Many starting to cut out TV; online video growing

Online video is becoming more popular and effective.

Posted on Dec 10, 2013 by YuMe

The popularity of pay TV is starting to slip, something Wayne Friedman called "cord cutting" or "cord thinning" on MediaPost. Seventeen percent of pay TV customers, which is about 90 percent of U.S. TV-watching homes, either trimmed down on their services or cut them out completely in the third quarter of 2013, according to Digitalsmiths. This is up from 13.4 percent in the first quarter and 14 percent in the second quarter. Organizations may want to take notice and start investing in online video ads.

Research from the company also found that 34 percent of these households said the may consider changing their pay TV company in the near future. About 7 percent are planning on shifting away from their cable, satellite and telco company and 3 percent want to cut their service altogether. Another 2 percent are looking to switch to a third-party app or service.

Other numbers from this report show:

  • While 54.2 percent said they will maintain their current service, overall satisfaction is at 58.6 percent, with unsatisfied customers at 21.5
  • 43.6 percent said they are paying more for TV services versus a year ago, with 39.3 percent paying the same
  • More than 21 percent of TV customers are paying $151 or more for phone, TV and Internet combined

While we are likely a long way from the death of pay TV, advertisers should take these numbers as a signal that there are now more eyes than ever on mobile and online platforms. Simply putting ads on TV may be a good way to fall behind the competition these days.

Online ad revenue continues its ascent
In addition to many cutting back on pay TV, there is also a lot more revenue coming into the world of online advertising. IAB's Internet Advertising Revenue Report, conducted by PricewaterhouseCoopers, found that ad revenues for the first half of 2013 totaled $20.1 billion, an 18 percent increase from the same time last year.

Sherrill Mane, senior vice president of research, analytics and measurement at the IAB, said a big reason for this was the excitement consumers now have for mobile, and marketers are starting to realize where the crowds are migrating. Mobile ad revenue for the first half the year was a 145 percent increase from the same time last year and totaled $3 billion.

This is the fifth year in a row of online ad revenue growing. The advent of social media, video and mobile devices has made it much easier for advertisers to start moving online and for consumers to use these platforms. In fact, online video ad revenue was $1.3 billion for the first half of the year, a 24 percent increase from 2012. Mane said video captures the imagination of big brands and customers alike.

Adding to the lust for online video ads are numbers from another IAB study, this one in conjunction with Nielsen, which found that 58 percent of the U.S. population is now streaming. This is a 38 percent increase from five years ago, providing a huge opportunity for businesses everywhere that want to reach niche markets, as they seem to resonate more with all users.

"Online video ads score higher impact than TV ads on Nielsen measured metrics," the IAB report said. "Metrics are general recall, brand recall, message recall and ad likability."

As far as message recall is concerned, 40 percent of those who watch an online video ad remember the message compared with 20 percent of those who watch TV ads. The writing is on the wall: Online ads are here to stay and will likely work better than standard TV ads.