Business savvy advertising sales managers are increasingly boosting online advertising sales by tuning in to the growing shift in consumer viewing habits toward video.
According to research firm eMarketer, the explosion in devices capable of displaying online video lies behind the move, driving spending on video ads up by 46 per cent in 2012 — outstripping display ads and search ads to become the fastest expanding form of internet advertising. New interest in social media and internet-enabled TV and DVD players has spurred business development managers to focus more attention on them as distribution gateways.
The trend to video
Nikesh Arora, Google’s Chief Business Officer, says that YouTube’s top 100 advertisers increased their video ad spend by 50 per cent during 2012, while Yahoo’s erstwhile finance chief, Tim Morse said:
“One of our highest priorities was to create more online video experiences, because that’s where the demand is for advertising.”
Video ads, he says, are appealing increasingly to advertisers because of their resemblance to TV: “It’s the closest to what they’ve had offline. They’re looking for the same kind of medium where they can connect with consumers.”
Web publishers, too, are increasingly regarding video ads as good business: banner ads yield a few dollars with every thousand views, but video ad rates can climb to $20 per thousand, eMarketer’s David Hallermen explains.
Mark Mahaney, an analyst with RBC Capital markets, notes that to date, all internet advertising “has come from print sources” but, he adds, “We’re at a point where television ad budgets are likely to come online.”
A budget shift?
That could herald a major transition. eMarketer’s figures show that video ad spending in the United States hit $2.93 billion last year. That may seem big, but it’s small fry compared to the share that goes on TV advertising and represents just 10 per cent of the latter (Kantar Media estimates that the TV advertising spend in 2011 was $68 billion).
At present, brands and agencies tend to fund online video ads from Web ad budgets, not from the vastly better resourced budget for TV. But that could change. As Mahaney observes, the number of consumers watching TV is stagnating and possibly declining, while the number switching to the internet for entertainment is soaring.
“It almost inevitably drives these TV budgets online,” he says.