Online Video Advertising Turning Into A Feeding Frenzy?

Online Video Advertising Turning Into A Feeding Frenzy?

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I hate the terminology we associate with things. Words like epic, frenzy, legen….dary (thanks Barney Stinson) and unbelievable, phrases like iPhone-killer, the best ever and simply perfect. They all make me groan in disgust and I blame the sensationalist media in America for it all. The latest overly hyped phrase was used in reference to online video advertising heading for a ‘feeding frenzy,’ can you hear me groaning? But wait, perhaps we really are heading for this proverbial feeding online video ad frenzy. We all know money has been pouring into the industry for the past couple years. Everyone’s bottom line seems to be picking up and with a rebounding economy those recently shrinking marketing budgets are going to start ballooning again. Where will that money go? Yeah, most likely online video ads. Good for all of us who have been in the space for some time, right?

online video advertising growth chartBreak Media is one of the leaders in the online video ad space and they’re showing some amazing growth, 40% last year, and an expected 90% this year according to TechCrunch. They say that Q3 revenue could top $10 Million (from all operations, not just video ads).

Tremor Media is also reporting a doubling of ad revenues and their CEO stated the fourth quarter, “is lining up to be a monster,” and that video ads “have reached a frenzy point.” FRENZY! It reminds me of the old Transformers, anyone?

But what’s the Reel deal? According to eMarketer spending on video ads will see a fairly steady, yet slowly declining growth rate. 2008 jump started the revolution with massive growth and then the financial crisis struck a heavy blow with only 38.6% growth in 2009. The rebound is in progress and so is the growth rate with an expected 48.1%. After that it will begin to slide year after year which is not so surprising considering that the major players will already be in the market by the end of this year or next.

How much does that add up to? About $1 Billion last year and should be about $1.48 B this year. Comparing that to it’s older, larger video ad parent – Television – it’s got a lot of space to grow as TV pulled in $70 Billion.

Considering that there are around 178 Million US Internet users watching video online, that is about $8.40 spent per video viewer. Or, here’s another interesting stat, about 28 cents per video viewing session, comScore listed 5.235 Billion sessions for 178 Million viewers in the US in July 2010.

Where is all that ad money going? Hulu. They do show more ads than anyone else, 783 Million in July 2010 alone. Alright, not all money is going to Hulu, Tremor Media showed 452 Million and BrightRoll 249 Million. Oddly, Break Media didn’t make the Top U.S. Online Video Properties by Video Ads Viewed according to comScore, though they did have a potential reach of  38.7 percent, third for the month.

What’s the draw to online video?

Statistics, demographics, metrics. These are growing more and more accurate in the online video ad space. With places like TubeMogul offering fairly robust video ad tracking stats (see their InPlay service) advertisers can get a far better picture of who is seeing their ads, where they are, when they are seeing them and how interested they are (via engagement and interaction tracking). These are things that simply cannot be properly judged in the television advertising space, yet. With Internet and TV merging (I saw a pretty cool video about Google TV) these tracking statistics could make their way into the TV space in some form as well.

Hulu is of course a fairly safe bet for advertisers who already have ads on content that then moves from TV to Hulu. So why not expand your ad campaign to catch the online viewers of a show as well as those sitting on their couch. Still, there’s a lot of user-generated content out there as well. Luckily, for all involved, that is also beginning to see some interest from advertisers. YouTube stars are making money (at least 10 with $100,000 a year).

Of course, Hulu and YouTube are massive when compared with other sites that show video. Even the highly specific demographic that is the Gamers Daily News readership does not net us all that much revenue with the LongTail Ad Solution eCPM currently struggling to maintain itself at $1 for us (we really don’t show all that many videos just yet). We’re not a very good example really, so tell us what kind of eCPM you’re seeing on your video ads these days and we’ll take an average.


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