did not use CPV because it was not
We hope you find this study useful heading into 2012 and look forward to hearing your feedback as well offered by the publisher or VAN.
as the opportunities and challenges you face in the digital video space.
› Advertisers rank Difficulty Measuring ROI, Lack of Standardized Metrics, Not Enough ROI, and Lack of Transparency equally as
the greatest hindrances to use of video. Transparency was not cited as an issue in last year’s study, and its rise in importance
most likely results from increased use of VANs.
1 2

3. Spend Grows Faster
Than Expected
Advertisers’ spend on video ads appears to be growing much faster than last year’s study
indicated, with nearly 3 in 10 advertisers spending more than planned in the past 12
How did actual spend 29% SPENT
MORE 57% SPENT
PLAN 14% SPENT
LESS
“
on video ads compare
months. In the coming year, 68% of advertisers will increase the share
Nearly 3 in 10 to planned spend?
of online display advertising devoted to video ads with the Home
advertisers spent Furnishings, IT/B2B, Alcohol, and Women's Apparel sectors showing
more than they higher growth compared to other sectors. Advertisers increasing their
planned on video video ad spend in the next year say the dollars will come not just from
non-video display budgets (45%) and overall advertising budget growth (38%), but also
from television budgets (32%).
Dollars for increased video spend to come from…
Video Share of Online Display Budget
27% 35% 45 % 38% 32% 25% 16% 5% 4%
NON- SOCIAL
ONLINE TV
ADVERTISING MEDIA
2011 2012
DISPLAY
AD BUDGET PRINT/
SEARCH
GROWTH OUTDOOR
3 4

4. Video Ad Networks Have VAN Strengths
Joined the Party Reach
Campaign Performance
Last year we found moderate awareness of even the largest video ad networks
Spend with VANs 201 2 Targeting 2 01
(VANs). What a difference a year makes, with awareness of these entities 2
11 Creative Optimization
“
having grown two-fold in some instances. Use also has
2012 20
8%
Cost/Price
92%
grown with 73% now using VANs compared to 65% last 2011
Next year 92% of
27%
Reporting Tools
year. Next year 92% of advertisers plan to use VANs and
advertisers plan
20
ROI Metrics
increase the share of spend placed with these entities from
41
11
to use VANs
73%
Innovative Video Ad Formats
an average 20% to 41% of total video dollars. Larger than
20% %
0
2 01
35%
average increases are expected from the Home Furnish-
ings, IT/B2B, Pharma, and Travel sectors. Increased use of VANs appears to be
201 0
motivated by their greater range of strengths compared to publishers. % WHO WILL
NOT USE
VANS
% WHO WILL
USE VANS 65%
159.1 Million
IN A SINGLE SPENT WATCHED
MONTH people in
the US
3.2 Million
minutes
7.5 Billion ads
(that’s 50 per person) 80 + % Of Which
Ran through VANs
5 6

5. Video Ad Formats Used / Plan to Use
USED 2011 PLAN TO USE 2012
Pre-roll Has Competition 62%
But Still Takes the Crown PRE-ROLL
39%
63%
MOBILE 55%
The past year saw almost two-fold increases in the use of mobile,
PRE-ROLL
full-screen expandable banner, videostitial and ad selector formats. Use 59%
“
IN-BANNER
of these formats will continue to gain again in 2012 53%
Advertisers are based on advertisers’ plans. But as we found last EXPANDABLE BANNER 47%
31
strongly wedded year, advertisers are strongly wedded to pre-roll (PARTIAL SCREEN) 47%
to pre-roll
%
preferring it by a 3:1 margin over the next most
RICH MEDIA 38%
favored format. OVERLAY 45%
EXPANDABLE BANNER 37%
(FULL SCREEN) 43%
IN-BANNER
10% AD SELECTOR
18%
33%
VIDEOSTITIAL 28%
EXPANDABLE BANNER 33%
7%
(PARTIAL SCREEN)
24%
9
MID-ROLL
29%
%
27%
POST-ROLL
RICH MEDIA
OVERLAY 8 %
8% 25%
29%
IN-TEXT
26%
AD SELECTOR
MOBILE
12%
7 CONNECTED TV 8
24%

6. Advertisers Can’t Always
Get What They Want Pricing Preferred vs. Pricing O ered
Pricing models for video ads offered to advertisers do not necessarily match their PRICING USED PREFERRED PRICING
preferences. The various pricing models available for video ads are equally
“
Some did not use
CPV because it
preferred by advertisers, yet Cost per Thousand (CPM) and
Cost per Click (CPC) are the models most often offered.
Although use of Cost per View (CPV) increased two-fold in the
wasn’t o ered past year to 40%, many say they did not use CPV because it
was not offered by the publisher or VAN.
69% 80%
53% 60%
40%
34%
25 %
37% 40%
21 %
20%
19% 18% 17% 16%
8%
COST PER ACQUISITION COST PER ENGAGEMENT COST PER THOUSAND COST PER VIEW COST PER CLICK COST PER DAY / ROADBLOCK
9 10

7. VIDEO ADS IN CONTEXT
Inventory
Transparency Hindrances to Use of Video Ads
Video Ads Are Deployed With…
Now an Issue
Difficulty Measuring ROI stood out above all others last
42% 40% 67%
NON-VIDEO
48%
TV
40%
STAND-ALONE
36%
SEARCH ENGINE
28%
PRINT/OUTDOOR
year as the strongest hindrance to use of video ads. This
“
DISPLAY CAMPAIGNS MARKETING
year it ranks equally with Lack of
CTR and actual Standardized Metrics, Not Enough DIFFICULT TO LACK OF
TV No Longer the Neighborhood Bully
TRANSPARENCY ON
sales are top ROI and Lack of Transparency. The MEASURE ROI
AD PLACEMENT
success metrics rise in Transparency as an issue
TV SHOWS GENERAL NEWS
most likely results from greater use MOST PREFERRED
POP CULTURE ENTERTAINMENT NEWS
of VANs, which are perceived as weak on this
characteristic. Advertisers may be frustrated with
metrics because they view click-through rates (CTR) as a
success measure of equal value to actual product sales
38% 35% SECONDARY PREFERENCES
BUSINESS/FINANCE
WEB ORIGINALS
SOCIAL MEDIA
CONSUMER-GENERATED
TECHNOLOGY
SPORTS
and site visits. It has been argued that CTR—at least
LACK OF NOT ENOUGH ROI
when used in isolation—is not necessarily the best way STANDARDIZED
METRICS MUSIC GAMING
to measure video ad success. [1] LEAST PREFERRED
HUMOR MOVIES
Methods for Measuring Video Success
39% 38% 35% 30% 29% 22% 20% 19% 19% 17%
CLICKTHROUGH RATE ACTUAL PRODUCT VISITS TO THE BRAND BRAND AWARENESS VIDEO COMPLETION REACHED TARGET SOCIAL ENGAGEMENT TIME SPENT NUMBER OF TIMES INTENT TO PURHASE
SALES WEBSITE OR RECALL RATE AUDIENCE (SHARING/LIKES) WATCHING VIDEO VIDEO WAS VIEWED
11 12
1: Video’s Great CTR Debate: Can predictive analytics bring enhanced value to digital’s hardest working metric?, TidalTV, June 2011.

8. Study Methodology Contact Information
Study findings are derived from an online survey completed by 320 persons working for advertising agencies and the Press
companies that hire them (i.e. marketers) in the United States and Canada. Respondents were solicited from the Dale Legaspi, Press Manager
press@breakmedia.com
Advertiser Perceptions Inc. proprietary database of media decision makers and offered a cash incentive for survey
completion. All respondents are involved in the decision-making process for choosing what types of online media will be Research
included in advertising campaigns. They work for companies spending a minimum of $1 million annually on online Andy Tu, Vice-President Marketing
advertising. Survey results have a margin of error = ± 7%. atu@breakmedia.com
Sales
Andrew Budkofsky, Executive Vice-President Sales & Partnerships
andrewb@breakmedia.com
Glossary
Agency
Company engaged in advising clients on where
Non-video display ads
Online banners, non-video rich media, and About Break Media
to spend their advertising dollars text-based ads
Break Media is a leading creator, publisher and distributor of digital entertainment content including video, editorial,
Display ads Publisher
and games. The company's properties include the largest humor site online—Break.com—as well as MadeMan,
Online banners, non-video rich media, Company that owns and operates websites
text-based ads, and video ads consisting primarily of content GameFront, HolyTaco, ScreenJunkies, CagePotato, AllLeftTurns, Chickipedia, and TuVez. The Break Media Creative Lab is
an in-house production studio creating original videos that range from award-winning branded entertainment to
DVA VAN
celebrity-driven web shorts to viral one-offs. The Break Media Network represents hundreds of publishers as one of the
Digital video advertising; any online video ad Video advertising network; company engaged in
distributing video ads across publishers’ websites largest video advertising networks online, reaching more than 120 million visitors each month. For more information,
excluding rich media
visit www.breakmedia.com.
Marketer
Company that advertises its products or services
(including in-house agencies)
13 14

9. Distribute Create Activate
Metrics from last year’s Digital Video Advertising Trends report have been featured in the New York Times, eMarketer,
MediaPost, ReelSEO, Beet.TV and other industry publications.
Copyright 2011 ® by Break Media
www.breakmedia.com