Online video: eyeballs, headlines and ad dollars

"Airport" by .michael.newman (Michael Newman). Used under a Creative Commons License.

(Photo by .michael.newman)

There’s been one news story after the next about online video.

The stories have ranged from Netflix and Amazon expanding original programming for their respective streaming services (“Arrested Development”, etc.) to DreamWorks Animation buying a YouTube video creator (Awesomeness TV) for $33M, to the ongoing bidding war for Hulu.

Two news stories that especially caught my attention highlight the mainstreaming of mobile video viewing:

  • Verizon Wireless paying $1 billion for rights to expand the NFL games its customers can view via smartphone
  • Twitter and ESPN expanding their collaboration to distribute (and monetize) sports highlight clips

The underlying situation is that online video viewership continues to explode, and more and more of this viewing happens on mobile devices.

Regarding the first part, the numbers are staggering:

  • comScore recently reported that 181.9 million Americans watched 38.8 billion online content videos in April 2013
  • YouTube’s monthly global audience is now 1 billion unique visitors. According to YouTube’s official blog, this audience watches “more than 6 billion hours of video each month on YouTube; almost an hour a month for every person on Earth and 50 percent more this year than last.”

The shift to mobile is also remarkable:

  • YouTube says that its traffic from mobile devices tripled in 2011, and 25% of global YouTube views now occur via mobile

It doesn’t require a crystal ball to see that news about the online video industry will continue to come rapidly. It’s a young, growing industry with a shifting landscape (e.g., Viacom’s recent licensing of exclusive streaming rights for Nick Jr. content such as “Dora The Explorer” to Amazon).

One story we’ll surely hear more about:  increased ad dollars flowing to online video.

The shift of ad dollars from TV has been on the slow side but that’s changing as more advertisers are becoming – or are being made to become – more comfortable with online video. Inevitably, as the saying goes, ad dollars follow the audience.

eMarketer estimates US digital video ad spending will more than double from $4.14 billion in 2013 to $9.06 billion in 2017.

Truck loads of cash heading toward Mountain View

Google should continue to be a big winner in the competition for these growing ad dollars. Foremost because they own YouTube, the single largest platform, but also because of their existing search-ad relationships.

And very importantly to me as an advertiser, they offer the most innovative ad products. (I previously posted a similar opinion)

These products belong to YouTube’s TrueView category of video ads, a distinguishing feature of which is that advertisers only pay when viewers don’t choose to skip their ads.

An example TrueView ad format I particularly like is called “in-stream.” These ads appear before or during another video on YouTube. Viewers are required to watch the first 5 seconds of the video ad, and then have the choice of continuing to watch it or to skip it. Advertisers only pay when a viewer watches for 30 seconds (or to the end of the ad if its length is less than :30). So if an advertiser puts a 30-second ad on the platform, costs are only incurred when 100% of the ad is streamed.

Add robust geographic-targeting options, view-to-conversion tracking capability and the ability to test campaigns with minimal budget, and I have to wonder why advertisers wouldn’t initiate a test campaign with YouTube.

I believe more and more advertisers will start placing TrueView ads once they understand the program better — perhaps driven by more aggressive selling by the AdWords sales team.

As advertisers become more comfortable with the ad formats, a likely result will be the development of more creative customized for online viewing. For example, front-loading content specifically aimed at preventing viewers from hitting the “skip ad” button right after the mandatory 5 seconds of in-Stream ads.

It’s hard for me to imagine Google not gaining a significant revenue boost from the shift to online video advertising in the coming years (especially since I believe the budgets are more likely to transition out of traditional ad formats than out of other digital ads such as paid search).

2 thoughts on “Online video: eyeballs, headlines and ad dollars

  1. Pingback: $hift to Digital | The Contrast Principle - Joshua Cole

  2. Pingback: Video ads poised for takeoff | The Contrast Principle

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