Video ad publishers stand to benefit from consumer cord-cutting

More consumers are using hi-speed Internet services to deliver programming as opposed to traditional pay TV.

Posted on Apr 24, 2014 by YuMe

Cord-cutting in the United States isn't a new phenomenon, but according to data from  Experian Marketing Services, it appears to be on the rise. Cord-cutting is defined as consumers who choose to use the Internet to watch traditional television programming as opposed to spending money on a cable or satellite TV service provider.

Experian stated that in 2013, 7.6 million U.S. homes chose this option, a 2.5 million increase from 2010. For video ad publishers, this is good news.

In a MediaPost article, citing data from Media Dynamics, the website states that last year, the average cost per thousand viewers (CPM) for a standard online video ad ranged from $20 to $23. The CPM price increased significantly for targeted video ads to $32.75 per thousand. If more consumers are choosing the Internet over pay TV for their programming needs, then online video advertising could experience a boon as it relates to revenue growth.

Another MediaPost article, citing the Experian data, pointed out  that in households comprised of adults 35 years of age or younger, 12.4 percent don't have traditional cable or satellite TV service. That percentage saw an upward increase to 24.3 if these same adults subscribe to a streaming video provider such as Hulu or Netflix.

Additionally, the website said adults in the same age range who use a tablet or smartphone to watch video are likely to be cord-cutters, as well as those who utilize a connected TV device to stream video to a television.

All of this data suggests that video ad publishers stand to benefit greatly from consumer adoption of high-speed Internet services as a way to watch programming that was once exclusively native to television. If the cord-cutting growth between 2010 and 2013 is any indication, it appears that this trend will continue to increase in the coming years.