Study Highlights Online Video's David to TV's Goliath

Over the past couple of years, online video has been the focus of a considerable amount of research. That research generally falls into two classifications: dollars and usage. The "dollars" type focuses on revenue, usually along the lines of what percentage of marketer spend goes to online video now and in the future. The "usage" group typically focuses on user interaction. Both are important pieces of the puzzle as the medium grows into its own. This month, eMarketer released an important report focused on the dollars category. We'll review it in this edition of the Insider.

EMarketer is generally the go-to source when it comes to tracking ad spending. Its most recent report, The Online Video Advertising Picture Clears Up, includes updated projections for the video space.

According to the report, EMarketer sees online video as 4.3% of online ad spending in 2009 and only 1.3% of TV ad spend, growing to 11% and 5.5% respectively, by 2013. While that might not sound like much, that growth represents 30% to 40% growth per annum. Ask any media company investor or CEO -- that is a very healthy growth rate for a non-bubble environment.

The second interesting statistic from the report is a metric that is seldom measured: ad spending per hour viewed. EMarketer predicts that in 2009 TV will generate 13 cents per hour viewed, vs. online video's 17 cents per hour. Again, that does not sound like much of a difference, but on a percentage basis, it's significantly higher.

What does this study tell us?

The clear message is that online video has a long way to go. Even at a high growth rate, unless there is a game-changer around the corner (and game-changers generally don't give you much notice -- that's why they are called game-changers), TV will dominate for some time. And that's a healthy thing ; chasing down Goliath only makes David work harder. And David is doing a good job in messaging the advertisers of the value of the medium in the meantime.

2 comments about "Study Highlights Online Video's David to TV's Goliath".
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  1. Jeff Bach from Quietwater Media, August 25, 2009 at 3:47 p.m.

    In surfing and paddleboarding, once you have been at it a while, you learn that one board does not fit all the conditions. So over time you tend to end up with several boards and use each one for a given condition. That collection of boards is a "quiver".

    I think that the David and Goliath thing should be left behind. Online video will never replace TV and we should not expect or want it to. I think online video should be one of several options that both consumers and advertisers use. Radio, SDTV, HDTV, the theater, events, movies are all part of a consumers media quiver.

    I think the producers, creators and agencies should consider all of the above as part of their own quiver as well. Use each tool for the set of conditions that asks for it.


  2. Matt Kaplan from VisibleGains, August 25, 2009 at 5:10 p.m.

    Well if you really want to continue with this analogy ... David, equipped with only a sling and 5 stones, slays Goliath, who doesn't even see it coming.

    Why must we continue to compare TV and Online video as if they are the same type of medium? The only similarity is that they both use video. Other than that, they are completely different. TV is a reach medium, and Online Video is a much better targeting and direct response medium. What's not factored into those numbers are the millions of dollars being spent by brand advertisers on digital programs including video marketing initiatives which provide tremendous value and ROI. Those dollars need to come from somewhere and non performance-based media such as TV is ripe for the picking.

    We must continue to think of Online Video as an integral part of the Digital Marketing mix and a direct marketing medium that is unparalleled in terms of engagement and interactivity potential. Goliath may look big, but David has the technology, innovation and smarts to beat him. Maybe this time Goliath will actually see it coming, but I doubt it.

    Matt Kaplan
    Chief Strategy Officer

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