This year, U.S. online video ad revenue is on pace to exceed $1.3 billion, according to new research from Parks Associates. The report attributes the healthy numbers to steady growth in online video viewership, combined with the ability to target specific viewers based on preferences and viewing history.
Younger consumers are proving particularly receptive to targeted ads, creating openings for cross-platform ads and other opportunities for advertisers, according to the international research and consulting firm.
The new research supports other findings by Parks, which indicates that large percentages of consumers -- especially younger consumers -- have yet to form a strong opinion regarding targeted advertising.
These ads include commercials shown before an online video or overlays displayed during the show, with the content based on the user's Internet, TV, and mobile usage and viewing habits.
Among U.S. broadband households, almost 50% of heads-of-household ages 18-34 are indifferent to targeted advertising, while 42% ages 25-54 and 25% ages 55 or older are similarly neutral.
"Indifference indicates consumers can be won over by new advertising strategies, provided these messages are designed well, with truly relevant content," said Heather Way, research analyst, Parks Associates. "Also, the younger age groups are more receptive to the concept of targeted advertising, and advertisers place a premium on the ability to reach these demographics."
While online video does not yet have the same audience reach as traditional broadcast and cable TV, the medium continues to grow its user base, and increased content offerings via TV Everywhere initiatives will bring in more viewers and boost advertising revenues.
Presently, over 50% of heads-of-household 25-54 watch online video at least weekly, and the percentage jumps to 75% for ages 18-34.
Excluding video ads, comScore recently reported that U.S. Internet users received a record 1.1 trillion display ads during the first quarter of the year -- marking a 15% increase year-over-year. Also excluding video ads, U.S. display ad spending in the first quarter reached an estimated $2.7 billion, with the average cost per thousand impressions equal to $2.48, comScore found.