Average Video Ad Spend Doubled in the Last 3 Years — Here’s Why

May 26, 2016

Posted in Blog
Video Spend is Up, But Why?

As the IAB’s 2016 Video Ad Spend Study points out, marketing investments in original digital programming have more than doubled since 2014. And one-third of these dollars are going towards native ad opportunities. Anecdotally, the trend makes sense: marketers across verticals consistently cite increased ROI as the top driver for growth. Thanks to cross-platform targeting capabilities and programmatic technologies, native video offers marketers the ability to engage with target audiences in a compelling, human, and targeted way.

Knowing that native video investments are increasing and likely to grow in the coming years, where are the biggest areas of opportunity for advertisers? To answer this question, you need to know the story behind the stats. Here are the 3 biggest reasons why investments in native video are growing.

Mobile video viewership is exploding

Mobile video ad spending jumped 80.6% in 2015 and is likely to experience double-digit growth through 2019, according to eMarketer. Not to mention, these growth rates are projected to be higher than banners, rich media, display, and sponsorships.

Mobile has created a brand new advertising ecosystem for native video, and the movement is entirely consumer-driven. By targeting audiences on smartphones and tablets, advertisers are simply following their audiences—last year, the average daily time spent watching digital video on mobile devices in the U.S. surpassed desktop time, according to comScore, Nielsen, and ZenithOptimedia.

Cross-platform isn’t the future of marketing: it’s the new norm, and it’s already here.

Video drives record audience engagement rates

A recent report from BI Intelligence echoes the conclusions from the IAB and eMarketer—that the video advertising landscape is exploding. One of the reasons behind this trend, according to eMarketer, is that video ads have an average click-through rate (CTR) of 1.84%, which is higher than all digital ad formats.

In an advertising ecosystem where banner blindness is the defacto standard, native video introduces a strong value proposition to marketers who are looking to drive growth and potential buyers who are looking to learn about new products in an organic, engaging way. Video enables marketers and agencies to prioritize storytelling above sales pitches.

Programmatic video improves targeting efficiencies

With digital video comes the ability for marketers to optimize long-term values (LTVs) and track their buyers across the conversion funnel. That’s why the share of digital video ad spending bought programmatically has increased by 58% over the last 3 years, according to the IAB.

While 5 out of 7 marketers prefer to spend directly with premium video sites, CPG and financial verticals, both industries that are dealing with the challenges of market fragmentation, are showing a tendency to invest in programmatic technologies.

Brand marketers and agencies can use first-party and third-party data, for instance, to optimize their native video campaigns for performance. Programmatic ads are data-driven and can help in delivering unified audience experiences across the web.

Final Thoughts

With mobile comes a new channel for brands and agencies to reach their target audiences in the moment. But eMarketer also points out many marketers aren’t quite ready to make the most out of this opportunity: as one expert puts it, “we’re not quite there yet.”

When you look beneath the surface, mobile is trickier than it seems. Unlike television or desktop-based targeting where audiences are stationary, smartphone and tablet users are surrounded by distractions. While mobile is a strong window of opportunity for native advertising, it is also new user experience terrain. Now is a rare, ideal opportunity for advertisers to explore this ecosystem, run test campaigns, and become leaders in the market.

Don’t hold back— the gold rush is already here.


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