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.”