David Hallerman | eMarketer | State of the Online Video Market: Big Growth Ahead

VIDEONUZE
ONLINE VIDEO
ADVERTISING
SUMMIT
J U N E 1 9, 2 0 1 2

State of the
Online Video
Market:
Big Growth Ahead (but
let’s keep perspective…)

David Hallerman
Principal Analyst
©2012 eMarketer Inc.

How big will the digital video ad market
really become over next few years?

Online video
advertising
growth rates
might peak
this year and
then slow
down, but
spending
will double
in two years


Video ad
spending
gains will
come in part
from the
shifting
display ad
category


Online video
ad spending
will grow far
faster than
TV spending,
but growth
alone can be
somewhat
deceptive


While online
growth rates
beat out TV,
$4.1 billion
new dollars
will flow to
TV in 2012
vs. only $1.2
billion more
to digital


Digital video
in 2013—
nearly 10%
of online
total, but
advertisers
will spend
$100 on TV
for every
$6.90 on
digital


The still
imbalanced
market can
sometimes
be a little
crazy-making
for many in
the digital
video space


Several key factors will help or
hinder US digital video ad spending

We’ve identified 16 forces, including…
 CTV and tablets: best for the audience
 Fear: of cannibalization and lost revenues
 Inertia: TV’s power appears everlasting
 Audience: large online, but huge TV watchers
 GRPs: common currency, but dumb down digital
 Targeting: digital’s promise, but TV more reach
 Content: TV content still attracts brand dollars


Connected TVs superbly combine the
strengths of digital and TV
The best of television and digital video attracts
both audience and advertisers.


Tablets are major game changers for
both audiences and advertisers
Digital marketers believe that tablets provide
the best advertising experience.


Mobile video
ad spending
will rise by
triple digits
this year and
by over 93%
next year


However, the
mobile ad
market is
mainly
search and
banners,
with a tiny
slice going
to video


Comparing
growth vs.
dollars
shows
mobile video
growing far
more but 8X
more money
will go to
desktop
video ads


As seen on the web? (Nah!) TV’s power
is still unmatched for many goals


Extra costs for unique online
A sample of creative discourage many
marketers from making the most
TV’s power: of digital’s strengths.
Digital video
still depends
greatly on
TV creative
(that will
change, but
not quickly)


The TV industry fears digital video will
cannibalize its existing business

Many TV companies have a vested interest in
keeping digital video from undermining their
current revenue streams. Their tactics include:
 Bandwidth metering, also called data caps, could
make digital users think twice before watching another
video, since that would cost them extra or degrade their
service. Furthermore, bandwidth metering is already a
fact of life in the mobile space.
 Authentication. TV networks and cable operators
might require users to prove they are paying subscribers
before they can access video online, such as on Hulu.


The digital video audience is both very
large and somewhat illusory
Most people still spend the vast majority of
their video time in front of the TV.


Why do many people use social
The digital media while watching TV?
portion of a To get more information.
video ad
campaign
would often
do well to
expand on
the message
“as seen on
TV.”


Measurement difficulties mean what
can’t be measured can’t be sold
Most brand marketers want unified TV and
video metrics before spending more on digital.


GRPs offer a common currency to bring
digital and TV together, and yet…
Many marketers say GRPs dumb down digital,
failing to measure engagement and interaction.


TV forever? Containers may change, but
the content basically remains the same


Blending online video with TV—and thereby
boosting digital’s growth—will be slow

It will take several years for digital video to
integrate more completely with TV advertising.
 But time is on digital’s side. The five digital screens
are where the audience increasingly watches TV and other
video content, and brands need to reach them anytime
and everywhere.
 Marketers get balance. Blending digital video into
their TV messaging offers:
 a way to reach audiences they might not have touched otherwise
 a way to engage target customers in ways that TV doesn’t allow
 a way to make their spending more cost-effective

© 2012 eMarketer Inc.

David Hallerman | eMarketer | State of the Online Video Market: Big Growth Ahead

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David Hallerman | eMarketer | State of the Online Video Market: Big Growth Ahead