Video Ad Spending to Increase 22% in 2011 says IAB Survey

Video Ad Spending to Increase 22% in 2011 says IAB Survey

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The IAB (Interactive Advertising Bureau) recently released some survey results that they did at the end of 2010, An Inside Look at Demand Side Perceptions of Digital Video Advertising which was conducted, analyzed and prepared by Advertiser Perceptions. The survey hit up people who are in decision making positions for digital and or TV media in companies that spend $1 million or more in the next 12 months on advertising. The split was 70% agency, 30% marketers, an almost even split between higher and lower level titles and 85% make decisions on digital and 62% on TV ad spending. What did they find? Digital video advertising is set to increase.

Online Video Ad Spending Growth

The major finding, as the title suggests is the 22% growth in the spending for online video advertising. The reasons cited for this are less than surprising: more reach, easier to track ROI, consumers are more engaged. That’s the triple dip of online video ad goodness with sprinkles and a cherry on top. Yum!

It seems that those bigheads who determine TV ad spend haven’t been blind to everything we’ve been saying about them and they look set to delve deeper into the world of online video advertising.

Online Video Budget Percentage

Sure, digital video advertising is only 17% on average of total ad budgets. But if it’s a minimum of $1M then that’s $170,000 per advertiser. A bit more for agencies (19%), and a bit less for marketers (15%).

TV decision makers who are making the move to online video stated that it’s because it’s more trackable and targetable. They also say that production is less expensive which makes me wonder why that is since they should still be trying to put out high quality stuff. Regardless what I think, they say it’s more efficient spending. It makes sense right, spend less, reach more with better targeting and tracking… sounds like a winning cocktail for drunken success.

Reasons for the Shift to Online Video Ads

Marketers are gluttons for ROI and with the belief that it brings more they lead the way for increased spending. 62% of them cited that as the main reason while 53% of agencies said the same. The online and TV decision makers were about even 55% and 57% respectively.

Agencies on the other hand are more interested in audience which means targeting. Their main target audience is shifting to online and if they want to keep hitting them with their message and product, they need to do the same. 47% of agencies said that’s the push for them to spend more in online video ads while just 41% of marketers said the same. A six percent difference was seen between online decision makers (44%) and TV (50%).

Some see the ads being targeted more effectively, others say they’re following the consumers. One Chief Marketing Officer said, “The traffic between online and television simply are no longer in the same ballpark.”

Video Advertising Decision Criteria

As you can see by the graph below, targeting trumps results for all but marketers with results being also very high on the list. Reach was more important with agencies as was cost.

One Brand Manager was cited as saying, “Strong evidence and case study showing effectiveness for brand awareness and promotional activities, as well as alignment with target demographics.”

I think part of that is due to the smörgåsbord of great services that are being offered by major online video ad networks. Everything from day-part targeting to auto-optimization means that online video campaigns are certainly far easier to control and analyze than TV. With a TV on in the living room it’s hard to know exactly who is watching it while online, usually, people have their own computers, browsers or user accounts meaning more fine grain tracking of who is seeing what.

Obstacles to Online Video Ad Adoption

It’s not all wine and roses in the land of Online and TV ad decision makers of course. Well, it probably is actually, but they say that there are some certain obstacles yet to them throwing their bulks into the online arena. 56% of marketers cited ROI measurement and 44% of agencies said standard metrics.

That would then explain the marketers’ reluctance to fly high with online video since they are having a hard time zooming on on the return. The agencies on the other hand certainly need better tracking and reporting. After all, they generally have to do the same with their clients and so providing them with a full course of analytics, metrics and reporting is definitely going to be the way to bring them to the table.

Proof-of-performance, ROI analysis, stronger metrics, cost-per-engagement models and data about how the online video ads impact retail sales were all requests in the survey (video ad networks, are you reading? I don’t want to name names because I know you all are and I hold no favorites…probably).

Major Concerns About Online Video Ad Campaigns

72% of respondents said, “If I had more proof and/or certainty that my ads/campaigns ran, I would spend more on digital video advertising.” So for video ad networks you know what you need to do, get them that proof. Part of that is going to mean cutting down on view and click fraud (like those autoplay, muted ads on the bottom of some pages).

59% said they would prefer to buy in real-time. If you remember I did state that real-time ad buying and bidding was going to be the wave of the future and specifically said that it would be this year that it really took off with all the big ad exchanges starting to offer it. See, I do know what I’m talking about. Only 41% said that no video upfront purchasing limits their digital video ad spending.

The online video ad industry has done itself proud in two respects. Purchasing of it is far easier than it was in the past with only 35% stating it was too difficult and it might even be that same 35% who said that consumers don’t really engage with digital video ads.

So overall, from this survey, 65% of video advertising decision makers believe consumers engage with online video and that it is not difficult to buy online video ad spots. Well done!

Pre-roll dominates Agencies, Marketers Spread it like Butter

Here’s an interesting graph from the report:

Mmmm…butter baby! We have seen some recent research that shows pre-roll isn’t as effective as it was in the past and that interactive is going to be the way of the future. But right now, it still seems to be the format du jour. There’s little shift in the expected use of pre-roll but the other three are expected to increase this year along with rich media overlay and post-roll which a full 30% believe to be a viable solution for this year.

That’s a Chicken Wrap!

If you hadn’t noticed, there was a light food theme to this article. Why? Perhaps because I just ate lunch? Or perhaps it’s because I’m hoping that advertisers will become ravenous for online video advertising. Either way, it’s all about consumption and it seems like online video advertising is definitely going to consume more and more budget dollars. The IAB wrapped up their report with four basic points:

  • Spending will increase
  • Share of ad budget will increase
  • Ad dollars will migrate from TV to Digital
  • Use will increase

What should you be doing as an online video ad network?

Accelerate Migration:

  • Improve ROI measurement
  • Create better standardized metrics
  • Demonstrate audience shift to digital
  • Sell More

Focus on the decision drivers:

  • Targeting
  • Results
  • Reach

What should you be doing as an online video publisher showing video ads?

Lick your chops and get ready to gorge yourself on online video advertising dollars!

See, I told you there was a definite food theme today.

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