As brands rush to find the most profitable ways to drive brand engagement via digital media, digital video advertising has become a widely adopted practice. Digital video advertising has exploded over the past decade, and is poised to continue to grow over the coming years. The rise of mobile & OTT video delivery has drastically altered how brands approach video advertising, and allowed brands that don’t have multimillion dollar ad budgets to pursue video ads for the first time. In this report, we’ll present our own findings alongside data from several market studies to help you understand the current state of digital video advertising, and where things are headed in 2017.

First, a Bit of Recent History!

Video advertising isn’t exploding onto the scene in 2017; it’s been a major point of emphasis for marketers for decades. In fact, a series of technological innovations and cultural phenomena have helped video advertising become one of the fastest growing brand engagement formats, with brands pumping billions of dollars into video content each year over the past few decades.

While we often focus on recent history when it comes to marketing trends, video advertising has it’s roots back in the 1950s, when the coronation of Queen Elizabeth II drove massive adoption of televisions in the UK and opened the door to the first tv ads. MTV once again changed the way brands used video to engage in the 80s, with brands following the network’s success by spending more on increasingly experimental and culturally-relevant video advertisements. The 2000s saw video advertising grow beyond anyone’s expectations, with brands spending tens of millions on single ads that would become interwoven with historic events. In 2005, video advertising went digital on a massive scale with the release of Youtube, a brand which still commands a majority of video advertising dollars today.

Today, video advertising is the fastest growing advertising format, spurred forward at a breakneck pace by advances such as social media, smartphones, and broadband-quality wireless connectivity.

The Current State of Video Advertising

Things have changed in the video advertising world, and yet they remain the same. Brands are increasing their video advertising budgets across the board, according to a recent IAB study. Much of this new money is going to digital video advertising, but that doesn’t mean that traditional television ads have died completely. The truth is that, while digital media is experiencing explosive growth, television ad spend continues to grow as well, and is still the dominant form of video advertising. Television audiences are still larger than desktop and mobile audiences by a margin of nearly 100 billion viewers, and television ad spend, while growing slowly, continues to inch upwards towards the $75 billion per year mark in the United States. The key takeaway here is that while digital video is the shiny new things that is talked about everywhere, all forms of video advertising are experiencing year-over-year growth.

Before we dive into our predictions for the state of video advertising in 2017, let’s examine the benchmarks that were set in 2016:

2016 Video Advertising Performance

Cowen & Company’s 2016 digital ad buyer survey reported that 14% of digital ad spend in the United States went to video advertising. While that’s a far cry from the 49% spent on search engine ads, it’s an increase of over $1 billion over 2015’s spending report. It should come as no surprise that video advertising is the fastest growing form of digital advertising, according to Cowen & Company’s report.

 

2016 digital video advertising ad spend share

Video accounted for 14% of all digital ad spend in 2016, a number that continues to increase year-over-year.

Digging a bit deeper, we find that while digital video advertising as a whole is experiencing drastic growth, much of that growth is being driven by growth in mobile video advertising. The table below demonstrates the growth of desktop and mobile video ad spending from 2014-2016:

digital video advertising mobile desktop spend

The key takeaway here is that while video advertising isn’t yet the dominant form of digital advertising, it’s growing at a faster rate than any other ad format, and mobile video ads in particular appear to be drawing brands’ attention.

2017 Video Advertising Trends

With past and present video advertising data looking so bright, it’s hard not to wonder what the future has in store. We decided to dive deeper into the data available, and come up with a summary of what advertisers can expect in the coming year. These are the key trends that we see affecting video advertising in 2017.

Mobile Video Advertising is Poised to Explode

If you look back at the chart in this post covering digital video ad spend, you’ll see that mobile video is growing by leaps and bounds year over year. New spending on mobile video advertising in 2016 matched total spending on mobile video advertising in 2014! We’re confident that mobile video ad spending will reach (or surpass) $6 billion in 2017.

Video Advertising is More Diverse Than Ever

Youtube may still command a hefty share of the digital video advertising market, but things are changing quickly. Brands like Vevo, Facebook, and Snapchat all have their own video advertising platforms offering alternative ad channels to brands who want to move beyond Google’s video platform.

Native Video Content is Becoming More Important

While traditional video ads are still growing on digital channels, a new trend has emerged that threatens to upend how we approach video advertising. Native video content is less about pushing products or services and more about brands telling authentic stories that tie into their brand identities. Native advertising is already a multibillion dollar industry, and we’re fully expecting to see native video become a major point of emphasis for brands in 2017.

Why Are Brands So Excited About Digital Video Advertising?

If you haven’t paid much attention to video advertising in the past, you may be wondering why so many companies are moving money into digital video ads. Even if your company has been running video ads, there’s a good chance that the ROI of your efforts is a topic of contention, as it is in 45% of companies surveyed by Strata.

To help, we’ve compiled a bit of information on video ad performance. The metrics you’re about to see below will make it quite clear why brands are spending billions on video ads.

Click-Through Rates (CTR)

CTR is an important metric for any digital ad, and one that is especially valuable when comparing different ad formats. Pointroll took the time to compile data on digital advertising CTR in a 2014 report, and their findings surprised even us. In their report, they found that in-stream video ads have a CTR nearly three times as high as the CTR of traditional rich media ads. Furthermore, they found that in-stream  video ads offered a CTR 460% higher than standard (non-media) digital advertisements. Across the web, video ads average a much, much higher CTR than traditional mobile or banner ads, as seen below.

digital video advertising ctr vs other ad formats

CTR for video ads is vastly higher than other common digital ad formats.

Viewability

Marketers struggle constantly with the fact that the average person’s attention span seems to get shorter every year. The truth of the matter is that less than half of those who started reading this article have gotten this far down the page. When you’re trying to deliver a complete, carefully crafted message, gaining and keeping your audience’s attention is a major obstacle. That’s why we were pleasantly surprised at just how many people actually watch video ads all the way through. According to Pointroll’s data, 77% of viewers watch 15 second ads all the way through, and that number only decreased by 4% when the video advertisement’s length was doubled to 30 seconds!

Consumption

One of the key principles of marketing is placement. As a brand, you want to place your ads in places that your target audience frequents, in a format that they’re likely to consume. Once again, video outshines other digital advertising formats in an important area. Digital video consumption rose by nearly 20% in 2016, with Statista reporting 139.8 million mobile video viewers in 2015, a figure which they predict will continue to expand.

How Will You Use Digital Video Advertising in 2017?

Video is the preferred method for consuming content on today’s digital devices. As you set out to build an engagement strategy for 2017, consider how you can use digital video advertising to drive impressions and bottom-line growth. There’s no limit to the ways that video can be used, and you’ll be surprised at the results you achieve when you add video content to your marketing mix. There’s more to video advertising than pre-roll ads- we’ve had positive results using video in email campaigns, sales proposals, and blog posts for our clients in B2B & B2C sectors. If you need a hand building your video strategy, our digital advertising team is here to help!

 

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