Online video ads made up 8% of online display ad revenue in Europe during 2011 according to new research. The research – a collaboration between sell side video ad management platform, Videoplaza and analyst house IHS Screen Digest – found that TV remains first choice for reaching audiences at a national scale for building brand awareness.
However flat growth over the next five years (CAGR of 1.4% Western Europe, 2.5 % US) means that media companies must diversify to reach their increasingly connected audience.
As the definition of television continues to change, large-scale brand advertising has not yet found a way to tap the potential in IP-delivered video.
Sorosh Tavakoli, CEO of Videoplaza said: “The rush to deliver content to the growing range of connected devices presents a business and technology challenge to traditional TV platforms, caught between old business models and the need to innovate. This research highlights that as media companies move to address the connected audience, they must complement their content with a clear IP monetisation strategy.”
Designed to help broadcasters and publishers understand the new landscape of fragmented devices and emerging trends in content consumption, the research findings, including data from IHS Screen Digest and Videoplaza, demonstrate the need for companies to act now to take advantage of the opportunity presented by connected devices such as tablets, smartphones and connected TVs.
Media owners should advance their IP-delivered video advertising strategies quickly to ensure sustainable, monetized growth in a fast changing market. Key findings of the research include:
• IP-delivered video advertising is not following the upward trend of content consumption on connected devices at the same rate. Today IP-delivered video ad revenues are at around €300m across the top 5 European countries.
• The renaissance in brand advertising online is still PC-led, with IP-delivered TV advertising yet to reach other screens. Video forms a critical factor in online brand advertising but the current level of IP-based video ad spend does not fulfil the potential offered by connected devices.
• In Videoplaza’s broadcaster clients, ad delivery to connected devices other than the PC grew from under 2% to over 16% in the last year.
• At the current rate of adoption, media owners risk missing out on growth by not delivering monetised services that address a full range of connected devices.
• There are already 124m connected living room devices in Western Europe and North America. By the end of 2014, there will be more connected living room devices than PC or TV households. The growth in connected devices is leading to a double fragmentation – of the traditional audience and of increasing sources of content, thereby driving up the costs and increasing the competition to reach viewers scattered across platforms and devices.
• Audience reach needs to be complemented by ad reach as a way to re-unite a widely dispersed audience. The connected device landscape must be forged into a cohesive ecosystem that combines the delivery of content and its monetisation.
• Technology will play a key part in the future success of video monetisation, enabling broadcasters to get to market quickly and deliver key reach across devices.
“The tipping point is happening now – 8% of online display advertising revenue in 2011 came from video. We expect high growth in the sector to continue in 2012, with a revenue increase of 53% in the big 5 European markets. Media companies realistically have a 12-24 month window of opportunity to get prepared before the audience significantly shifts on to multiple devices. With fewer and fewer barriers to IP-delivered video, the competition from new players in the connected space is also set to intensify. This means that broadcasters should act fast to monetise their content equity,” commented Daniel Knapp, Director of Advertising Research, IHS Screen Digest.
A whitepaper entitled ‘A future for TV: IP-delivered video advertising in a connected world’ which details key findings will be available from 11th July 2012.