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.
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