Mobile and social are fueling massive digital-video advertising growth as dollars shift away from display ads

Video is emerging as one of the top digital advertising formats on desktop and mobile.

Mobile will be the biggest driver of digital-video ad spend over the next few years. Advertisers are rushing to snap up video ad spots as video viewership increases on mobile devices. Mobile video ad revenue will grow more than 3x faster than desktop through 2020.

Digital video is gaining traction quickly on social-media sites. Facebook was an early backer of the format with the introduction of autoplay video ads in 2013, but recently other social networks, including Twitter, have launched digital-video ad units.

In this in-depth report from BI Intelligence, we find that US digital-video advertising revenue from PC- and mobile-based video ads will top nearly $5 billion this year, and grow at a five-year compound annual growth rate (CAGR) of 21.9%. Total revenue will reach $13.3 billion by year-end 2020, according to BI Intelligence estimates based on historical data from the Interactive Advertising Bureau (IAB).

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Here are some of the key takeaways:

• Video is quickly replacing static display advertising on desktop. Video will account for 41% of total desktop display-related spending in 2020, up from a 26% share this year.
• Video ads perform better than standard display ad units. In-stream video ads, including ads that play at the start, during, and after video content, yielded click-through rates (CTRs) that were 18x higher than HTML5 banner ad units in February 2015, according to Google's Rich Media Gallery.
• Video's premium status within digital is reflected in the format's high prices. Video ads tend to cost significantly more (e.g., 2x or 3x) than non-video ad units on premium publishers like Vice and Instagram.
• Facebook, Instagram, and Twitter have all introduced new digital-video ad products. Social video offers several major advantages from an advertiser perspective, including huge built-in mobile audiences, advanced targeting, and native-style ad units.
• But despite their high prices and strong results, video ads create a special set of challenges around viewability.

In full, the report:

• Forecasts programmatic and digital video spending on desktop and mobile through 2020.
• Analyzes recent video-ad price and performance trends.
• Outlines new video-ad products from social networks like Facebook, Twitter, and Instagram.
• Explores the unique hurdles that video-ads face for viewability.

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