david hallerman | emarketer | state of the online video market: big growth ahead

©2012 eMarketer Inc.

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State of the Online Video Market: Big Growth Ahead (but let’s keep perspective…)

David Hallerman

Principal Analyst

How big will the digital video ad market really become over next few years?


Online video advertising growth rates might peak this year and then slow down, but spending will double in two years


Video ad spending gains will come in part from the shifting display ad category


Online video ad spending will grow far faster than TV spending, but growth alone can be somewhat deceptive


While online growth rates beat out TV, $4.1 billion new dollars will flow to TV in 2012 vs. only $1.2 billion more to digital


Digital video in 2013—nearly 10% of online total, but advertisers will spend $100 on TV for every $6.90 on digital


The still imbalanced market can sometimes be a little crazy-making for many in the digital video space


Several key factors will help or hinder US digital video ad spending

We’ve identified 16 forces, including…

CTV and tablets: best for the audience

Fear: of cannibalization and lost revenues

Inertia: TV’s power appears everlasting

Audience: large online, but huge TV watchers

GRPs: common currency, but dumb down digital

Targeting: digital’s promise, but TV more reach

Content: TV content still attracts brand dollars


The best of television and digital video attracts both audience and advertisers.

Connected TVs superbly combine the strengths of digital and TV


Digital marketers believe that tablets provide the best advertising experience.

Tablets are major game changers for both audiences and advertisers


Mobile video ad spending will rise by triple digits this year and by over 93% next year


However, the mobile ad market is mainly search and banners, with a tiny slice going to video


Comparing growth vs. dollars shows mobile video growing far more but 8X more money will go to desktop video ads


As seen on the web? (Nah!) TV’s power is still unmatched for many goals


A sample of TV’s power: Digital video still depends greatly on TV creative (that will change, but not quickly)

Extra costs for unique online creative discourage many marketers from making the most of digital’s strengths.


The TV industry fears digital video will cannibalize its existing business

Many TV companies have a vested interest in keeping digital video from undermining their current revenue streams. Their tactics include:

Bandwidth metering, also called data caps, could make digital users think twice before watching another video, since that would cost them extra or degrade their service. Furthermore, bandwidth metering is already a fact of life in the mobile space.

Authentication. TV networks and cable operators might require users to prove they are paying subscribers before they can access video online, such as on Hulu.


Most people still spend the vast majority of their video time in front of the TV.

The digital video audience is both very large and somewhat illusory


The digital portion of a video ad campaign would often do well to expand on the message “as seen on TV.”

Why do many people use social media while watching TV?To get more information.


Most brand marketers want unified TV and video metrics before spending more on digital.

Measurement difficulties mean what can’t be measured can’t be sold


Many marketers say GRPs dumb down digital, failing to measure engagement and interaction.

GRPs offer a common currency to bring digital and TV together, and yet…


TV forever? Containers may change, but the content basically remains the same

© 2012 eMarketer Inc.

It will take several years for digital video to integrate more completely with TV advertising.

But time is on digital’s side. The five digital screens are where the audience increasingly watches TV and other video content, and brands need to reach them anytime and everywhere.

Marketers get balance. Blending digital video into their TV messaging offers: a way to reach audiences they might not have touched otherwise

a way to engage target customers in ways that TV doesn’t allow

a way to make their spending more cost-effective

Blending online video with TV—and thereby boosting digital’s growth—will be slow

david hallerman | emarketer | state of the online video market: big growth ahead

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