Online video is poised to be the next big trend for online advertising. How do I know this? More specifically, how do I know this outside of the fact that every research analyst and thought leader in the space has been predicting this trend for years? Because 1) media buyers are increasingly moving their TV ad dollars — and ad dollars from other categories — to online video and 2) they will have soon have a seamless, TV-sized audience for their online video ads, courtesy of Facebook FB -1.76%.Let’s start with point No.1
Not too long ago it was standard for online video purchases to come out of the online budget line item. Now, though, media buyers are cannibalizing other categories, such as their TV budgets, to seed this category.
This is according to comments made by Mindshare’s chief strategy officer for North America Jordan Bitterman in an interview with AdExchange.
Q: Regarding TV dollars moving online, and in particular, into online video advertising, how do you see that evolving?
A: Online video dollars had been coming from online budgets until about a year ago. Initially, marketers were saying, ‘I’m not willing to move my dollars out of television. This is not a proven medium for me. Therefore, I’m [only] willing to move my online dollars – some of which I know exactly what I’m getting when I spend it, just like I do on television. Some of it I don’t necessarily know what I’m getting for it, or it’s experimental, or I’m doing it for objectives that might be secondary or tertiary – I’ll play around with those dollars.’
This is significant. Look at mobile advertising and its trajectory over the years in the marketer’s budget. It took until 2012 for brands in any significant number to start carving out a separate line item for mobile ads. The category exploded after that.
Now, I don’t want to make too much of this. For starters, while online video may be getting more respect in a marketer’s budget the category is not, contrary to many reports, likely to kill off television. Other categories, such as display advertising are being raided as well to feed this space.
Also, online videos are growing from a very small level of activity. About 20 brands spent more than $10 million on the medium last year, according to Competitrack’s Online Video Ad Tracking service. And in general, budgets for online video advertising were small relative to other media, it said, noting that some leading brands allocated “as much as” 4% to 6% of their media outlays to online video last year. On average, the top 100 brands allocated 1.5% of measured media spending to online video during the year.
But that was BF – Before Facebook.
Facebook is widely expected to launch video ads in its News Feed this year. The ads will be 15 seconds in length and will cost a reported, according toBusiness Insider, $1 million.
$1 million, I can’t help but remember here, was the initial price to run a campaign on Apple AAPL -0.2%‘s mobile ad platform, iAd, when it first debuted to much fanfare a few years ago. The price steadily dropped though as brands decided it wasn’t worth the money or the hassle of working with Apple. Another Business Insider article reports campaigns on iAd can now be had for an embarrassing $50
Facebook’s video ad story will almost surely have a different ending. One reason is timing; companies are now used to digital advertising and accept that serious money needs to be invested in the format. Another reason is Facebook’s reach. While there may be some quibbling over the accuracy of Facebook’s traffic numbers, it is indisputable that its reach is honkin’ big. Then there is the nature of TV advertising – media buyers in this space tend to think and spend big. $1 million for a campaign is nothing to them. As Business Insider said:
…the steep price of the ad unit is precisely what agencies like about it. You can run a big campaign on Facebook for a few thousand dollars, but that’s chump change to TV media buyers. They prefer to deal with billions annually. Needle-moving budgets, in other words.
So those are my two big reasons why I see online video ads finally catching fire: supply and demand is ripe and they are about to intersect with some serious money.
Erika Morphy 7/26/2013 @ 3:19PM http://www.forbes.com/sites/erikamorphy/2013/07/26/get-ready-for-online-video-ads-to-eat-everything/