In an AOL Platforms poll of 300 premium publishers, the majority said they expect digital video to be their number one revenue driver this year. Online video represents a major source of growth for publishers. But the category is constantly evolving and the pace of change can be difficult to navigate.
With that in mind, here are three trends publishers need to consider as they seek ways to capitalize on the video explosion.
TV Dollars Are Finally Poised to Shift
Over the next three years, digital video spend will grow at a pace exceeding linear TV, hitting $17 billion in 2020. Some of these dollars are coming directly from TV budgets. Just last year, for instance, $1.5 billion shifted from TV to video. Still, the migration has been slower than expected.
Our own MediaRadar analysis of 2016 TV advertiser spend shows that, even though 75 percent of TV advertisers bought ads online, the overlap between linear TV and online video was low. Only 20 percent (36 percent in 2016) of TV advertisers bought digital video ads that year. While that number has certainly increased since then, TV budgets have remained steady, signaling that online video’s rapid growth has so far not come at the expense of linear TV.
To make it easier for advertisers to migrate to away from traditional broadcasters, YouTube created designated channels (lineups) based on audience demographics. There are 12 lineups. YouTube calls this the “Google Preferred” program. We are tracking 24 YouTube sites, 2 in each of the 12 lineups. Early analysis shows that the strategy is working, with nearly half (45 percent) of advertisers on these channels also running TV ads.
For publishers, expect more TV advertisers to accelerate the migration of budgets to digital video. And as publishers grow their capabilities around creative and targeting, it will only drive more value for brands. But the biggest factor will ultimately be consumer adoption. Younger audiences coveted by advertisers prefer digital video over linear TV, and marketers will be forced to transition.
Outstream Video Is a Great Tool for Publishers
U.S. digital video ad spend represents nearly 15 percent of total digital ad dollars – and that number is only growing. But, for publishers to take full advantage of the demand, they will need to rely more on outstream video this year.
Premium video inventory from traditional broadcasters and publishers is in short supply, which limits advertiser engagement and caps revenue. (This is not the case, however, with social platforms. For example, Facebook users watch an average of 100 million hours of video each day on the site.) Outstream ad units solve that problem. Unlike instream video, outstream units live within text content. They do not require publisher video inventory in order to work (think pre-roll and mid-roll). The format enables new revenue streams by monetizing video that wasn’t there before for higher CPMs. This is why 30 percent of publishers believe outstream will drive most video ad revenue growth this year.
With this in mind, publishers are likely to turn in greater numbers to outstream video providers like Giant Media, Teads, AOL, and others. These platforms help publishers monetize inventory on their sites where there was none, making the most of the digital video ad opportunity.
Skipping Videos Might Die Out This Year
Video ads without skip options continue to be the most common type of video. While skippable video ads exist, only a handful of sites feature them; those that do include more traditional broadcasters like CNN and CBS, as well as YouTube. Eighty-nine percent of video ads viewed offer no skip option at all.
Moving forward, expect even more video ads to be non-skippable or for the skippable ad to die out completely. This benefits publishers and advertisers and is happening for several reasons.
First, video ad inventory is scarce. Most publishers have too little video inventory to sell. So, despite consumer desires, they cannot afford to have valuable ads overlooked. Further, many publishers don’t charge advertisers for ads skipped, giving them a strong incentive to remove the skip option, and advertisers want to know that their ads were seen.
As digital video continues to grow, these developments—TV budgets shifting to video, outstream as an option, and the demise of skippable video ads—are important trends for publishers to note. Planning accordingly will help them take full advantage of the video opportunity.
Guest post by Todd Krizelman, the CEO and co-founder of ad sales intelligence company MediaRadar. OnlineVideo.net accepts guest posts based upon their usefulness to our readers.