As anyone who reads this site knows, the video ad industry continues to grow and evolve at a rapid pace. Video advertising has become an increasingly important component of marketing campaigns for just about every major brand, and considerable time and expense is being invested to develop strategies to effectively reach relevant audiences.
In the second quarter of 2013, the video ad industry is at a unique point in its life cycle; in many ways it is expanding rapidly, but in others it is showing signs of maturity. Below are five charts designed to give newcomers and experienced video advertisers a "state of the industry", highlighting some key trends that should impact how both publishers and advertisers approach this space. All data is from comScore monthly releases that use an imperfect methodology, but the general trends are still very useful.
Charts 1 & 2: Putting YouTube In Perspective
For TV advertising, a display of market share would include major networks such as NBC and CBS as well as smaller cable channels such as A&E and Comedy Central. For video ads, the big players are sites such as YouTube and networks such as BrightRoll that include groups of smaller sites. We'll start with a look at a breakdown of the video ads served in March 2013, broken down by online properties:
Takeaway: Basically, there's a lot more to video advertising than just YouTube. While Google sites (primarily YouTube) may seem like the 800 pound gorilla, they have a relatively small share of the overall market. And it looks even smaller if you take a look at ad minutes for March:
If you're an advertiser, this means that YouTube probably shouldn't be the extent of your video presence. That would be akin to putting together a national TV campaign but appearing only on Comedy Central; there are several other platforms that offer unique exposure opportunities.
If you're a publisher, you similarly have a number of options available when exploring ways to monetize your video inventory (you may also like my recent feature on 101 ways to make money with video). In addition to the major networks included in the chart above, there are dozens of smaller networks who will work with you even if you don't have millions of monthly impressions. Mark Robertson has a collection of dozens of video ad network options that is a great resource for both advertisers and publishers.
Chart 3: Steady As She Goes
The tremendous growth of the video ad market has been covered at length on this site and others. And with good reason; spending has skyrocketed in recent years and is expected to continue moving up and to the right for the foreseeable future. So it's a bit surprising perhaps that total unique viewers has been basically stagnant for the last year. This next table shows millions of unique viewers over the past 13 months, as well as minutes of video consumed per viewer:
Takeaway: The audience for video ads has been essentially flat over the past year, meaning that video ads aren't getting into more and more households as one might expect. This makes sense if we step back and think about it; growth in Internet penetration rates have slowed considerably in recent years as the market has reached something of a saturation point, meaning that the online audience as a whole is no longer growing nearly as quickly as it did during the 1990s and 2000s. Basically, the state of online video advertising is both "wow!" and "ho-hum."
Chris Atkinson recently highlighted the fact that earthlings now watch 6 billion hours of YouTube videos each month, a staggering figure. As he noted, however, that number is reached not by everyone on the planet watching an hour a month but by a relatively small group of viewers watching for several hours.
Chart 4: We Are The 52%
Video ads are everywhere now. Or at least so it seems to anyone who is reading this article. In reality, however, a little more than half of the country is "accessible" through video ads. Below is a chart of video ad reach for the past 13 months, reflecting the percentage of the U.S. population that can be served a video ad:
Takeaway: Advertisers currently have "reach" to just over half of the U.S. population–a huge potential market. What's not reflected here–and is perhaps more important–is the incremental reach of video ads, particularly to the audience of "light TV viewers." Google has published a detailed research paper on this topic and also a pretty compelling presentation on the specific benefits of utilizing video ads in conjunction with traditional TV campaigns.
It's also worth noting that this percentage is up just slightly from a year ago, when video ads had a reach of about 51%. In other words, video ads may seem ubiquitous but aren't exactly breaking down doors to get into every U.S. household (though 52% reach is nothing to scoff at).
Chart 5: Cranking Up The Frequency
So the number of unique viewers is relatively flat and reach hasn't increased dramatically. Yet total ad minutes for March 2013 was up about 42% over a year earlier, at more than 5 billion minutes. That's the result of a big jump in frequency, or the number of ads shown to each unique viewer. Here's the chart of this trend over the past year (complete with a fancy trendline):
Takeaway: Simply put, the average viewer is seeing a lot more online ads than he or she did a year ago. Almost all major properties and networks have seen their frequency go up in the last year (Tremor and TubeMogul are the exceptions), meaning that they are showing more ads to each viewer. That makes sense intuitively: more advertisers have embraced video marketing as part of their overall strategy, and as a result ads are now appearing where once there was nothing but uninterrupted content.
Obviously, this is a potential issue for advertisers; they don't want their message to get lost in a sea of ads. But a bit of perspective is needed here. The average child sees more than 1,000 commercials each month. The typical Internet user is served 1,707 display ads each month. So there's no need to sound the alarm bells and bail on video ads. But this is certainly a trend that's worth keeping an eye on.
Chart 6: Video Marketing Landscape
To this point I've focused primarily on industry wide statistics. Now let's examine how the biggest servers of video ads stack up to one another in terms of Reach and Frequency. Again, reach refers to the percentage of the U.S. population that can be shown an ad while frequency refers to the number of ads each shows to a viewer every month:
Takeaway: Not all networks are created equal; there are huge differences in the reach and frequency of each. These certainly aren't the only factors to consider when planning a video ad campaign, but they are two pretty important ones. A few comments on the scatter plot of video ad sites:
- Hulu has a ridiculously high frequency, showing about 65 ads to each viewer.
- BrightRoll (50.4%), not Google (32.3%), has the largest reach–and almost matches the total reach for video ads as a whole.
- Tremor (10.3 ads/month) and Specific Media (11.4) have the lowest ad frequency.
In many ways the video ad industry is undergoing tremendous growth and change on a daily basis. In others, it's reached what looks to be a form of maturity. Crafting a successful marketing campaign will probably require a bit more than getting your ad running at the beginning of YouTube clips; there's a massive amount of opportunity out there that can deliver results if properly tapped. Understanding the landscape is a good place to start; hopefully you're now equipped with exactly that!
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