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Ooyala co-founder explains why streaming video will draw online advertising spend

Online adver­tis­ing sales gen­er­at­ed by stream­ing video con­tent will grow sub­stan­tial­ly in impor­tance and invest­ment over the next few years.

That’s the ver­dict of Bis­mar­ck Lepe, co-founder of online video con­tent pro­duc­er and video ana­lyt­ics start­up, Ooy­ala.  A word of warn­ing before pro­ceed­ing; new research from Ooy­ala could well have many a search engine mar­ket spe­cial­ist, adver­tis­ing sales man­ag­er and busi­ness devel­op­ment offi­cer falling off their chairs in a swoon.

Stream­ing video view­er­ship dou­bles in one year

The study (Glob­al Video Index: 201 Year in Review) con­firms what many in the indus­try may have felt in their water.  The lev­el of video con­tent viewed on tablets and smart­phones soared by 100 per­cent between 2011 and 2012, and adver­tis­ers have noticed. The stream­ing video con­tent ad spend­ing rock­et­ed by 46 per­cent last year to hit $2.94 billion.

There’s grow­ing aware­ness, Lepe believes, that an increas­ing pro­por­tion of the tele­vi­sion audi­ence (the advertiser’s key tar­get) is doing its view­ing online.  In 2012, between 10 and 15 per­cent of Amer­i­cans viewed video con­tent, includ­ing DVDs and TV shows, on inter­net-con­nect­ed devices. When Ooy­ala launched in 2007, the pro­por­tion was just 1 percent.

Adver­tis­ers can also get a much more accu­rate han­dle on how that online audi­ence is actu­al­ly inter­act­ing with their ads, thanks to the real-time data that can be extract­ed from stream­ing con­tent. For­get proxy num­bers (the over­all num­ber of peo­ple view­ing a video); adver­tis­ers can now tell exact­ly how many peo­ple are skip­ping ads, and how many are watch­ing them through.

Many agen­cies used to the dis­play adver­tis­ing mod­el had a moment of pan­ic when Google launched the pay-per-click mod­el, fear­ing that a whole­sale col­lapse of the online adver­tis­ing busi­ness was afoot. But instead, Lepe notes, adver­tis­ers just got a clear­er pic­ture of where the return on invest­ment was great­est.  The spend­ing con­tin­ued; it just got allo­cat­ed more productively.

Steam­ing on to stream­ing future

Lepe thinks the “shiny disc” mar­ket (Blu-ray/D­VD) is going to shrink but stream­ing video is undoubt­ed­ly going to grow.  He says, “Today, the entire video mar­ket is rough­ly half a tril­lion dol­lars, and that includes TV adver­tis­ing and DVD sales, [as well as] paid access to con­tent and VOD that you buy from your cable provider. And that half-a-tril­lion-dol­lar indus­try is going to migrate online.”

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