The writing is on the walls--people are watching more online video and less cable television. I don’t mean to dispute that. However, as with any new field or advancement, there comes a lot of speculation. I’d like to set the record straight on a few topics surrounding the growth of online video creation, distribution and advertising that have been misconstrued or blown a bit out of proportion.
Fact: Online video ad spend is increasing and will continue to. This is very true. Online video ads are the fastest growing ad medium. According to ZenithOptimedia, a media buying agency, the amount of time people spend with online video will increase 23% this year and 2016 is projected to increase by 19.8%. Video consumption on mobile devices is expected to grow 44% this year and 35% next year as mobile devices become the primary platform for video consumption by 2016. Advertisers are close behind viewers with higher spending optimism than any other video or TV media type. eMarketer reported digital video ad spending will increase 41.9% this year, reaching $5.96 billion.
Fiction: Reach and frequency of online video is the same as traditional television. In absolute terms, this is false. As explained in a recent Wall Street Journal story, there are 115.6 million homes with televisions in the U.S. and 294 million persons age two or older living in those homes. Between desktop and mobile devices, the top 25 web properties such as Google and Facebook can only reach about 46% of the 243 million person digital population. That said, you may not care about reaching the masses. If your target demographic is reachable via online video, that’s all that matters.
Fact: Ad blockers will cost publishers. Website publishers depend on advertising. So they’re not thrilled with the recent explosion of ad blocking. A study from PageFair and Adobe found publishers will lose $21.8 billion in 2015 thanks to ad blocking practices. This fall, Apple will release iOS9 that allows users to natively block ads while browsing mobile Safari, which will surely add to that loss. Moving forward, publishers and advertisers will have to treat advertising more like the content in order for the ad model to remain viable.
Fiction: Cord-cutters are killing media companies. Don’t get me wrong, content providers and distributors should pay attention to cord-cutters. However their overall impact is minimal. In the last 12 months households have been canceling their pay-TV subscriptions at a rate of about 0.75% for the viewing population as a whole, according to BMO Capital Markets. Cord-nevers, those who have never subscribed to program television, will have a bigger impact as the only video content viewing experience they’ve ever known has been on their terms rather than a cable network’s. Video on-demand is the direction we’re all headed, especially when it comes to cord-nevers and future generations.
As with any new medium, there are several questions we’re still unable to answer. Will TV buyers and planners be replaced by algorithms? When will we have more accurate measure of viewability? Will OTT bundles from pay TV providers appeal to cord-nevers? Will traffic fraud continue to be an industry-wide concern? Only time will tell, but with the right partners are the right strategies, you can help determine the outcomes.
Michael Kohn oversees development and operations of device strategy, marketing and ad operations for ViewLift. He manages relationships with every major platform providers including Roku, Sony, Xbox, Playstation, Samsung, Panasonic, LG, Apple, Google and many more, establishing and expanding relationships with advertising providers and assisting with the monetization of display and video ads, as well as increasing streams and revenue on all platforms.
