Advertising not keeping up with IP video consumption
Michelle Clancy | 17-07-2012
Research into global video trends has revealed that the growth in IP-delivered content is not being matched by a comparable level of investment in advertising across connected devices.The research, a collaboration between Videoplaza and analyst house IHS Screen Digest, found that TV remains first choice for reaching audiences at a national scale for building brand awareness.However, flat growth over the next five years (expected to be a CAGR of 1.4% in Western Europe, and 2.5% in the U.S.) means that media companies must diversify to reach their increasingly connected audience. As the definition of television continues to change, large-scale brand advertising has not yet found a way to tap the potential in IP-delivered video."The rush to deliver content to the growing range of connected devices presents a business and technology challenge to traditional TV platforms, caught between old business models and the need to innovate," said Sorosh Tavakoli, CEO of Videoplaza. "This research highlights that as media companies move to address the connected audience, they must complement their content with a clear IP monetisation strategy."IHS said that media owners should advance their IP-delivered video advertising strategies quickly to ensure sustainable, monetised growth in a fast-changing market. But the renaissance in brand advertising online is still PC-led, with IP-delivered TV advertising yet to reach other screens. Video forms a critical factor in online brand advertising but the current level of IP-based video ad spend does not fulfil the potential offered by connected devices.In Videoplaza's broadcaster clients, ad delivery to connected devices other than the PC grew from under 2% to more than 16% in the last year.There are already 124 million connected living room devices in Western Europe and North America. By the end of 2014, there will be more connected living room devices than PC or TV households. The growth in connected devices is leading to a double fragmentation - of the traditional audience and of increasing sources of content, thereby driving up the costs and increasing the competition to reach viewers scattered across platforms and devices.Audience reach needs to be complemented by ad reach as a way to reunite a widely dispersed audience. The connected device landscape must be forged into a cohesive ecosystem that combines the delivery of content and its monetisation."The tipping point is happening now – 8% of online display advertising revenue in 2011 came from video," said Daniel Knapp, director of advertising research at IHS. "We expect high growth in the sector to continue in 2012, with a revenue increase of 53% in the top five European markets. Media companies realistically have a 12-24 month window of opportunity to get prepared before the audience significantly shifts on to multiple devices. With fewer and fewer barriers to IP-delivered video, the competition from new players in the connected space is also set to intensify. This means that broadcasters should act fast to monetise their content equity."