Online video ads may soon beat out TV commercials

Online viewers are starting to watch more ads online.

Posted on Oct 6, 2013 by YuMe

While the number of commercials on TV are still far greater than that of online video ads, industry professional Kevin Van Lenten wrote on ADOTAS that the amount of advertising money being spent on Internet videos is growing. It could soon get to the point where online videos are matching prime-time commercials, especially as the breadth and quality of content online increases over time.

A recent report from the Interactive Advertising Bureau found that 75 percent of 5,000 surveyed ad executives are planning to shift money they have been spending on TV ads to online video ads.

"This year's Digital Content NewFronts not only shined a spotlight on the depth and breadth of original online programming available in the marketplace -  but also provided a pivotal turning point in the minds of many media buyers, who now grasp digital videos' power and reach," said Randall Rothenberg, president and CEO of the IAB.

An estimate by eMarketer found that U.S. advertisers will spend $66.4 billion on TV ads this year and $4.1 billion on Internet ads. Video ads will see a 40 percent increase, which Van Lenten said does not bode well for the TV ad market, as it is only expected to grow to $75 billion by 2017.

Syndication may be a way to go for online videos
Van Lenten said one area where companies could see a benefit is utilizing online video syndication.

"The rise of video advertising and video syndication is good for brands and for content providers as it creates engagement, and that means greater monetization," he said. "In the future, content producers will be more selective about the type of videos they make and the partners they choose to distribute them with over time. As the quality of the content that is created continues to improve, selling it at a premium price will become more important and distribution will be key."

While this trend grows larger, it is likely that products will want a greater share of the money generated from online content. Video ads will start to bring in even more revenue in syndication, Van Lenten said, as it will allow more consumers to view a greater amount of streaming media for less money. As TV starts to lose more of its market, it's clear that Internet video ads are going to pick up some of the legacy format's steam.

Some time may still be needed for full carry-over
A post on Nielsen's website said while there is a lot of hype right now, Web video is currently just 2.3 percent of TV content viewing. However, growth is clearly expected, as Web video will reach spending levels of $4.12 billion in 2013.

A recent report by comScore showed that if nothing else right now, online video ads are definitely reaching a big chunk of the U.S. audience. The company said 187 million Americans watched more than 48 billion online content videos in July alone, with online video ads total just under 20 billion viewers. This means 88.6 percent of the U.S. internet audience viewed a video online, showing the vast potential this format has.

Video ads accounted for 28.8 percent of all videos viewed and 2.8 percent of all minutes online looking at this format. The duration of the average online video ad was just under one-half of a minute. Time spent watching these ads equaled about 7.4 billion minutes.

The general public has shown that they are not averse to watching online video ads. It is simply a matter of time before they become more dominant.