Commentary

Ad Spend On Original Digital Video Programming Doubles And Growing

According to a new report commissioned by the Interactive Advertising Bureau (IAB), summarized by Eric Oster, AdWeek writer, spending on ads that support original digital video content has nearly doubled in the past two years. The average annual ad spend around original digital video content, defined as being professionally produced for digital consumption, is around $4.4 million for 2017, up from an estimated $2.4 million in 2015, the report compiled by Advertisers Perceptions said.

Average Annual Spend on Original Video Advertising ($millions)

Spender

2015

2016

2017

3YR Increase

All spenders

$2.4

$3.0

$4.4

80%

Agency

2.9

3.7

4.5

53%

Marketer

2.1

2.5

4.3

108%

Source: IAB, April 2017

 The survey also found that 80% of brand and agency executives plan to further increase spending on the format this year.

 Original digital video will represent, on average, 47% of total digital video budgets in 2017, the report said. Native advertising will play a prominent role, representing 42% of that investment.

 Anna Bager, svp and general manager of mobile and video for IAB, says “…original digital video is an inventive and engrossing medium… leveraged by advertisers to reach and engage consumers… with the introduction of VR and 360-degree technologies… expect to see original digital video play an even bigger part in brand strategy…”

 Despite the rosy outlook for original digital video, advertisers still have some concerns, as 38% of respondents citing quality of content as the primary obstacle. Price, viewability, ROI and targeting challenges were not far behind in the survey’s findings of potential roadblocks for original video

Obstacles To Increased Spending on Original Digital Video Advertising

Obstacle

%of Respondents

Quality of content

38%

Price

33

Viewability

32

ROI (vs. other media)

32

Challenges/Audience targeting and reach

31

Consumer ad blocking

30

Audience & campaignmeasurement

29

Complexity of Buying

28

Scale

27

Video unit lengths

24

Source: IAB, April 2017

 There appears to be wide variance in the response based on market sector. While advertisers in the household goods and retail sector were in line with the overall response, the largest concern area mentioned by the auto sector (43%) was viewability, while the food and beverage industry’s top concern (35%) was ROI versus other formats. In financial services, the chief concern (34%) was price.

 The consensus, though, concludes the report, was that original digital video programming will become as important as original TV programming within the next three years, a statement that 75% of respondents either “somewhat” or “completely” agreed with. The same percentage agreed the format reaches an audience that TV can’t, says the report. Furthermore, some 76% at agencies at least “somewhat agree” that the format is “more engaging than TV commercials,” with 66% of marketers concurring.

 For additional information from the IAB, please visit here: https://www.iab.com/insights/2017videoadspend/

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