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The State of Online Video Advertising in 2016

The State of Online Video Advertising in 2016

January 27, 2016

The proliferation of video advertising is quite astonishing. What was a niche strategy 10 years ago now represents the future of online advertising and marketing. Whether you’re a small business owner or the CMO of a Fortune 500 company, video advertising has to be an integral component of every publisher’s strategy moving forward.

The Value of Video Marketing

Before you can even begin to have a conversation about video advertising, you must first pause and reflect on the value of video – as a content medium – in today’s marketplace.

While there are plenty of different content mediums available to today’s marketers, you could comfortably argue that no single platform is as powerful as video.

“The use of video is so ubiquitous in our everyday lives, it has become part of our subconscious.  We don’t even realize how much we know and learn from video—news, commercials, documentaries, even YouTube,” writes Richard Tiland, CEO of New Evolution Video.

Video has evolved past the point of merely being a vehicle for entertainment. Video is now an effective means of marketing, selling, advertising, promoting, and engaging. Shoppers who view a video are 1.81-times more likely to make a purchase than non-viewers. Simply using the word “video” in the subject line of an email boost rates by 19 percent. By 2017, predictions suggest 74 percent of all internet traffic will be video. We could rattle off dozens of additional statistics and data points just like these.

This mass appeal is what makes it so successful in the business world. There’s very little that video cannot do. “Ultimately therein lies power of video,” Tiland writes, “—the ability to effectively share beliefs and impact audiences worldwide from the comfort of their homes to the screens of their smart phones 24 hours per day, 7 days per week!”

Video Advertising in 2016 and Beyond

With the value of video serving as the foundation of the discussion, we can now discuss the current state of video advertising and what it will look like moving forward. And as a business owner who is investing in a large amount of video content, it’s imperative that you understand the significance of effective advertising in order to maximize your efforts. Consider the following:

  1. Video Ad Revenue on the Rise

Online video is officially growing faster than any other advertising format or medium. Specifically, a report from Business Insider suggests video ad revenue will increase at a three-year compound annual growth rate of roughly 19.5 percent through the end of this year.

It should be noted that this is significantly faster than any other medium outside of mobile. It’s also quite faster than the growth of traditional internet display advertising, which is only growing at a 3 percent rate. Here are some other predictions and trends from the Business Insider report:

  • The cost of online video, which has been significantly more expensive than other formats in the past, is declining as additional publishers invest in video and more placement opportunities open up.
  • Video advertisements have an average CTR of 1.84 percent, which is the highest of any digital ad format.
  • Online video ad revenue is expected to top $5 billion by the end up this year, which is up from just $2.8 billion in 2013. Over this same time period, TV ad revenue will decline by 3 percent.

As you can clearly see from these Business Insider findings, video advertising isn’t a flash in the pan. This medium has tremendous opportunities for growth and publishers who invest in video this year will be rewarded with lucrative returns.

  1. The Maturation of Programmatic Advertising

In 2016, look for programmatic advertising, the automated, tech-driven method of buying digital display advertising and using it to reach screen-agnostic audiences, to continue maturing.

According to a 2015 survey conducted by eMarketer, 86 percent of respondents plan on purchasing display ads programmatically in the future. Approximately 69 percent expect to purchase mobile ads programmatically, 67 percent for video, and 49 percent for social.

However, as programmatic advertising grows, look for the term to die off. Programmatic will simply become the standard for video advertising, as opposed to a progressive exception to the norm.

  1. Video Advertising Metrics Will Evolve

For years, video advertisers have used view counts as one of the defining metrics for success. While views can tell you some things, they shouldn’t be used as a definitive measure of a video’s efficacy. They can easily be manipulated and are rarely consistent across publishing platforms.

“In 2016, the video marketer focused on views will have a much harder time showing success than the marketer who understands what commerce-generating behaviors are driven by video usage,” writes Rob Davis, executive director of content and social at Ogilvy. Instead, things like length of view will take precedence.

  1. Device Mesh Will Impact Video Strategies

This year, look for amount of device mesh – which is the term for the interconnectivity between different devices, including mobile, wearable, and smart home technology – to proliferate. And as devices become increasingly connected, video strategies will be forced to change. No longer will advertising be delegated to a single device medium. Instead, advertisers will focus on cross-device approaches that fill in the gaps that once existed.

VertaMedia: Your Video Advertising Solution

Our Video Supply Side Platform is designed to strategically facilitate publishers’ video ads selling workflow, so that you can drown out distraction and bring yield optimization into focus.

We help you reach your potential by building and establishing a strong connection between your inventory supply and the demand in the video advertising marketplace. This allows you to put all of your energy into developing quality video content.

At VertaMedia, we serve more than 300 million video impressions and over $750,000 in payouts per month. If you’re interested in working with a video advertising solution that allows you to focus on what really matters, then you’ve come to the right place.

Video advertising is changing in 2016 and it’s imperative that business owners, and those publishing video content, understand just how to adapt. For more information regarding our services, please contact us today!