Online video ad revs rise twofold in three years

DetailsEditor | 13 May 2015

Research from IHS Technology and Vidiro has revealed that some of the worst fears of TV operators are being realised as TV advertising budgets are being cannibalised by digital.

The survey from the analyst firm and the video analytics company found that fundamentally online video was redefining television. Between 2011 and 2014 global advertising revenue from online video doubled to $11.2 billion and is set to jump to $13.8 billion in 2015. IHS also forecasts that by 2017, online video advertising revenues will reach $19 billion, with TV advertising budgets beginning to see cannibalisation by digital in some markets. By this time, TV is set to make up only 28% of total advertising in Western Europe.

The IHS and Vidiro data also found that advertising was the principal mechanism of monetising online video, generating more revenues than subscription or transactions. It also revealed that linear TV is taking a hit from online and on-demand video, declining in 2013, by seven minutes per person. By way of contrast, online video services grew steadily with increasing viewing share in the past two years, notably the industry's flagship YouTube showed 50% growth in hours watched, year-on-year. Yet the research observed that in 2014 Facebook surpassed YouTube as the leader in online video impressions and forecast that it will account for 25.7% of all online video ad revenue by 2018.

In the Advertising Media Intelligence Service report, IHS Technology also suggested that the structure of the online video market was changing rapidly as well. It asserted that, as online content consumption grows, content production is also increasingly moving online. The research noted that technology companies, who traditionally focused on improving ad formats to increase their revenues, are now investing heavily in content to compete for TV ad budgets, and that programmatic buying and selling was rapidly taking hold of video, improving effectiveness and efficiency of the transactional process, as well as measurement, attribution and optimisation.

"YouTube leads the pack by combining a content strategy with an aggressive advertising strategy," commented Anna Stuart, senior analyst at IHS Technology. "YouTube advertising revenue in 2014 amounted to $4.2 billion, up in double digits from 2013."