Online Video Spending Will Almost Double Over The Next 3 Years

Video and TV often bought together

The process of buying video ads has become increasingly complex, with more websites, ad networks, exchanges, and demand-side platforms (DSPs) than ever before, according to a new eMarketer report, “Buying Online Video Advertising: Making the Most of Your Budget.” But buying online video ad space is, at its core, similar to buying traditional TV advertising. For advertisers, it starts with knowing how to reach their target audience mixed with a good grasp of brand objectives and how they shift at different stages.

What’s at stake here is money—a lot of money. And the total is growing rapidly. Estimates from eMarketer indicate that US digital video ad spending will nearly double in only four years, climbing from $4.14 billion this year to $8.04 billion in 2016.



Besides the basics of defining audience and objectives, marketers typically need to factor in a variety of elements when choosing where and how to buy digital video advertising, including costs, types of ad and pricing formats, whether to buy direct from video sites or to buy audiences via ad networks, and whether to use real-time bidding (RTB). In addition, many advertisers must consider how digital video ad buys tie into their television buys.

Evaluating costs means more than simply calculating how much the advertiser pays the publisher. When marketers choose which video sites to advertise on, and where on those sites to place ads, they also need to factor in the video buy’s effectiveness.

Many marketers can find the road to that intersection in the type of site, and the ad’s location within that site. In a somewhat rough estimate from Credit Suisse, the CPM for midtier sites and placements in 2013 will be approximately $25 and reach nearly $33 for premium destinations.



The Credit Suisse data focused on traditional CPMs, but many advertisers are looking for engagement and prefer cost-per-click or cost-per-completion arrangements. And several marketers are moving toward some kind of cost-per-action pricing.

One advantage of this completion-based pricing method tends to be a more involved audience—and marketers who get a better picture of audience interest.

Advertisers must also choose a video format for their ad. Video ad formats vary widely, ranging from in-stream ads such as pre-rolls and mid-rolls to page takeovers and interactive units. Video ad sites’ offerings are rarely uniform.

“Do they have certain ad units that are proprietary to them where the audience can choose multiple videos to watch? Will they allow us to put a skin around the video so it really looks like it’s our own content and that we actually own that page?” said Erica Bigley, digital media manager at Ford Motor Co. “All of the partners we work with do each one of those a little bit differently, so we know which one will work best for what we’re trying to push at that time.”

The interactivity of user’s choice is just one active ad format marketers can decide to include in their online video campaigns. A Q2 2012 study from Millward Brown, Dynamic Logic and YuMe found that in most cases, interactive ads delivered greater brand metric results.



While marketers often place television and digital video in separate buckets, some are beginning to look at them as a single universe—T/V (television/video).

“We’re pretty much approaching all of our major broadcast partnerships in concert with our digital programs,” said David Matathia, director of marketing communications at Hyundai Motor America. “When we’re working with network partners, it’s now rare to see a standalone TV or a standalone digital deal. It’s almost become standard practice to package digital and broadcast together.”

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The full report, “Buying Online Video Advertising: Making the Most of Your Budget,” also answers these key questions:

• What are the key considerations for brands and agencies when buying online video advertising?
• When do advertisers want to buy based on site? When do they want to buy to target a specific audience?
• How can online video ads extend the larger TV buy?

This report is available to eMarketer corporate subscription clients only. eMarketer clients, log in and view the report now. -eMarketer

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