It’s no secret that the U.S. digital video advertising industry is growing even faster than initially predicted.
An updated report from eMarketer shows that digital video ad spending will increase by double-digit percentages annually between 2018 and 2021, topping $26 billion by the end of that period.
The industry is also gaining in complexity. Each year brings new formats, devices, platforms, ways of transacting video ads and, accordingly, new best practices.
According to a recent survey by the IAB, digital video ad spend has increased by 53 percent over the past two years.
Over 350 brand marketers and advertisers with more than $1 million in annual media spend completed the online survey that was published in April 2018. On an average, the respondents reported that:
- 59% of their digital ad spend goes to video, with an average of more than $20 million spent on digital and mobile video ad buys annually.
- Two-thirds of respondents plan to shift some TV budgets to digital video this year.
- 56% said broadcast/cable TV ad spend would remain flat over the next 12 months compared to the previous year.
- In comparison, more than half of respondents said budgets would increase on desktop/online video, mobile video, and advanced TV.
Meanwhile, TV ad spending is moving in the opposite direction.
As of this April, eMarketer has made a downward revision of TV spending that shows even steeper annual decreases through 2022, except for a slight bump in 2020 due to the US presidential election and the Summer Olympics in Tokyo.
According to the latest eMarketer report, here are some key highlights of Q2 2018:
- Time spent on video platforms is on the upswing while the time spent on TV is decreasing.
- The number of US TV viewers is also dropping. Though the decrease isn’t precipitous, it’s on track to put viewers at below 90% of the US population for the first time in at least a decade, and likely longer.
- Cost is the most significant factor causing people to cancel pay-TV service, according to TiVo data. This has been the case for almost two years, but the degree to which cost drives the decision is increasing.
Three key things you need to know about digital video now:
#1 - Programmatic digital video ad spending continues to keep rising quickly.
US programmatic digital video ad spending is estimated to reach $19.26 billion by 2020, up from $6.47 billion in 2016. This means programmatic video ad spending will have almost tripled in a four-year span, during which time its share of total US video ad spending will increase to nearly 80% from 60%. These estimates also represent an increase over the last time we forecast programmatic video ad spending in mid-2017.
These estimates also represent an increase over the last time eMarketer forecasted programmatic video ad spending in mid-2017.
Most of the dollars—54.0%—spent on US programmatic video advertising will go to mobile devices in 2018.
#2 - A large number of local and small to medium-sized businesses (SMBs) are investing in digital video advertising.
SMBs say digital advertising is one of the most effective ways to attract new customers.
The IAB has found that of the 9 million SMBs in the U.S., 75 percent or more have spent money on advertising, with 80 percent using self-service platforms and 15 percent using programmatic advertising. We believe this number will continue to grow as technology becomes more and more accessible.
Digital video advertising is very engaging. Digital ads can get an immediate response. If a local business is offering something someone’s interested in, the sales cycle will be much shorter and will help the business get hot leads immediately instead of waiting for them to trickle in through their doors or the phone to start ringing on its own.
#3 - US digital video viewership will increase through at least 2022.
eMarketer estimates that the ranks of US digital video viewers will grow from 228.8 million to 248.9 million between 2018 and 2022, and the penetration rate among internet users will increase from 69.5% to 73.5%. As the number of US adult digital video viewers grows, the universe of adult pay-TV viewers will continue to diminish.
The digital video combines the emotional impact of the story with the efficacy of digital advertising. It is a perfect way for businesses to authentically engage with today’s consumers. It has the scale of television, the precision of digital advertising and the power of authentic story.
ZypMedia specializes in local digital video advertising. We can help you place your digital ads in front of your target audience, drive your sales, and grow your business. Learn more about our digital products.