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 advertisers39 campaign reach when used in conjunction with traditional TV In support of this growth and the presentations known collectively as the quotNewfrontsquot 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 spendingThe 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 medium39s revenue base Most of the conclusions based upon averages in the report primarily relate to trends among smaller advertisers and thus have limited readthroughs on traditional TVNonetheless we thought the following survey responses were particularly noteworthyamp183amp160amp160amp160amp160amp160amp160 Among 194 responding marketers the average respondent expects to spend 86mm on digital video in 2016 vs 44mm in 2014 and 56mm in 2015 nearly doubling over a two year periodamp183amp160amp160amp160amp160amp160amp160 The same 194 have raised average spending on original digital video content made for digital environments from 18mm in 2014 to 25mm in 2015 and an expected 40mm in 2016amp183amp160amp160amp160amp160amp160amp160 Respondents quotinvolved in video and other digitalmobilequot 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 digitalamp183amp160amp160amp160amp160amp160amp160 Marketers indicated that programmatic video spending is expected to average 42 of digital video budgets in 2016 vs 34 in 2015 and 27 in 2014amp183amp160amp160amp160amp160amp160amp160 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 videorelated advertisingObstacles to spending more on digital video called out by more than 20 of respondents includedamp8226 ROI vs other mediaamp8226 Quality of contentamp8226 Audience and Campaign Measurementamp8226 Lack of transparency in buying processamp8226 Complexity of executing a buyamp8226 Lack of promotion of video content to audiencesamp8226 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 timeOverall while online video is clearly in a growth mode and adsupported publishers such as Google39s 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 timeRISKS 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 privacyFULL REPORT INCLUDING RISKS AND DISCLOSURES CAN BE FOUND HERE IAB Newfrontspdfamp160The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecom MyersBizNet Inc management or associated bloggers

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IAB Digital Video Study Illustrates Growth -- Pivotal Research

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