The report says that as marketing budgets are reduced across industries, advertisers look to reach their consumers in a more targeted and cost-effective manner. In recent periods, the expanding availability of premium network and cable TV programming combined with increasing broadband penetration now covering 60% of US homes by Magna estimates, collectively led to a 24% increase in time with professionally produced online video during 2008, following a 50% rise during 2007, according to Accustream.
Internet Access, Broadband Households | |
Year | Subscribers(Millions) |
Actual | |
1999 | 1.7 mm |
2000 | 5.1 |
2001 | 10.8 |
2002 | 17.1 |
2003 | 25.6 |
2004 | 34.8 |
2005 | 43.4 |
2006 | 54.8 |
2007 | 63.6 |
2008 | 69.5 |
Estimated | |
2009 | 73.9 |
2010 | 76.8 |
2011 | 79.2 |
2012 | 81.6 |
2013 | 84.0 |
2014 | 86.5 |
Source: MAGNA, US Census, April 2009 |
Few large advertisers can achieve broad reaching objectives solely by using an online video-only campaign if there are any content preferences involved, concludes the report. As a point of reference, during 2008 490 billion person-hours of traditional television were consumed according to Nielsen. This equates to 244 times more consumption of professional content video than of online video. Even assuming last year's growth rate continues through 2012, traditional TV would still account for 98 times more consumption
2012 Traditional TV "Popularity" Vs. Online Video(Scenarios Assuming 4-Year Compounded Growth Rate of Online Video) | |
Growth Rate of Online Video Assumption | Relative Consumption of Professional Content Video(times as much) |
10% | 158.5X |
15 | 132.7 |
20 | 111.9 |
24 | 98.0 |
25 | 95.1 |
30 | 81.3 |
35 | 69.9 |
Source: MAGNA. 2008 Growth Rate from Accustream, April 2009 |
Over the next few years, says the report:
In total, by 2011, the study projects online video to generate slightly more than $1 billion in net advertising revenues for video content. This represents a compounded annual growth rate of 36% for each year between 2006 and 2011.
Online Video Advertising Revenue | |
Year | Ad Revenue(millions) |
2006 | $215mm |
2007 | 360 |
2008 | 530 |
2009 | 699 |
2010 | 864 |
2011 | 1,009 |
Source: MAGNA, April 2009 |
For more from Magna about the Online Video Forecast, please visit here.