nScreenMedia OTT multiscreen media analysis

nScreenMedia – Digital video ads growth to continue

nScreenMedia Video Podcast

Advertising is shifting to online sources. The most effective way to promote is with digital video ads.

Chapter 1: Digital ads are growing and growing (0:26)

Television advertising will be surpassed by digital this year. More money is being spent online and is growing at a much faster rate than television advertising. Digital ads are projected to grow by double-digit percentages each year through the year 2020. Television advertisements are only growing at around 2% per year.

All of the advertising revenue is going to two companies, Facebook and Google. 3/5th of all the money spent on digital ads in the United States goes to these two behemoths and they capture about half of all worldwide digital ad spending. No other digital platform has more than 5% market share in this area. Simply put, the digital ad space is a duopoly.

Chapter 2: Video ads are responsible for the growth (1:04)

Banner ads, rich media, sponsorships, and pop-ups are all declining. One of the main reasons for this decline is that most websites have run out of room for them. In 2016 Facebook stated that it had no more space on its News Feed for more ads. With all these types of ads declining there is only one format that is still growing, video. Video ads are more valuable and are growing very fast. YouTube is a big target for brands because of this. In 2016, 73% of brands targeted YouTube to promote their video ads.

However, Facebook’s growing video presence makes it a strong player in the video market as well. Social video ad spending is doubling every year and is currently a $4 billion marketplace. Instagram’s revenue from video advertising is also growing over 90% per year.

Is there anything slowing online video ads?

Chapter 3: Video ads in the future (2:09)

Though recently we’ve seen incredible growth there are many challenges for digital video advertisers. Ad blocking software is becoming much more prevalent, particularly among PC users, with over a quarter of internet users utilizing them, up from 16% last year. The number of users is expected to increase in the coming year.

Additionally, many news companies are tired of the duopoly governing almost all the news that people see online. They are looking for ways to level the playing field and are pushing for new regulations. In some countries, it looks like this could happen.

Both Facebook and YouTube have experienced problems in relation to video ads. YouTube has been in a constant battle to keep its content creators and advertisers happy. With so many videos to monitor, neither is. Facebook has also misrepresented the number of views it receives for the video advertisements it runs. Understandably, brands have grown skeptical of the numbers reported by the social platforms.

Despite all of these challenges, the demands of the consumer for online video seems to be outweighing the concerns. This is a situation that is likely to persist for the next several years, making digital video advertising the best way to deliver an advertiser’s message.

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