IAB Digital Video Study Illustrates Growth -- Pivotal Research

IAB Digital Video Study Illustrates GrowthDigital video advertising is clearly in an ascendant position, with growing consumption, improving content product quality and a beneficial contribution to advertisers' campaign reach when used in conjunction with traditional TV. In support of this growth and the presentations known collectively as the "Newfronts", the IAB, the trade group representing sellers of digital advertising and organizer of the Newfronts, published a report on Monday based upon a survey of professionals involved in online video ad spending.The survey involved 360 respondents, 299 of whom are decision makers using digital budgets as the primary source of digital video advertising and 61 who use TV budgets as their primary source of digital advertising. Respondents were not representative of TV advertisers in our view, as only 26% claimed to spend more than $25mm annually on that medium. For reference, we believe that several hundred advertisers spend more than this amount each year on traditional TV and account for approximately 90% of the medium's revenue base. Most of the conclusions based upon averages in the report primarily relate to trends among smaller advertisers, and thus have limited read-throughs on traditional TV.Nonetheless, we thought the following survey responses were particularly noteworthy:&#183;&#160;&#160;&#160;&#160;&#160;&#160; Among 194 responding marketers, the average respondent expects to spend $8.6mm on digital video in 2016, vs. $4.4mm in 2014 and $5.6mm in 2015, nearly doubling over a two year period&#183;&#160;&#160;&#160;&#160;&#160;&#160; The same 194 have raised average spending on original digital video (content made for digital environments) from $1.8mm in 2014 to $2.5mm in 2015 and an expected $4.0mm in 2016&#183;&#160;&#160;&#160;&#160;&#160;&#160; Respondents "involved in video and other digital/mobile" have shifted their digital budget allocations towards video from 49% in 2014 to 54% in 2015 and an expected level of 57% in 2016, illustrating that video is gaining share of spending on digital&#183;&#160;&#160;&#160;&#160;&#160;&#160; Marketers indicated that programmatic video spending is expected to average 42% of digital video budgets in 2016 vs. 34% in 2015 and 27% in 2014&#183;&#160;&#160;&#160;&#160;&#160;&#160; Commentary throughout the document refers to multiple response questions indicating that shifts of funds away from TV are the primary source of spending growth on digital video. To the extent this reflects trends for larger advertisers rather than the pool of respondents here; it could be de minimus in context of their total spending on video-related advertising.Obstacles to spending more on digital video called out by more than 20% of respondents included:&#8226; ROI vs. other media&#8226; Quality of content&#8226; Audience and Campaign Measurement&#8226; Lack of transparency in buying process&#8226; Complexity of executing a buy&#8226; Lack of promotion of video content to audiences&#8226; Video ad unit lengthsWe note that buyers of traditional TV would likely have negative views on factors including price, ad clutter and audience attentiveness if they were polled on the challenges for that medium as well. As well, we note that most of the obstacles listed above will undoubtedly be overcome with time.Overall, while online video is clearly in a growth mode, and ad-supported publishers such as Google's YouTube, the likes of Hulu and the MCNs are benefitting from growing consumption of digital content and improving quality. However, we continue to believe that the bulk of online video growth comes from digital advertising broadly, with a limited negative impact on traditional TV at this point in time.RISKS. Three core risks for all web publishers companies relate to: 1) high degree of rivalry given an absence of barriers preventing new competition from emerging 2) overly high and increasing capital needs to remain competitive and 3) government regulations and consumer pushback related to management of consumer data and respect for privacy.FULL REPORT INCLUDING RISKS AND DISCLOSURES CAN BE FOUND HERE: IAB Newfronts.pdf&#160;The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillage.com / MyersBizNet, Inc. management or associated bloggers.

IAB Digital Video Study Illustrates Growth -- Pivotal Research

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IAB Digital Video Study Illustrates Growth -- Pivotal Research

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