Happy New Year!
Recently, eMarketer forecasted Connected TV (CTV) advertising will increase from approximately $7 billion in 2019 to over $14 billion in 2023. The forecast gained a lot of attention in the closing weeks of 2019 as CTV came into focus as one of the industry’s most important themes in 2020. To learn more and get behind the numbers, I recently interviewed eMarketer video analyst Ross Benes who was responsible for the forecast. A lightly edited transcript follows.
(Reminder, for a deeper dive, check out VideoNuze’s Connected TV Advertising Summit on June 11th in NYC)
VideoNuze: eMarketer recently released a forecast showing CTV ad revenues increasing from approximately $7 billion in 2019 to over $14 billion in 2023. What are the key contributors to this rapid growth?
Yesterday eMarketer shared its U.S. advertising forecast for 2019, predicting that digital ads will account for $129.3 billion or 54.3% of spending, while traditional ads will drop to 45.8% of the market. eMarketer said it’s the first time digital will surpass traditional in share of market.
Digital has been on a trajectory for years to achieve this milestone, so in a sense there’s no major surprise here. What is a surprise is the outsized role that Amazon is playing in both growing the digital ad market and taking a bigger slice of it - and how quickly this has happened.
eMarketer believes that in 2019 Amazon will take nearly 9% of digital ad spending, chiseling into Google’s and Facebook’s (the “duopoly”) combined share which stood at 60% in 2018 but is forecast to drop to 59.3% in 2019. eMarketer cites Amazon’s “shoppers’ behavioral data for targeting and provides access to purchase data in real time” which was previously only available to advertisers/agencies through retail partners.
At last week’s SHIFT // Programmatic Video & TV Ad Summit, Lauren Fisher, eMarketer’s principal analyst, kicked off the day sharing her forecasts for both programmatic video and programmatic TV ad spending in the U.S. Following her presentation, I interviewed Lauren and the audience asked a number of questions.
Overall, Lauren sees strong growth ahead for programmatic video, which will account for 76.5%, or over $13.4 billion of online video advertising by 2019. She’s particularly bullish about the role of mobile, which she sees growing to 60% of programmatic video by 2019. Lauren is also optimistic about connected TV’s opportunity, though she still see it as early in its development.
Programmatic TV is not nearly as far along, with Lauren forecasting $3.8 billion in spending by 2019, representing 5% of overall TV ad spending. Lauren also reduced her 2018 forecast to $2 billion, which is roughly half of what she forecast for 2018 when she presented at SHIFT 2016. We discuss all the reasons behind her revisions.
Watch the session video now!
At last week’s SHIFT // 2016 Programmatic Video & TV Ad Summit, we were privileged to have Lauren Fisher, senior analyst at eMarketer, kick off the day by presenting details behind her forecast that programmatic video and TV ad spending will hit $15 billion in 2018, more than doubling from 2016’s estimated $7 billion.
In her 15-minute presentation, Lauren highlighted the critical roles of data, targeting, audience fragmentation, mobile and connected TVs in driving programmatic video & TV ad spending forward. Below is the video of her presentation, and her slides are available here.
I'm pleased to present the 311th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
First up this week we discuss NBCU’s announcement on Wednesday that it will allow select advertisers and agencies to buy ads programmatically in its linear TV networks. It’s another important step in advertising becoming more data-infused and targeted, though as I explained, it’s not yet a full-blown programmatic offering like we’ve seen in video and display. Colin and I dig into the details.
We then turn to new research on connected TV adoption and forecasts. Colin details findings from 3 different sources, which differ from one another. We attempt to reconcile them, although not fully successfully. Regardless, connected TVs remain one of the pivotal areas of online video, providing access to high-quality long-form content in the living room.
Listen now to learn more!
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According to eMarketer’s latest forecast, by 2017, programmatic will account for 65%, or $7.43 billion, of total online video ad spending of $11.4 billion.
eMarketer has also increased it forecast of programmatic’s share of online video spending in 2015 and 2016. For 2015, eMarketer is now estimating 39%, or $2.91 billion, of online video advertising will be done programmatically (vs. the prior forecast of 28% or $2.18 billion). For 2016, eMarketer is now estimating 56%, or $5.37 billion, of online video advertising will be done programmatically (vs. the prior forecast of 40% or $3.84 billion).
It's no secret that smartphones and tablets are now nearly ubiquitous, and that more and more video is being consumed on them. For example, Ooyala recently said that 34% of all video plays were on mobile devices in Q4 '14, which was up from 6% just 2 years prior. Meanwhile, YouTube's CEO said last Fall that 50% of its views are on mobile and its head of content said about its product development focus, "It's all mobile, mobile, mobile."
All that mobile video usage is now starting to heavily impact how video is created and monetized. While mobile video has always been shorter-form than desktop, a key creative influence over the past year has been Facebook's insertion of audio-off autoplay video in users' news feeds. Last week Fortune provided a lot of context for what's behind Facebook's 4 billion views per month. Then, in an insightful post, Newsbound's Josh Kalven pointed out how audio-off is leading content creators to adopt readable video formats.
According to a new eMarketer forecast, in 2014 YouTube will account for 18.9% of the U.S. online video ad market, down from 21.2% in 2013. Still, YouTube will see a healthy 39.2% year-over-year net video ad revenue increase, from $810 million in '13 to $1.13 billion in '14. eMarketer forecasts YouTube's U.S. video ad revenue to continue growing, by 34.2% in '15 to $1.51 billion and by a further 18.3% in '16 to $1.75 billion.
At last month's Video Ad Summit, mobile video was a big topic of conversation. Kicking off the day, eMarketer's principal analyst, David Hallerman, walked the audience through his firm's online video ad forecast, including the mobile component, which it estimates will quadruple to $5.44 billion by 2018, over 44% of of total online video ad spending (the full forecast is available for complimentary download here).
Later in the day, Jim Spencer, president and founder of Newsy (an ad-supported mobile video news app acquired earlier this year by E.W. Scripps) led a spirited panel on how media and technology companies are keeping up with mobile video's surging adoption. Joining him on the session were Ashish Chordia (founder & CEO, Alphonso), Jason Krebs (head of sales, Maker Studios), Rebecca Paoletti (CEO and co-founder, CakeWorks LLC) and Canaan Schladale-Zink (VP, Sales North America, Sizmek).
Videos of each of the sessions follow below.
eMarketer is forecasting that mobile video advertising will nearly quadruple in size from $1.44 billion in 2014 to $5.44 billion in 2018. The forecast is part of eMarketer's new "US Mobile Video Advertising 2014" report which eMarketer is offering for exclusive, complimentary download to VideoNuze readers.
At last week's VideoNuze Online Video Ad Summit, eMarketer's Principal Analyst David Hallerman previewed some of the data in his opening presentation. The session was video-recorded and will be available soon. In the meantime, Beet.tv interviewed David at the Ad Summit and I've embedded the video below.
At the recent VideoNuze 2012 Online Video Advertising Summit, eMarketer's principal analyst David Hallerman presented data on the state of the online video advertising market. While bullish about its prospects for growth, one of David's clear message was that TV advertising isn't going away any time soon, and in fact the growth of ad dollars TV will experience over the next 5 years will actually be greater than online video's.
In David's presentation, he explains the key factors he believes will hinder or help online video's growth. No surprise, one of the most important is unified measurement. Overall, David sees online video advertising as being complimentary to TV advertising. At the end of the session I join him on stage for 10 minutes of Q&A.
Note: David's slides are available for download here.
Daisy Whitney and I are pleased to present the first VideoNuze Report podcast of 2010 (and the 45th edition overall!).
In today's podcast we first discuss my post from yesterday, "Why Netflix's Long-Term Focus in New Warner Bros. Deal is a Win for Everyone," in which I assert that the new 28 day "DVD window" that the deal creates helps Netflix, Hollywood studios and ultimately consumers. There is a lot of consternation in the blogosphere and Twittersphere about whether Netflix is hosing its subscribers with this new policy, but I believe there's actually little risk of that, and the payoff for Netflix is better content for its streaming catalog as well as lower costs for its DVD purchases. While WB surely doesn't expect to sell more DVDs due to the deal, it can only help make the DVD model's demise a little less disruptive.
Switching gears, Daisy then reviews some of eMarketer's predictions for ad spending in 2010, with particular focus on online video advertising, which eMarketer expects to grow from about $1 billion in '09 to $1.4 billion in '10. Listen in to find out more.
Click here to listen to the podcast (12 minutes, 30 seconds)
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Daisy Whitney and I are pleased to present the 27th edition of the VideoNuze Report podcast, for August 14, 2009.
In this week's podcast, Daisy and I discuss "The Future of Internet Video," a new research report released this week by eMarketer. Coincidentally, we had each read the press release about the report and found ourselves disagreeing with its conclusions.
As Daisy explains, the report essentially asserts that for online video advertising to continue to grow, the viewing experience between the computer and TV must converge. The logic is that TV's "lean-back" viewing mode is a preferred context for advertisers, and therefore for advertising against online video to grow, the video must be accessible on TVs.
Daisy takes issue with this, arguing that while convergence is great, there are indeed times when watching on a computer is preferred by consumers. A "new norm" has emerged with the computer as a parallel viewing platform. Rather than looking at this as an obstacle, advertisers should embrace consumers' behavior, and capitalize on it.
My main disagreement is that eMarketer believes that a "lean-back" TV viewing mode is preferred by advertisers over the "lean-forward" computer viewing mode. While eMarketer argues the computer mode creates viewer distraction and incents clicking away from ads, I see it the other way around: when watching video on computers, ads cannot be skipped, calls to action can be easily implemented (e.g. "click here to receive....) and everything of course can be measured. Contrast this with the rampant ad-skipping that now occurs in DVR-enabled homes.
Listen in and draw your own conclusions.
Separately, I can't resist touching on the topic of "authenticity" of broadband video I wrote about earlier this week in "How I Got Punked by the Megawoosh Waterslide Video." I received lots of feedback on this post, with plenty of people 'fessing up that they got punked too, while others called me the "poster child for gullibility!" Either way, authenticity of broadband video is a fascinating topic.
Click here to listen to the podcast (13 minutes, 58 seconds)
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The VideoNuze Report is available in iTunes...subscribe today!
Following are 4 items worth noting from the week of August 3rd:
1. Research, research, research - For some unknown reason, there was a flurry online video-related research and forecasts released this week. In no particular order:
eMarketer was out with a new forecast indicating 188 million online video viewers in the U.S. in 2013.
Veronis Suhler released its forecast of 2009-2013 communications industry spending, showing advertising shrinking as a percentage of total spending.
PWC's UK office released its 2009-2013 forecast, which also anticipates declines in advertising.
CBS's research head David Poltrack used detailed data to explain the company's online video strategy and buttress its argument that in a TV Everywhere world, it should be compensated for its content (slides are here, via PaidContent).
Ipsos found that Americans streamed a record amount of TV programs and movies, doubling their consumption from Sept '08 to July '09.
Yahoo and a group of research partners released data finding that 70% of online video consumption happens throughout the day and night, as opposed to traditional TV viewing which is concentrated in the prime-time window.
Last but not least, TDG released excerpts of its research on "over-the-top" video services, available for download at VideoNuze.
2. Unicorn Media launches, hires ex-Move Networks executive David Rice - It will be hard for some to believe there's room for yet another white label video publishing and management platform, but startup Unicorn Media is going to try elbowing its way into the crowded space, with a specific focus on large media companies. I spoke with Unicorn's executive team this week, led by Bill Rinehart, who was the founding CEO of Limelight.
Unicorn is positioning itself as the first "enterprise-grade" solution, staking out key differentiators such as enhanced analytics/reporting, faster/easier transcoding, improved APIs for content ingest/management and more flexible monetization/ad queuing. I have not yet seen a demo, but I'm intrigued by what I heard. The company has raised $5M to date from executives/angels and has a staff of 25. David Rice, formerly Move's VP of Marketing has come on board as Chief Strategy Officer. Given the team's industry expertise and relationships, this could be a company to watch.
3. Google acquires On2 Technologies and other encoding-related news - The blogosphere was in a flurry about Google's $106M acquisition of video compression provider On2 Technologies this week. Speculation flew about Google open-sourcing On2 new VP8 codec, which could potentially force a new standard to emerge as a challenge to H.264, today's leading codec. This is important stuff, though a little further down the stack than I usually focus, so I refer you to Dan Rayburn's analysis of the deal's implications, which is the best I've seen.
There was other news in the emerging cloud-based encoding/transcoding/delivery market this week, as Encoding.com announced a new premium service with tighter service level agreements (4 minute max wait time and 50 Gbyte/hour/customer throughput). Encoding.com's Gregg Heil and Jeff Malkin explained the company is using the new SLAs to move upmarket to service tier 1 and 2 media companies. Separate, Encoding.com's competitor mPoint's CEO Chiranjeev Bordoloi told me they're now on a $3M annualized revenue run rate as cloud-based alternatives continue to gain acceptance.
Welcome to September. Before looking ahead, here's a quick recap of 3 key topics from August:
1. Advertising model remains in flux
Broadband video advertising was a key story line in August, as it seems to be every month. The industry is rightly focused on the ad model's continued evolution as more and more players in the value chain are increasingly dependent on it. This month, in "Pre-Roll Video Advertising Gets a Boost from 3 Research Studies," I noted how recent research is showing that user acceptance and engagement with the omnipresent pre-roll format is already high and is improving. However, as many readers correctly noted, research from industry participants must be discounted, and some of the metrics cited are not necessarily the best ones to use. I expect we'll see plenty more research - on both sides of pre-roll's efficacy - yet to come.
Meanwhile, comScore added to the confusion around the ad model by first highly ranking YuMe, a large ad network, very high in its reach statistics, only to then reverse itself by downgrading YuMe, before regrouping entirely by introducing a whole new metric for measuring reach. In this post, "comScore Gets Its Act Together on Ad Network Traffic Reporting," I tried to unravel some of this mini-saga. Needless to say, without trustworthy and universally accepted traffic reporting, broadband video is going to have a tough slog ahead.
2. Broadband Olympics are triumphant, but accomplishments are overshadowed
And speaking of a tough slog, the first "Broadband Olympics" were a huge triumph for both NBC and all of its technology partners, yet their accomplishments were overshadowed by a post-mortem revenue estimate by eMarketer suggesting NBC actually made very little money for its efforts. This appeared to knock broadband video advertising back on its heels, yet again, as outsiders pondered whether broadband is being overhyped.
The Olympics became a hobbyhorse of mine in the last 2 weeks as I tried to clarify things in 2 posts, "Why NBCOlympics.com's Video Ad Revenues Don't Matter" part 1 and part 2. These posts triggered a pretty interesting debate about whether technology/operational achievements are noteworthy, if substantial revenues are absent. My answer remains a resounding yes. But having exhausted all my arguments in these prior posts, I'll leave it to you to dig in there if you'd like to learn more about why I feel this way.
3. Broadband's impact is wide-ranging
VideoNuze readers know that another favorite topic of mine is how widespread broadband's impact is poised to become, and in fact already is. A number of August's posts illustrated how broadband's influence is already being felt across a diverse landscape.
Here's a brief sampling: "Vogue.TV's Model.Live: A Magazine Bets Big on Broadband" (magazines), "Tanglewood and BSO Pioneer Broadband Use for Arts/Cultural Organizations," (arts/culture), "American Political Conventions are Next Up to Get Broadband Video Treatment," (politics), "Citysearch Offering Local Merchants Video Enhancement," (local advertising) and "1Cast: A Legit Redlasso Has Tall Mountain to Climb" (local news).
I expect this trend will only accelerate, as more and more industries begin to recognize broadband video's potential benefits.
That's it for August and for the busy summer of '08. Lots more action to coming this fall!
Two days ago, I posted "Why NBCOlympics.com's Video Ad Revenues Don't Matter." I'll take the risk today of "beating a dead dog" by writing again about this same topic, for a couple of reasons.
First, there were some great comments on the site and I received many emails both supporting and challenging my arguments. (As a sidenote, I've discovered an interesting dynamic with VideoNuze - though I've repeatedly tried to encourage readers to post comments so all readers are able to see, folks seem more comfortable just emailing me directly for a one-on-one dialogue. I'm not going to resist human nature here, but again, I would love even more if you share your reactions by posting a comment so the whole community benefits!)
Second, the real trigger for writing a follow-up part 2 today is an incident I experienced yesterday. I gave a presentation about broadband video to a group of investors. These were mainly people who are familiar with broadband video, but not necessarily steeped in it. Upon finishing up and opening the Q&A, an early question/comment was, "Hey Will you lay out great points about broadband, yet I just read somewhere earlier this week that even NBC's Olympic video, which should have been a big revenue opportunity if ever there was one, generated little money for NBC and looks like it was a total failure for them. Given that, why should people bother investing in this medium? It doesn't seem promising."
Ugh. Ugh. Ugh. This is exactly the perception that I sensed would be created out of the blogosphere's and mainstream media's coverage of eMarketer's NBCOlympics.com revenue estimate. And why it is so vital that people interested in broadband video not get distracted by this single data point. Instead, maintaining perspective about where the industry stands and what needs to be done to grow should be the real focus.
I totally get the point made by people in their comments and emails that video providers must show they can make real money in the broadband medium. Ultimately, that's paramount. In particular it's key that broadband not get tagged as the "digital pennies" medium, in contrast to the traditional "analog dollars" model.
But I'll continue to insist that the path to industry revenues and profits begins by demonstrating the technical/operational viability of the broadband medium, massive user adoption of it and differentiated engagement with it. To be sure, progress is being made on all fronts. Still, there is still a long road ahead to drive significant shifts in advertiser spending to broadband. If you're a media buyer today, you're very intrigued by broadband and are likely experimenting with it.
But you're looking for more proof points before making bigger spending commitments. Can broadband's architecture scale to handle massive traffic loads, or are the Chicken Littles right that the Internet will crash under video's massive weight? Can broadband video's quality compare with TV, and HD in particular? Given the broadband choice, will users in fact shift their consumption patterns? And if they do, how different will their awareness and engagement with ads be? Importantly, when is broadband video actually going to be widely and easily available on TVs, not just computers?
These are but a few of the questions repeatedly being asked. And many of these are what NBCOlympics.com has helped to answer. NBC could have done lots of things to squeeze more money out of its Olympics video (though my guess is that no matter what revenue they generated cynics would have still said, "Is that all?"). Instead they focused on user value/experience and pushed the broadband envelope considerably. Others are doing the same. More needs to be done, and I believe it will.
As the saying goes, "Rome wasn't built in a day." So too with this exciting new medium. Revenues will not gush immediately. Staying focused on the core building blocks is the key. In short, I'm bullish long-term, but highly realistic short-term.
What do you think? Please post a comment! Or send me an email if you really prefer!
Today's post is from TDG's Mugs Buckley, who discusses the confusing state of video advertising projections.
The Reality of Web Video Advertising Just Doesn't Seem to Add Up
by: Mugs Buckley, Contributing Analyst, The Diffusion Group
I used to think I was pretty good at math, but after trying to make sense of recent forecasts regarding web video advertising, I'm beginning to doubt my skills. Let it be known that I'm a big believer in the growth potential of the Internet video ad business; I'm simply struggling to follow the numbers that have been reported. Since no single analysis offers an "apples-to-apples" industry comparison, I thought I'd offer up some of the available forecasts and offer a few thoughts.
So here's where I'm stuck.
The estimates and forecasts for only video ads are all over the place. For example:
So here's where it gets a bit confusing.
Hmmm. So if YouTube (at 34% of all web video consumed) could generate $22.6M in revenue in 2008, and the Big Four were running about $120M in 2007, how does one arrive at these impressive near-billion dollar predictions? Where else is this revenue coming from?
Let's not rule out operator error - I'll quickly admit that I may have misinterpreted how these numbers were derived and what they represent. That being said, however, there doesn't seem to be a rational way to reconcile these disparate estimates. Can anyone out there help to square these numbers? Is it simply a matter of under- or over-reporting? Are the measurement systems currently in place so poor and mutually exclusive in methodology that they necessarily offer conflicting estimates?
Something just isn't adding up. Yes, this may seem to be a bit nit-picky on my part; the rambling of an analyst with too much time on her hands. Then again, without accurate revenue and usage estimates, it is impossible to know the real value of any form of advertising, much less an emerging model such as web-based video advertising.
Please let us know what you think!