Marketers are expected to spend $7.77 billion on digital video ads this year in the United States, up 30% compared with 2014, fueled by the growth in video on social networks, according to eMarketer, reported by Queenie Wong, SJMercury News. That's still just a fraction of the $70.59 billion the research firm expects television to make from advertising, but digital video spending is growing much faster.
The cost of a video ad on a social media platform can be comparable to some TV ads. In 2014, the average CPM of a network prime time television ad was $24.76, according to estimates by investment banking firm Peter J. Solomon. The price goes up to $43.06 for a network prime time television ad aimed at adults 18 to 49, according to SQAD, which forecasts media costs.
Credit Suisse and other sources estimate that, priced around $25 per thousand impressions (CPM), digital video ads are between five to 10 times more expensive than a traditional display ad with a static image and text such as a Web banner, says the report.
Social media companies such as Facebook and Twitter are making a stronger push to attract video advertising as more people use computers and smartphones to watch videos online. Marketers are turning to social networks to better target their ads to likely customers, using the data these sites gather on consumer interests and characteristics.
In April, 191 million Americans watched online content videos via desktop computer. Google topped the list, driven primarily by video viewing at YouTube.com
Online Content Videos
Total Unique Viewers (Millions)
Source: comScore, May 2015
Advertisers are experimenting with various formats, including shorter or longer play time to appeal to mobile audiences, who are quick to scroll past videos that don't catch their attention immediately. The ability to tailor ads to particular consumer profiles led Lexus to run video ads on Facebook in February and March, said Teri Hill, the carmaker's media manager.
Facebook, which started testing video ads in 2013, recently topped 4 billion video views per day, with more than 75% of those views happening on mobile devices, says the report. Cowen and Co. estimates that Facebook will take in $1 billion from video ads in 2015. Facebook has significant demographic data on its users that advertisers can employ for targeting.
Microblogging websites such as Snapchat and Twitter, where people have real-time conversations about big events such as the Oscars, Superbowl or television show premieres, are also attractive platforms for creating buzz. Targeting Generation X and millennial females, TV Land recently showed trailers in tweets to tout a show by tying it to the Oscars and the release of "Fifty Shades of Grey."
YouTube is still a big force in online video advertising and makes up an estimated 20% of U.S. video ad spending, according to eMarketer, writes the report.
YouTube said one of its strengths is that, unlike Facebook, people go to the site to look for videos, often for things they intend to purchase. As with other types of advertisements, marketers and social media companies have to be wary of annoying consumers with too many video ads. Facebook allows users to hide ads from certain companies on their News Feed, and Twitter users can "dismiss" ads that look like tweets from their timeline.
Paul Verna, a senior research analyst at eMarketer, concludes that "… these (social media) companies went from… lightly testing video to deploying it… there's a perfect storm now of consumer behavior, technology, development and content availability… "
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