Search ads have been the champions of online ad spending for some time. Thanks to Google not only having the majority share of the search market, but also a major tie-in with Adwords and Adsense. But video ad spending is increasing rapidly. So one day these two online titans will face off in the annual tables and duel for supremacy. That fight might be sooner than you think and here at ReelSEO we have front row seats (and a blonde in a fur coat on each arm like all good fight promoters should).
eMarketer have stared into their crystal ball and predicted that US online video ad revenue will continue to grow at an extremely fast rate going from $734M in 2008 to $5.2B or 7x as much in 2014 - just 6 years. In that same time frame they believe that Search ads will tack on another 50%. The difference in growth rate year-to-year ranges from 30 to 50% which means that at that rate, if you extrapolate those numbers out to 2020 Video Ads will already have hit $10B and Search will have topped $20B.
But we have historically seen that money is being shifted out of one form of advertising in favor of another. Remember all those calls that TV advertising was dying and the poor TV execs (who have been pulling in billions for decades) are suddenly in dire need of advertisers?
Well according to eMarketer everything will show growth over the next few years, even classified ads and Sponsorships which have been losing money over the last few years. So they believe the the future will be rosy and there will just be piles and piles of money for everyone to share in the online ad arena.
However, they are calling for the ad industry overall to only grow between 0.3% and 2.7% a year into 2014 yet there will be more than 50% more money in online ads in 2014 than in 2009. So that money must be coming from other forms of advertising. In Q2 of last year they found that budgets have been cut mostly in print ads (37.5%) and (TV 21.4%) with radio and outdoor advertising taking slightly lower hits at 8.9% and 5.4%.
What does that add up to in dollars? 2009 was about $66.9B for TV advertising so roughly $16.75 per quarter or a loss for the quarter of $4B. That is certainly a lot of money and if that happened for a year it would free up $16B roughly for spending in other areas, like online advertising. However, much of those cuts have probably been due to a slow economy and not so much a shift in ad dollars since even online advertising lost ground in 2009 and this year is expected to just top 2008.
So it seems like a change might have to come in the online ad industry. There are several ways this could happen. Right now the majority of advertisements shown on YouTube are not in fact video ads, but text ads, companion ads and banners. They have begun to do some pre-roll ads but that's it and considering I recently wrote that a good 15-25% of viewers will click away before a 10-30 second pre-roll finishes (according to TubeMogul), this might not be an ideal strategy for them to embrace.
Ashkan Karbasfrooshan, over at Online Video Insider (part of MediaPost), says that the definition of video ads will change. But that's like turning beans into peas (comment with the film that is from heh) as far as I'm concerned. Re-defining what a video ad is doesn't necessarily mean more money is being put into it, it means the definition is most probably covering more than it did in the past. He believes that contextual banner ads (shown as companions to videos) should be included in the video ad revenue streams since they are tied directly to video. But a Video ad either consists of video itself or is in the video player as an overlay is it not? Theoretically, according to him, any advertisement on YouTube should then be considered in the video ad arena - after all, they are a video site and the reason people go there is to watch video so all advertisements there are video-related right?
I can see some validity in that but it just seems like cheating. What seems more likely to me is that other areas of online advertising will start to feel the bite perhaps or other offline advertising will take harder hits and that money will make up some of the difference. Search ads certainly aren't growing rapidly, but they are growing and with Google behind them I don't think they'll die out anytime soon. After all, they own the two largest search engines on the planet. Where I do see some of the money coming from is most likely email and classifieds because really, who clicks on links for products sent to them in email? Unless I specifically request some information in my email, I almost never click a link (thanks to thousands of spam messages, viruses and phishing scams) and I have never purchased anything because I received an email with a link in it. Of course, that's not a very lucrative area anyway as it hovers under a half million a year.
In order for Video and Search Ads to stand toe-to-toe and start duking it out for supremacy, the money will have to come from one and go to the other. Obviously, the one that would need to start losing money is the Champ - Search Ads. This could happen if Google suddenly decided to shift its focus from words to video in regards to its advertising presence. Or if the evolution of online videos continues and they become far more compelling. Remember that patent Google filed about interactivity and games in YouTube videos? That "game" might shift ad dollars from everywhere straight into interactive online video advertising and, like a pro wrestler on steroids, Video Ads could suddenly balloon into a force strong enough to knock Search Ads from the throne and take the belt home, Can I get a Hell Yeah!?
Interactive advertising seems, even to me, not a major consumer of anything (aside from beer and pizza), like something cool that I would probably get wrapped up in from time to time. I could certainly sit down and play a 'game' of choose your own adventure in a Dorito and Mt. Dew sponsored world or perhaps some casual video-based game where I have to use various products (Product Placement Madness!) to solve puzzles and clues to see a portion of a film, video or show. It would be like, I was personally guiding the telling of the story and that is huge in games right now, so why not in advertising as well? Let the consumer guide the ad and they might be more willing to not only watch the ad but eventually to buy the products.
But this Fight of the Decade doesn't really need to happen does it? There is, according to eMarketer, plenty of money to go round. In 2014 online ads alone will be worth $34B. That's over 50% more than last year and it sure seems like it's enough to me. Perhaps that Fight will be postponed. Or perhaps some presently unknown or underestimated innovations in online video ads could mean it happens before 2015. Of course, we can't narrow our vision so much so that we don't see the next big thing coming. That could certainly be detrimental as it might do to online video ads what they did to other forms of ads. In a few years we might talking about Online ad X taking out Video Ads with a sucker punch and setting its gaze on Search as its next target. Then again...maybe we won't, maybe things in the online ad arena will just turn into a static hierarchy and in 10 years I'll be writing about how foolish I was to think that Video could ever knock out Search. I don't have a crystal ball so I don't know for sure, but isn't it fun to talk about it!?