Online video consumption is rising steadily and advertising spending is following suit. Online video ad spending is set to nearly quadruple from more than $1 billion this year to more than $4 billion in 2013. Still, most people will not spend a long period of time watching video on their computer screens, but they will in front of their 50-inch flat-screen TVs.
Online video ad spending is dwarfed in terms of absolute dollars compared with TV. For every $1 marketers spend on Internet video ads in 2009, they will spend nearly $65 on TV commercials. But, online video is ahead in terms of dollars spent per hour of content viewed.
eMarketer projects that TV advertisers in the US will spend only $0.13 per hour of viewing, while their online video counterparts will spend 38% more, at $0.17 per hour. That imbalance will need to end in order for marketers to find equivalent value for online video, rather than greater costs.
“By 2010, the difference between Internet video’s and TV’s spend per hour will start to even off—which indicates a potential tipping point for online video advertising,” said David Hallerman, senior analyst and author of the report “Digital Video Advertising: Where’s the Money?”
Today’s online video advertising will not support substantial advertising dollars. The lean-forward, immersive mindset of Internet users is often not receptive to the story-based brand messages of typical video advertising. Lean-forward media consumption creates a readily distracted audience, which will deter a substantial scale of video content online, the kind of scale that will shift large ad dollars from TV to the Internet.
In order for Internet video to grow more quickly, it needs to reach an inflection point where Internet video and TV video have substantially converged. “In the lean-forward computing mode, people are mousing and ready to click at the slightest provocation,” said Mr. Hallerman. “In the lean-back TV mode, while people may certainly click with the remote, they tend to spend extended time with the content and absorb messages with a more receptive frame of mind.”
Matching ad spending to viewer eyeballs in a ratio comparable with TV will support online video ad spending growth, making the generally higher CPM pricing for online video more acceptable to many marketers.
Since the time people spend watching video or TV content produces potential engagement points—moments to reach them with the marketer’s message—this is a suitable method for gauging the strength of these two parallel ad spending formats.
For more information on online video advertising, or to speak with Mr. Hallerman, contact Samson Adepoju.
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