Where Will The New Digital Video Money Come From?

As more gets spent on original digital video, does the money come at the expense of original TV programming -- or from somewhere else in marketers' budgets?

In the future, digital TV might overtake traditional TV. For now, digital video will hit $5.90 billion this year, according to eMarketer. Other research shows that number to be lower.

A study conducted by Advertiser Perceptions on behalf of the Interactive Advertising Bureau found that media buyers plan to spend nearly half (48%) of their Internet video budget on “made for digital” video programming in 2014. Where will the rest be spent? A big chunk is probably for so-called premium video content -- TV shows that premiered on traditional networks before running on Hulu and other platforms.

Digital TV will grow, but don’t think for a minute that will come entirely at the expense of traditional TV studios and producers -- especially in the near term. Can about half of digital video’s take -- $3 billion -- be going to premium TV/video providers?

Digital video revenues have gained some 44% in 2014 versus last year.  But traditional TV advertising -- set to reach $68.5 billion this year – is still growing, up over 3% this year.

Much of this “traditional” spending reflects back to the big TV/movie content providers. If half -- or nearly half  -- of digital video advertising is going to these providers, then new digital producers and platforms, including YouTube, AOL, Yahoo and others, aren’t doing as well collectively.

Not only that, but when looking at actual dollars, eMarketer says TV will still add more new dollars ($2.19 billion) than digital video ($1.71 billion) in 2014.

What does this mean? For some, there isn’t much in the way of diversity of voices around new digital content -- even considering small user-generated video content. For big TV/video marketers, it might mean more of the same -- getting a run in premium digital video as a supplement for TV audience erosion.

If this trend seems to echo one of a decade or so ago -- when cable networks were found to be taking away audience from the big broadcast networks -- it should. Marketers are always looking for more alternatives. Media efficiency alternatives? That continues to be open for debate.

So where is the rush of new digital video money coming from? No one is really sure.  Display? Search?  Many believe the future money might actually get siphoned from cable TV – specifically from some of the more mature networks that are now seeing the same kind of audience erosion that broadcasters have endured for decades.

There is also the overall growth in media budgets. Digital video will surely benefit. But much of the growth -- at least in the near- term -- will go to traditional TV sellers - whether networks, stations, syndicators, or other programming services.

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5 comments about "Where Will The New Digital Video Money Come From?".
  1. Jay Singh from ViralGains , April 29, 2014 at 5:01 p.m.
    Hi Wayne, According to brands the money is indeed coming from "no other category": http://www.slideshare.net/fullscreen/Adapdottv/adaptvs-q4-2013-state-of/10 Broadcast, display, print, and cable budgets are next in line to send money to online video. Good story.
  2. Ed Papazian from Media Dynamics Inc , April 30, 2014 at 10:42 a.m.
    At the outset, the growth of digital video ads will probably come at the expense of "other" budgets, notably magazines for national advertisers and newspapers and radio for local advertisers, not TV. This is because advertisers are wedded to traditional forms of TV which they feel have proven track records and are comfortable with, merchandising-wise and creatively. Also, look for the TV networks and major cable players to expand their offerings in this area as soon as they feel any kind of pinch in their pocketbooks because of it. The broadcast TV nets once scoffed at cable's puny numbers but now, they are major players in the cable arena and make their largest profits from cable. Rest assured, they have the means, the expertise and the agency/advertiser connections to move rapidly beyond what they are now doing, mainly in the premium video category, to follow the money.
  3. AMARIS SOPH'E ADARA from ASA ENTERTAINMENT , May 1, 2014 at 7:07 p.m.
    Well, Advertisement dollars are the best suggestion as to The ? where
  4. Chris Long from Enterpreneur , May 5, 2014 at 10:39 a.m.
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    "You" (the answer)