Digital Video Ad Spend Is Surging As TV Dips

Marketers are buying digital video ads as fast as publishers can offer inventory for them.

Online video ad revenue will reach $5.6 billion in 2018, up from $2.8 billion in 2013, while TV ad revenue will decline by nearly 13% during the same time period.

Why are video ads compelling to marketers?

They provide a level of visual and narrative richness that nearly equals television, while offering all the advantages of digital, including advanced targeting, tracking, and increasingly, automated buying of video ad units.

In a recent report from BI Intelligence we explore the key drivers of the skyrocketing growth of video ads, examine the cost and performance of the emerging digital ad format, and look at the major players that are shaping the industry. We also examine some of the recent questions that have arisen around viewability of video ads and determine how we believe the industry will grapple with these issues.

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Here are some of the key trends we explore in the report:

• Video ad views exploded in 2013, topping over 35 billion views in December, averaging over 100% year-over-year monthly growth during the year.
• Online video ads are significantly more expensive than other formats, but prices are steadily declining as more publishers rush into video, and placements open up.
• Video ads have an average click-through rate (CTR) of 1.84%, the highest click-through rate of all digital ad formats.
• Viewability, the question of whether video ads are actually seen by multitasking online viewers, has emerged as an issue, but we believe that overall demand for online video is too high for viewability to put too much of a crimp in the video ad market.
• Streaming devices and connected TV accounted for just 2% of online video ad views in the fourth quarter of 2013, but companies like BrightLine are experimenting with formats to grow this new niche market.

In full, the report:

• Explores the key drivers of the growth of online video ads
• Examines how video ads stack up against other digital advertising formats in terms of both cost and performance.
• Looks at the issue of viewability, and explains how the problem could impact future spending on video ads.
• Outlines the major players in the video ad space.
• Explains how startups like BrightLine and Alphonso are using innovative approaches to bridge the gap between digital and TV ad spend.

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