ShareOctober 2008: When will online video advertising take off?
Industry Stats & Data by eMarketer
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When will online video advertising take off?
Last year, the IAB and PricewaterhouseCoopers (PwC) broke out Internet video advertising from the rich media category for the first time, pegging the video market at $324 million. The IAB/PwC historical data is the most complete Internet ad spending research to be found, and therefore is eMarketer’s benchmark source for US online advertising estimates.
While eMarketer’s original 2008 estimate of $1.3 billion appears to have been off the mark, the question is more a change of methodology than of perspective. That is, the basis has changed, but eMarketer’s prognosis for online video advertising has not.
It now appears that the market will take until 2010 to surpass the $1 billion mark. Beyond 2010, huge additional sums will go to online video advertising each succeeding year. Two essential factors will support that growth: more trusted video content to sustain advertising and more large advertisers (brand marketers, mainly) seeing enough scale to enter this market in a big way.
Annual growth will cap out at 78.9% in 2012 due to the combination of those two key factors and an anticipated ad spending influx from the national elections and summer Olympic Games.
The frequently asked questions swirling around US Internet video advertising can be funneled into two main streams: One, why has online video ad spending not grown as swiftly as predicted? And two, when will online video advertising take off? In fact, this year’s 55.9% increase is a key indicator of the parallel growth of video ads and the kind of trusted video content, such as sports, to support it.
By 2012—when both traditional and alternative media companies will be distributing far more professional-quality video content online, and when the national elections and the summer Olympics will contribute far more to video ad spending than they will in 2008—annual growth will peak at 78.9%.
A fuller perspective on Internet video details two seemingly contradictory elements: its significance over the next few years and its relatively average place compared with other advertising in the online space.
From 2008 to 2013, video ad spending gains will far surpass those of the other seven online advertising formats defined by the IAB/PwC. Video is the growth format on the Internet.
But growth from a small base is not necessarily difficult. Even when video ads reach a new high point at $5.8 billion in 2013, more spending will go into each of three other ad formats—paid search, display ads and classifieds.
Even by 2013, the annual video spend will still contribute less than 10% of the total Internet universe, less than any one of paid search, static display ads or classified ads. Video is an evolving ad format, with equally evolving content models and audience usage patterns to sustain the advertising.
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