Digital Video Advertising Opportunities

The continued growth in digital video advertising demonstrates the indomitable power of sight, sound and motion to capture attention, drive engagement, and build brands. As U.S. digital advertising revenue increases, mobile advertising is helping drive the growth, surpassing desktop advertising revenues for the first time in 2016. We see more growth and new opportunities for digital video in the near future. Read about the latest trends and a forecast in this section.

Market Size, Forecast, and Trends 

The digital ecosystem has never been more vibrant and exciting. The latest industry data demonstrates record digital ad revenues, continued robust double-digit compound annual growth, and a dramatic shift from desktop dominance to the seemingly inevitable march of mobile revenue prominence.

Market Size 

Digital Advertising Revenue grew 22% from $59.6 billion in 2015 to $72.5 billion in 2016. According to Nielsen, total U.S. media revenue only increased by one percent during the same period.[1]

2016 showed record revenues, with a strong overall compounded annual growth rate (CAGR) of 16%, and an astounding 87% CAGR for mobile ad revenues for the 2011-2016 period.

 

 

In terms of digital video advertising revenues, 2016 has been an extraordinary year with revenues reaching $9.1 billion, a gain of 53 percent across mobile and desktop.

Mobile video saw an extraordinary increase of 145 percent, with revenues of $4.16 billion. Desktop video advertising revenue reached $4.9 billion, representing 16 percent growth over 2015.[2]

Video ad revenue, including desktop and mobile devices, had the biggest increase compared to other formats.

This massive growth is a result of the explosive mobile device content consumption channels, properties, and platforms including social media.[3] As $10 streaming opportunities have never been so abundant and continue to expand, content will also be more inclined towards video.

Forecast 

The U.S. digital market is continuing its growth trajectory, with expected total $6.5 ad revenue reaching nearly $100 billion by 2021.

Filtered by format, digital video advertising is forecasted to show the biggest CAGR, (Compounded Annual Growth Rate) reaching $23 billion in revenue in 2021.[4]

Growth in digital ad revenue is supplemented by the continued increase of mobile and social spending.

Trends 

As we examine the continued convergence of TV and digital, a few key trends are emerging: the dramatic growth of mobile video revenue, the deep penetration of smartphone adoption, and the rise of automation in buying and selling of video inventory.

The anticipated and seemingly inevitable “year of mobile” finally arrived in 2016. For the first time, mobile advertising spend surpassed that of desktop. According to IAB Full Year 2016 Internet Advertising Revenue Report, mobile ad spend has grown to account for over half of digital ad revenue for full-year 2016.

Overall, mobile video advertising has grown an astonishing 145% year-over-year to $4.2 billion.[5]

The explosion of smartphone ownership has made mobile the number one platform for brands looking to access audiences. A recent ZenithOptimedia report suggests that consumers spend nearly 20 minutes a day watching online videos on mobile devices.[6] PwC’s Global Entertainment and Media Outlook[7] projects that growth will fuel equally rapid expansion for mobile advertising, making it the fastest-growing ad channel globally.

Smartphone adoption surpassed 80 percent of all mobile phone owners as of July 2016 and has inched up to 81 percent by December 2016.

Given that the average U.S. adult now juggles four connected devices (the majority being smart phones and tablets), it’s no wonder that mobile advertising is demonstrating such strong revenue growth.[8]

Automated buying is becoming the new normal in transacting digital video advertising as its efficiency, ease, and analytics have already garnered profits across all advertising verticals. In the last 3-5 years, programmatic has gone from a fringe term used to describe the automated buying and selling of remnant inventory to a widely adopted marketplace enabler, garnering billions of ad dollars. Automation in buying and selling has moved beyond display and is now a signicant force in digital video ad buying as well.

According to eMarketer, advertiser adoption of programmatic video has become mainstream with 60% of U.S. digital video ad spend expected to be transacted through automated channels in 2016.

These projections are echoed by the latest IAB Ad Spend Study that show that the share of digital video ad spend bought in an automated fashion will continue to grow in 2017.

Blockchain: A Glimpse of the Future Video Marketplace

Blockchain, best known at this point in the context of financial markets, is the technology underpinning bitcoin, essentially a massive shared excel sheet with many innovative uses. While synonymous with crypto-currency, new transactional use cases are emerging for block chain, including the buying and selling of media. Some pundits are hopeful that the use of blockchain can bring greater efficiency and transparency to the marketplace.[9]

How does it work? Blockchain is a protocol that enables a time series of data to be recorded, creating a distributed ledger through which logs from a tagged piece of creative can be tracked to determine its path and audience, conversion rates, and budget spend along the chain.

The process is as follows:

  1. A buyer buys an impression which is encrypted in a block and then broadcasted to every single participant on the chain.
  2. The impression is verified by the publisher, then added to the ledger.
  3. Everyone in the blockchain gets to see the impression event, validate, and approve it (creating ideally, a more transparent marketplace).

The key benefit of blockchain is that it potentially allows multiple parts of the industry to work together with no dependency on any single party’s data.

1: The Nielsen Company, Monitor Plus (Standard Calendar, Total includes B2B, National Internet (Display only), FSI Coupons), Oct. 2016
2: IAB/PwC 2016 Internet Advertising Revenue Report
https://www.iab.com/wp-content/uploads/2016/04/IAB_Internet_Advertising_Revenue_...
3: To view the Top 10 Video Content Properties by Unique Viewers, see comScore’s monthly release of their Video metrix data.
http://www.comscore.com/Products/Audience-Analytics/Video-Metrix
4: Business Insider: “The US Digital Media Ad Revenue Report: The path to $100 billion in annual revenue by 2021.”
http://www.businessinsider.com/the-us-digital-media-ad-revenue-report-the-path-t...
5: IAB/PwC 2016 Ad Revenue Report
https://www.iab.com/wp-content/uploads/2016/04/IAB_Internet_Advertising_Revenue_...
6: Business Insider: “5 video advertising trends that will change your business.”
http://www.businessinsider.com/sc/5-video-advertising-trends-2017-3
7: PwC: “2017-2021 Global Entertainment and Media Outlook.”
http://www.pwc.com/us/en/industry/entertainment-media/publications/global-entert...
8: Forrester Research, 2016
https://go.forrester.com/blogs/16-08-24-announcing_our_annual_benchmark_on_the_s...
9: Pathak, S. (2017). “Why digital advertising is experimenting with blockchain.” Digiday, 4 Apr 2017
https://digiday.com/marketing/digital-advertising-experimenting-blockchain/
10: Gross Rating Point: Measured by the % of households that tune into to a particular show or network and have the opportunity to see an ad.
11: Reach: Represents the total number of people exposed to the media plan or ad over a certain time period, based on the total size of the target audience.
12: Frequency: Is a measure of media repetition.
13: IAB’s Digital Video In-Stream Ad Format Guideline.
http://www.iab.com/wp-content/uploads/2016/01/DVAFG_2015-01-08.pdf
14: IAB Deep-Dive on In-Feed Ad Units: A Supplement to the IAB Native Advertising Playbook
https://www.iab.com/news/iab-deep-dive-on-in-feed-ad-units-a-supplement-to-the-i...
15: Herrmann, J. & Isaac, M. (2016). “The Online Video View: We Can Count It, but Can We Count on It?” The New York Times, 2 Oct 2016
https://www.nytimes.com/2016/10/03/business/media/the-online-video-view-we-can-c...
16: Cloud Servers: A cloud server is a logical server that is built, hosted and delivered through a cloud computing platform over the internet. Cloud servers possess and exhibit similar capabilities and functionality to a typical server but are accessed remotely from a cloud service provider.
17: Syndication is a term that is used in both print and broadcast media. It indicates content that for instance is purchased for use by a local newspaper, TV, or radio station. It is not produced by the media company’s owner but through an outside source.
18: XML: Extensible Markup Language (XML) defines a set of rules for encoding documents in a format that is both human/machine-readable
19: CSS: is the language for describing the presentation of Web pages, including colors, layout, and fonts. It allows one to adapt the presentation to different types of devices, such as large screens, small screens, or printers. CSS is independent of HTML and can be used with any XML-based markup language
20: Audience segments are subsets of user data signifying specific facts, interests and other attributes. Audience segments, and the techniques
21: URI is a string of characters used to identify a resource. Such identification enables interaction with representations of the resource over a network using specific protocols. Schemes specifying a concrete syntax and associated protocols define each URI. The most common form of URI is the Uniform Resource Locator (URL), frequently referred to informally as a web address.
22: Making Measurement Make Sense (3MS) is a cross-industry initiative founded by the American Association of Advertising Agencies (4A’s), the Association of National Advertisers (ANA), and Interactive Advertising Bureau (IAB). The Media Rating Council (MRC), an independent body, is responsible for setting and implementing measurement standards.
23: IAS 2016 year-end survey results
https://insider.integralads.com/2016-year-end-survey-results/
24: An “affiliate” is an entity that controls, is controlled by, or is under common control with another entity. Control of an entity means that one entity (1) has significant common ownership or operational control over the other, or (2) can exercise a controlling influence over the management or policies of the other entity. In addition, for an entity to be under the control of another—and thus be treated as first party under these entity’s policies.Principles—that entity must adhere to online behavioral advertising policies that are not materially inconsistent with the other
25: Deloitte. “2015 Global Mobile Consumer Survey: US Edition. The rise of the always-connected consumer.”
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/technology-media-tel...
26: Mobile Spearheads Digital Video Advertising’s Growth.” eMarketer, 22 Feb 2016.
https://www.emarketer.com/Article/Mobile-Spearheads-Digital-Video-Advertisings-G...
27: comScore Inc., Nielsen, and ZenithOptimedia
http://www.zenithoptimedia.cz/en/zenith/news/detail/107-Mobile%20to
28: Nielsen Q2 2016 Comparable Metrics report.
http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2016-report...
29: Q2 2016 Comparable Metrics report.
http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2016-report...
30: AARP.
https://press.aarp.org/2016-12-05-Smartphone-Ownership-Up-Among-Adults-Age-50-Pl...
31: Nielsen Q2 2016 Comparable Metrics report.
http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2016-report...
32: Mobile Spearheads Digital Video Advertising’s Growth.
https://www.emarketer.com/Article/Mobile-Spearheads-Digital-Video-Advertisings-G...
33: ANA reports 7.2B lost in Ad fraud
http://adage.com/article/digital/ana-report-7-2-billion-lost-ad-fraud-2015/30220...
34: Snapchat internal data snapchat.com/ads
35: The continued evolution of enhanced mobile experiences that overlay digital information on top of the physical world
36: Duffy, F. (2017). “Turner Takes on eSports in a Big Way.” NCTA Platform, 6 Jan 2017.
https://www.ncta.com/platform/industry-news/turner-takes-on-esports-in-a-big-way...
37: The waterfall model is a sequential process in which progress is seen as flowing steadily downwards (like a waterfall) through the various phases, in this case, the potential demand sources or buyers
38: IAB Programmatic Revenue Report 2014 Results. July 2015
http://www.iab.net/media/file/PwC_IAB_Programmatic_Study.pdf
39: IAB Transparency is the Key to Programmatic Success
http://www.iab.net/media/file/IABDigitalSimplifiedProgrammaticAdvertisingTranspa...
40: WTF is header bidding?
https://digiday.com/media/wtf-header-bidding/
41: Thomvest ventures
http://blog.thomvest.com/header-bidding-overview/
42: Programmatic TV definition per IDC
http://pages.thetradedesk.com/rs/527-INM-364/images/TheTradeDesk_IDC_Programmati...
43: Lotame Bridge the TV ad gap & PWC Media forecast 2015, agency reports, front row advisory analysis
https://event.on24.com/eventRegistration/EventLobbyServlet?target=reg20.jsp&part...
44: eMarketer More OTT Time Means More Ad Time
https://www.emarketer.com/Article/More-OTT-Time-Means-More-Ad-Time/1012388
45: eMarketer’s Connected TV and Over-the-Top Video: The Living Room’s Place in the US Digital Video Ecosystem report.
https://www.emarketer.com/Article/Premium-Content-Helps-Grow-US-Connected-TV-Aud...
46: Frank N. Magid Associates study
http://magid.com/
47: comScore 2016 U.S. Cross Platform Future in Focus report.
https://www.comscore.com/Insights/Presentations-and-Whitepapers/2016/2016-US-Cro...
48: Nielsen’s first-quarter 2016 Total Audience Report.
http://www.nielsen.com/us/en/insights/reports/2016/the-total-audience-report-q1-...
49: Adobe U.S. Digital Video Benchmark 2Q15; adobe primetime; TV connected devices=apple TV, Roku, gaming console, amazon fire TV,smart TV, other
50: Based on 2016 total viewers Broadcast - Source: Nielsen. Prime time total viewers, Live+7; Broadcast data: 12/28/15-12/4/16
51: Based on 2016 total viewers Cable - Source: Nielsen; Live+SD numbers from 12/28/2015-12/18/2016
52: Based on 2016 TV household coverage. Networks supplied coverage percentages, except for Create TV, which came from Across Platforms consltancy
http://www.tvnewscheck.com/article/96496/diginets-keep-growing-despite-auction-c...
53: IDC
https://static1.squarespace.com/static/57901762725e2547f073e884/t/58aefa0bff7c50...
54: Video Landscape Report
https://www.iab.com/wp-content/uploads/2016/10/IAB-Video-Landscape-Report-Novemb...
55: IAB TV 20/20 Webinar, 2016. Videology % estimates from Nielsen, eMarketer trend data; Time spent data calculated by Videology from Nielsen and KPCB data. Highest rated programs based on Nielsen A18-49 Live+7 data.
56: “2016 U.S. Cross-Platform Future in Focus,” comScore
https://www.comscore.com/Insights/Presentations-and-Whitepapers/2016/2016-US-Cro...
57: IAB Digital Video Landscape report
https://www.iab.com/wp-content/uploads/2016/10/IAB-Video-Landscape-Report-Novemb...
58: Any Given Minute Comparable Metrics Report, VAB 2016
http://www.thevab.com/wp-content/uploads/2016/04/VAB-Any-Given-Minute-Comparable...
59: IAB: The Programmatic Supply Chain: Deconstructing the Anatomy of a Programmatic CPM)
https://www.iab.com/wp-content/uploads/2016/03/Programmatic-Value-Layers-March-2...
60: Ghostery, Inc. Interview with Ghostery CEO Scott Meyer. IAB Annual Leadership Conference. January 26, 2016.
61: IAB/EY Study released on Dec-15. Estimates are for the U.S. Market only. Industry-wide collaboration under the auspices of TAG is needed in order to forestall these criminal activities