On­line video, the world fastest-grow­ing ad­ver­tis­ing for­mat

Zenith has looked at the growth in on­line video, the world’s fastest-grow­ing ad­ver­tis­ing chan­nel, fo­cus­ing on con­sump­tion time, ad­spend, and how this new chan­nel is chang­ing brands’ me­dia strate­gies.

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The rapid rise in video view­ing makes on­line video the world fastest-grow­ing ad­ver­tis­ing for­mat. By on­line video Zenith means all video con­tent viewed over an in­ter­net con­nec­tion, in­clud­ing broad­cas­t­erowned plat­forms such as Hulu, ‘over-the-top’ subscription ser­vices like Net­flix, videoshar­ing sites, e.g. Youtube, and videos viewed on so­cial me­dia.

Global con­sumers will spend an av­er­age of 67 min­utes a day watch­ing on­line video this year, up from 56 min­utes last year, ac­cord­ing to Zenith’s On­line Video Fore­casts 2018, pub­lished in July 2018. By 2020 the av­er­age per­son will be spend­ing 84 min­utes a day watch­ing videos on­line. This rapid rise in con­sump­tion is lead­ing to a shift in the way brands plan cam­paigns across both tele­vi­sion and on­line video.

Global on­line video con­sump­tion grew by 11 min­utes a day in 2017, and Zenith ex­pects it to grow by an av­er­age of nine min­utes a day each year to 2020. It ac­counts for al­most all the growth in to­tal in­ter­net use, and is grow­ing faster than me­dia con­sump­tion over­all, so it is tak­ing con­sump­tion time from tra­di­tional me­dia. Al­though some of this ex­tra view­ing is go­ing to non-com­mer­cial plat­forms such as Ama­zon Prime and Net­flix, plenty of it is go­ing to com­mer­cial plat­forms, so the sup­ply of com­mer­cial au­di­ences is ris­ing rapidly.

Zenith es­ti­mates that on­line video ad­spend grew 20% in 2017 to reach Us$27bn. Growth peaked at 36% in 2014 and has fallen steadily since then, but still re­mains very high. The agency fore­cast a 19% growth in 2018, and an av­er­age of 17% an­nual growth to 2020, when on­line video ad­spend will reach Us$43bn.

On­line video view­ing grew 91% be­tween 2015 and 2017, while ad­spend grew 52%. The cost of on­line video ad­ver­tis­ing has there­fore come down sub­stan­tially. As the growth of video con­sump­tion grows, prices are ex­pected to sta­bilise, with mild in­creases from 2019 on­wards.

On­line video ad­ver­tis­ing is still only a frac­tion of the size of tele­vi­sion ad­ver­tis­ing, but be­cause tele­vi­sion is stuck at 0% to 2% an­nual growth, this frac­tion is ris­ing rapidly. The on­line video ad mar­ket was 10% of the size of the tele­vi­sion ad mar­ket in 2015, and 14% in 2017. By 2020 on­line video ad­spend is ex­pected to be 23% of the size of tele­vi­sion ad­spend.

On­line video and tele­vi­sion com­ple­ment each other well, with most brands ini­tially us­ing on­line video to add in­cre­men­tal reach to their ex­ist­ing tele­vi­sion cam­paigns. But with the rapid growth of on­line view­ing, Zenith is now see­ing more brands plan tele­vi­sion and on­line video to­gether to op­ti­mise fre­quency. By cut­ting out tele­vi­sion spots that lead to very fre­quent ex­po­sure among heavy tele­vi­sion view­ers, and us­ing on­line video to tar­get – and re­tar­get – light tele­vi­sion view­ers, brands are us­ing tele­vi­sion and on­line video to­gether to cut out both over­ex­po­sure and un­der­ex­po­sure within the tar­get au­di­ence, max­imis­ing re­call at a re­duced price.

On­line video ad­ver­tis­ing be­gan by emu­lat­ing tele­vi­sion ad­ver­tis­ing, with most ads ap­pear­ing within other video con­tent that the view­ers were re­ally in­ter­ested in as in­ter­rup­tive ‘in-stream’ ads. But over the past few years ‘out-stream’ ads have be­come com­mon. These are stand-alone video ads that ap­pear within text or im­ages, or within a so­cial news feed. Thanks mainly to the rapid adop­tion of video con­tent and ad­ver­tis­ing by so­cial me­dia plat­forms, out-stream video is rapidly be­com­ing the dom­i­nant form of on­line video ad­ver­tis­ing. Be­cause a viewer can sim­ply scroll past them, out-stream ads need to grab the viewer’s at­ten­tion from the very first se­cond, ei­ther with an ar­rest­ing im­age or with a celebrity with a ded­i­cated fol­low­ing. They do not have the nar­ra­tive lee­way avail­able to in­ter­rup­tive ads.

“On­line video is driv­ing growth in global me­dia con­sump­tion, as smart­phones with high-speed data con­nec­tions make high-qual­ity video avail­able to peo­ple on the move, and smart TV sets give view­ers un­par­al­leled choice in the liv­ing room,” said Jonathan Barnard, Zenith’s Head of Fore­cast­ing and Di­rec­tor of Global In­tel­li­gence. “The rapid rise in video view­ing makes on­line video the world fastest-grow­ing ad­ver­tis­ing for­mat, cre­at­ing new strate­gic and cre­ative op­por­tu­ni­ties. Brands that do not cur­rently have a strat­egy for on­line video need to think about get­ting one.”

Ex­am­ple of a video con­tent by Fat­tal Group Le­banon that ap­pears on an In­sta­gram feed

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