Online video ads are getting three times more clicks on average than other digital ad formats, including mobile, display, and rich media ads. (See chart, above.)
That performance is attracting advertisers to digital video, and helps to explain why it is growing faster than most other ad formats.
In a new report from BI Intelligence we explore the key drivers of the skyrocketing growth of video ads, examine the cost and performance of the emerging digital ad format, and look at the major players that are shaping the industry.
Here are some of the key trends we explore in the report:
- Performance: Video ads have an average click-through rate (CTR) of 1.84%, the highest click-through rate of all digital ad formats.
- Revenue growth: Video ad revenue will increase at a three-year compound annual growth rate (CAGR) of 19.5% through 2016, according to our estimates. That’s faster than any other medium other than mobile. And much faster than traditional online display advertising, which will only grow at a 3% annual rate.
- Digital video is picking up the slack as TV declines: Online video ad revenue will reach nearly $US5 billion in 2016, up from $US2.8 billion in 2013, while TV ad revenue will decline by nearly 3% per year during the same time period.
- Views are exploding: Video ad views exploded in 2013, topping over 35 billion views in December, averaging over 100% year-over-year monthly growth during the year.
- Prices are becoming more accessible: Online video ads are significantly more expensive than other formats, but prices are steadily declining as more publishers rush into video, and placements open up.
- Viewability, the question of whether video ads are actually seen by multitasking online viewers, has emerged as an issue, but we believe that overall demand for online video is too high for viewability to put too much of a crimp in the video ad market.
- Streaming devices and connected TV accounted for just 2% of online video ad views in the fourth quarter of 2013, but companies like BrightLine are experimenting with formats to grow this new niche market.
- The growth of mobile and digital video advertising has been paralleled by fundamental changes in the online advertising industry — programmatic advertising, which we covered in a recent report, has begun to reshape the entire digital ad market, including video.
- Newly launched video ad platforms have been among the companies to adopt programmatic tools, including real-time bidding, ad exchanges, and advanced analytics.
In full, the report:
- Explores the key drivers of the growth of online video ads, and compares it to the growth in online ads generally
- Examines how video ads stack up against other digital advertising formats in terms of both cost and performance.
- Looks at the issue of viewability, and explains how the problem could impact future spending on video ads.
- Outlines the major players in the video ad space.
- Explains how startups like BrightLine and Alphonso are using innovative approaches to bridge the gap between digital and TV ad spend.
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