While traditional advertising outlets – newspaper, radio and TV – are slowing down with decreases in advertising revenue over the last several years, video pre-roll is taking off. In fact, an article by eMarketer concludes that by 2020, TV’s share of ad spending will drop below one-third and total digital ad spending in 2017 will equal 38.4% of total ad buys. Here are some key drivers of video pre-roll advertising growth and what you can expect for the future of this space:
- 65% of U.S. marketers plan to increase their mobile ad budgets to account for video according to eMarketer.
- 76% of marketers plan to increase their use of YouTube and video marketing, reported by Social Media Examiner via Envisa
- Video ads make up 35% of total online ad spending according to Break Media
- 87% of online marketers use video content according to Outbrain
Forbes agrees that video pre roll will change the way that marketers are targeting audiences stating, “In the United States alone, brands and agencies are expected to increase their programmatic video budgets from $630 million in 2014 to $7.3 billion in 2017, representing a staggering three-year compound annual growth rate of 127%.”
A recent Business Insider Intelligence report identifies key trends influencing this growth, including:
- Video ad views are on the rise, with an average click-through rate of 1.84%, the highest of all digital ad formats.
- Digital video analytics continue to improve, offering marketers even more insight into audiences and ad effectiveness.
The report also states that “online video ad revenue will reach nearly $5 billion in 2016.” We think another key growth factor here is that more viewers are watching programming online – whether through network websites (like NBC.com and bravotv.com) or subscription services, such as Comcast OnDemand and Hulu.
And, of course, there’s the old marketing adage that you want your brand’s advertisement as close to the point of purchase as possible. And where are today’s consumers making a huge chunk of their purchases? That’s right: online. It would seem to make sound strategic sense to invest video advertising dollars where the option to buy is just a few clicks away.
Sneak Peek at the Future of YouTube (and Video Ads)
When Google decided to buy the video search engine YouTube in 2006 – for a hefty price tag of $1.65 billion— many scoffed. The Tube then had no revenue and was “embroiled in copywriting disputes.”
No one is scoffing today, however – especially not Google. The search giant now relies on the ad revenue from YouTube. And with the continual growth in online video advertising, YouTube’s future is looking brighter than ever.
Many interesting facts have been uncovered providing some impressive pre-roll advertising statistics, as well as future plans that could impact all video pre-roll marketing:
- 72 Hours of video are uploaded to YouTube every minute (source: YouTube
- The average user spends over 16 minutes watching online video ads every month (source: ComScore)
- Including video on a landing page can increase conversion by 80% (source: Unbounce)
So what’s on the horizon for YouTube – and perhaps even digital video ads as a whole? First and foremost, a subscription model. This experiment is part of YouTube’s efforts to generate more revenue and more professional content – along the lines of Amazon’s “Transparent” or Netflix’s “House of Cards.” A second strategy, called Google Preferred, allows companies to target just the site’s most popular content across a variety of categories.
So what does all this add up to? Marketers shouldn’t roll their eyes at the idea of a commercial spot that lives exclusively online. This seemingly unlimited media outlet will only continue to gobble up a larger piece of the marketing mix pie. It’s time to pick up your fork and dig in.
Courtney Olbrich
Media & Analytics Director
Courtney is our Media & Analytics Director, located in our Myrtle Beach office. She has over 20 years of experience in marketing and advertising, with a wide variety of clients. Hailing from Metro Detroit, Michigan, it comes natural that she is an avid sports fan. So much so that all of her pets are named after professional baseball stadiums!