As online video advertising faces a sea change, Q1Media, AdExcite plan merger

Parent Category: News | 18-03-2013

Q1Media and AdExcite are to merge to create a display network that serves multiscreen, multiplatform video advertisements.
The news comes at a transitional time for online advertising: evidence suggests that while viewing of online video ads is up, the prices that individual spots command are declining. At the same time, the overall volume of online video ad inventory is expanding, making for a growing amount of marketing spend being allocated to the space.
Q1Media supports more than 1,500 Web publishers and 150 million unique visitors, up from 65 million in January 2012. AdExcite meanwhile has grown to 130 million visitors by the end of 2012, from 67 million in April 2012, according to Mediapost.
And while both are Web publishers at heart, the build-out of a mobile platform will be a top priority for the combined company as mobile video continues to grow as a share of Internet traffic.
AdExcite co-founder Phil Banfield will serve as CEO for the new entity, while Bill Wiemann, Q1Media's founder and CEO, will serve as president and COO.
The opportunity for video advertising continues to grow online. As RTVN previously reported,
according to comScore a full 83.3% of the US Internet audience viewed online video in February, with video ads accounting for 23% of all videos viewed and 2% of all minutes spent viewing video online. There were nearly ten billion ad views, the industry's best outing since December 2012's 11.3 billion ad views. Video ads reached more than half of the total US population, an average of 63 times during the month.
AdExcite holds about one-third of the video advertising reach in the US, Banfield told Mediapost, and said that it is marking significant growth: "In 2012, AdExcite grew 260%," he said.
The company will nonetheless have its work cut out for it, facing behemoths. Google Sites delivered an all-time high of 2.2 billion ad views in February. The BrightRoll Video Network came in second with 1.6 billion ad views, followed by Hulu with 1.4 billion, with 1.4 billion and with 1 billion.
Time spent watching video ads totalled 3.8 billion minutes, with BrightRoll Video Network delivering the highest duration of video ads at 859 million minutes. Hulu delivered the highest frequency of video ads to its viewers with an average of 61, while CBS Interactive and Google Sites tied for second with an average of 23 ads per viewer.
With viewership expanding, so is online video ad spending. eMarketer predicted that online video ad spending will exceed $4.1 billion in 2013, up 41% from last year. And, online video advertising expenditures will almost double from $4.1 billion this year to $8.04 billion in 2016, the analyst firm said far outstripping the growth rates for traditional television.
Looking to capture the opportunity, websites are thus expanding inventory, with about a quarter carrying video ads now, according to comScore. That in turn is creating a bit of a glut, with the laws of free economics reacting predictably. Per-unit pricing for online video advertising fell in 2012 by 10% to 15%, according to estimates by video BrightRoll (reported by the Wall Street Journal). The average video ad CPM, came in at $15 to $20 in 2012 way down from 2011's average CPM of $17 to $25.
The takeaway? There's more online video advertising out there than ever before, but it's becoming less profitable. But the future and the vision that AdExcite and Q1 Media have lies in the convergence of inventory and messaging across screens.
Leveraging traditional TV, second-screen ads, TV everywhere and mobile video spots in a personalised, targeted way will add value to the industry and create better engagement. The recent fluctuations in market dynamics for online video ads alone are just part of the process of creating that next generation of marketing, analysts noted.
"In the future, online video will almost certainly prove so disruptive that TV advertising will have to integrate with it," eMarketer predicted. "Several factors are likely to contribute to that eventual fusion, most notably the availability of high quality video content and associated advertising across five increasingly used digital screens desktop computers, notebook computers, smartphones, tablets and connected TVs."