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Did you know that online video ads account for just 1% of total video viewing time in a typical month? While the debate rages regarding the risk of trading traditional dollars for digital dimes, it is easy to miss that the tonnage does not give digital a fighting chance in the first place. Even taking into account the higher brand favorability metrics relative to traditional channels that are commonly observed with digital video campaigns, something more is needed to bridge the gap and to help video take its place at the table.
Video as a platform has consistently shown impressive growth across a range of viewing metrics, both here in the US (as well as in all the countries that we measure including Canada, UK, France, Germany, China, Japan, Hong Kong, Malaysia, Singapore and Australia). Below are several key metrics demonstrating the growth in U.S. online video consumption:
In addition, the growing engagement with video can be seen across all age groups, not just millenials – though 18-34 year olds are growing at the fastest rate.
So with all these positive growth indicators in terms of viewing, what is the current state of online video advertising?
Eager to expand both audience size and time spent viewing, video sites have erred on the side of fewer ads so as not to disrupt viewing or give the user any reason to navigate away. This is particularly noticeable on sites with long format TV content, because the contrast in ad loads to the same program on television are so marked (typically about 25% of TV ad loads make it online, with video ads comprising 6-8% of viewing time online on sites that focus on long format TV programming).
However, although audiences continue to grow in both size and engagement, this approach has resulted in challengingly low ratios of ads to content, and a business model around online distribution of TV programs that is difficult to sustain for many content providers. This is true despite the fact that online video is achieving higher CPMs than TV in many instances due to single pod placements, less clutter, high demand, greater innovation in ad units and creative quality and strong engagement.
While we are not suggesting that the ad load should merely replicate TV, based on the findings about how little advertising there really is, there is definitely room for growth in terms of increasing ad loads. The other important opportunity lies in standardizing a few key video ad formats that will simplify video ad ops and provide scalability across multiple publishers and ad networks. The IAB has suggested guidelines, and there are also some interesting developments in this regard from Vivaki’s The Pool and their ad selector product. High quality video creative (created with the online platform in mind as well as having at least the same quality as the programming surrounding it) will also become increasingly important.
We recently introduced video ad reporting for our Video Metrix service in order to bring further transparency into industry trends such as ads to content ratios, ads per content minute, and overall reach of video advertising. As viewers continue to time shift and platform shift, we need greater understanding of how video advertising currently works, what online publishers are currently doing, and where the opportunities for future growth lie. This all starts when we can innovate and experiment from a baseline understanding of the video ads that are reaching consumers.
