There are some interesting findings from a study conducted by Digiday along with sponsor Adap.tv that show the typical spend increases that you see associated with online video. However, there are some findings about how ad buyers are purchasing the ads that are enlightening–namely, the rise of private video ad marketplaces. We heard some interesting numbers coming out of last year's Newfront and a prediction of a billion dollars changing hands for this year's Newfront. But according to this study, the Newfronts may not be generating that much, and it all comes down to inventory.
Online Video Ad Money Spending Broken Down
Some basic findings from Digiday/Adap.tv's Q1 "State of the Industry in Online Video" study include:
- 72 percent of video buyers’ budgets for the medium increased in the last year.
- The average spending increase of those whose video budgets rose was 53 percent, compared with just 20 percent the year previous, representing a doubling of the average budget hike.
- Of those whose video budgets did increase, 39 percent of buyers shifted spending from TV budgets to fund the increased spending, compared with just 27 percent the year previous. Even more buyers, 41 percent, shifted money from display advertising to fund increases in online video.
- The average amount of TV spending tapped for the increase in online video was 11 percent.
The increased spending in online video means there is less money being spent on TV and display advertising. But advertisers are seeing online video as more of a compliment to TV advertising rather than a full-on replacement. So display advertising is getting gutted while TV ads are merely experiencing a thinning. It's pretty much what we've talked about a lot with online video in general: it's not a replacement for TV, TV is not going away, but the money between the two is getting split from a budget once dedicated chiefly to TV advertising.
Which brings us to an interesting discovery when it comes to the digital upfronts (Newfronts) happening later this month. Participation of the 759 respondents to this survey was 14 percent in last year's Newfront. It's expected to be around 25 percent this year, but the possibility of a billion dollar haul that has been touted by some executives sounds unlikely considering the amount of participation. Take a look at this graph, how the respondents said they were buying their ads:
Buying from private video ad marketplaces jumped from 52 percent to 93 percent, mainly because of these given reasons: more control over the buyers' brands, more control over pricing, better audience targeting, and simple speed to market. With the Newfronts, there is a perception that ad inventory isn't all that scarce to justify buying ad space well in advance:
In addition to these findings, the Digiday/Adap.tv study discusses the use of analytics from services such as Nielsen and comScore that have started giving buyers and sellers "guarantees" on audience numbers. Many think it's a great thing, but there is still a lot of uncertainty when it comes to these measurements, as you can see here:
There's this wide discrepancy between publishers and agencies as to whether this is a good thing. But there are some very good reasons why an advertiser would want these types of guarantees: being able to understand ad spend waste, the ability to measure the efficiency of publishers and data providers, being able to compare online video to TV, and the impact on pricing, as seen below:
Publishers might be a little wary of "guarantees" because that's a "pact" being made between the buyer and the seller. It's probably hard to absolutely guarantee success many times, and expectations might be too high. The analytics are extremely important to the next set of data: mobile devices.
There is a greater emphasis on mobile ad buying being a compliment to TV advertising, but in the realm of mobile, the analytics for mobile have not quite matured yet where those "guarantees" can come in. 82 percent of advertisers believe its a viable compliment to TV, but 39 percent of the group believes the reporting is a barrier and 32 percent say the lack of scale of premium inventory is a big obstacle.
75 percent of agencies believe mobile is complimentary to TV, and 40 percent came back with the reporting barrier and 27 percent say the inventory is the main roadblock.