Online Video Surges, As Advertiser Budgets Cut Into TV

AdexpendVideo ad spend will continue to explode, increasing 29% per year and reaching $23.3 billion by 2017, according to the latest update to ZenithOptimedia’s global ad expenditure forecast.

While 29% is a decline from the 34% growth rate Zenith recorded for online video in 2014, the format is the fastest-growing digital ad category, partially due to mobile.

Zenith predicts mobile ad revenue will grow 39.8% through 2017, while desktop display will grow 4.6%.

Other factors driving online video growth include measurement firms Nielsen and comScore’s investment in cross-platform video metrics, companies like YouTube, Facebook and Twitter investing in video ad products and the fact that programmatic video buying gives “advertisers with more control and better value,” according to Zenith’s report.

Zenith’s numbers illustrate the shift from traditional TV buying to “total video.” While television accounted for 39% of ad spend in 2014, it’s expected to grow at a much softer rate (3%) than other formats through 2017, particularly as more marketers move budgets from television to online video. 

IPG Mediabrands’ media investment division MAGNA Global similarly saw softening in TV ad spend. An update to MAGNA’s forecast in February estimated that TV ad revenues grew only 3% in 2014.

Advertisers, agencies and even media companies are beginning to complement and package television buys with online video and mobile, said Jonathan Barnard, head of forecasting for ZenithOptimedia.

“It’s obviously something broadcasters are looking at now, too, because they’re facing a lot of competition from upstarts and online services,” he said. “The broadcasters have a long-entrenched advantage in producing content, and so new ways to distribute and monetize existing content is something that would be very valuable to them.”

Zenith’s projections did not specifically reference investments in programmatic TV. While programmatic’s efficiencies has made it attractive for online display buying, it hasn’t arrived in TV – at least not yet.

“Certainly we see opportunity for programmatic to grow in offline, as well, with TV, and things like digital out-of-home,” said Barnard.

Total global ad expenditures will increase 4.4% in 2015 to reach $544 billion, a slightly downward revision by Zenith (0.5 decrease in percentage points) due to economic strain in Russia, the Ukraine and China. This figure was generally in line with MAGNA’s total global ad expenditure forecast for 2015, which was $536 billion.

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1 Comment

  1. Stewart

    Nice article but you left out an important point: television has become so dominated by ads, many poorly made, and lackluster programs that people are just tuning out. Why watch movies on TV when they wedge 45 minutes of commercials in a 120 minute movie when you can watch it on Netflix?