Online Video Advertising Is Exploding Ahead Of TV, Search, And Most Other Digital Ad Markets

Online video is growing faster than most other advertising formats and mediums.

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.

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:

Online video ad revenue will reach nearly $5 billion in 2016, up from $2.8 billion in 2013, while TV ad revenue will decline by nearly 3% per year during the same time period.
Video ad views exploded in 2013, topping over 35 billion views in December, averaging over 100% year-over-year monthly growth during the year.
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.
Video ads have an average click-through rate (CTR) of 1.84%, the highest click-through rate of all digital ad formats.
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.