Ad Support for Online-Originated Video Content Projected at $12 Billion in 2020

By The Myers Report Archives
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Jack Myers Media Business Report will be releasing exclusive new forecasts in December analyzing growth of advertising support for online-originated video content, projecting high double-digit annual increases and growth to between $12 and $13 billion in 2020. Of the projected $1.5 billion invested in 2010 by advertisers in total online video advertising, only about 25%, or $350 million, is being invested in online-originated content. The other 75% is targeted to online viewers of television, film and other content repurposed from traditional video media. For companies whose future depends on advertiser support for online-originated video content, such as AOL, Microsoft, Yahoo!, Demand Media, Babelgum, Tremor Media, BBE (acquired last week by Specific Media), Blip.tv, Next New Networks, YouTube and others, accurate forecasting of ad spending growth targeted to online-originated video content is critically important.

Myers' new forecasts will be the first to assign digital revenues to the originating medium and companies generating the income, rather than segregating ad spending based on the distribution source. The $1.5 billion currently invested by advertisers in online video advertising is aggregated and identified as "online video advertising", and is not appropriately assigned to broadcast networks, TV stations, magazines, online-originated content and other media types.

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Myers' forecasts will enable investors to accurately assess the growth potential for both traditional and emerging companies. Hulu, the joint venture of News Corp, NBC and Disney Corp, is projected to generate more than $150 million in advertising revenues in 2010, with more than 50% distributed to its partners. Digital revenues generated by broadcast and cable networks, magazines and other traditional media are projected to increase dramatically for the next decade at least. Currently, most industry analysts fail to incorporate this significant long-term incremental revenue growth into ad revenue forecasts for traditional media categories.

As TV Everywhere, VOD and cross-platform distribution models gain market traction, advertising messages will accompany the content, also requiring that analysts refocus their current forecasting models to accurately distribute advertisers' investments based on the companies that will be capturing them rather than the technology through which they will be viewed.

The importance of this recalibration cannot be underestimated. Broadcast networks' traditional ratings-based commercial inventory is projected by Jack Myers Media Business Report to decline 18% to $14.5 billion between 2010 and 2020. However, ad support for broadcast network-originated content across all broadcast plus emerging digital platforms is projected to increase nearly 50% to more than $26 billion in 2020.

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