Forecast: Internet Video To See Continued Growth, Traditional TV Registers Ad Declines

Although concerns over digital video remain, strong growth is expected in the next few years.

Analysis from MoffettNathanson, based on Magna Global estimates, forecasts that U.S. Internet/online video will see a 24% average annual ad revenue growth rate, rising to $20.4 billion in 2021 — from $7 billion in 2016.

At the same time, traditional U.S. TV spending will have a 2% average annual ad revenue decline per year, totaling $60.4 billion. That is down from $67.1 billion in 2016.

Other non-video digital media will continue its rapid rise — with an annual average ad growth rate of 9%, growing to $100.4 billion. It was $65.4 billion in 2016.

Completing the total U.S. ad-spend picture, other non-TV traditional media will sink by 8% annually, down to $28.6 billion from $42.5 billion in 2016.

Overall estimates are that U.S. total advertising spending will grow 3% annually, to reach $209.7 billion — from $182 billion in 2016.

This year, MoffettNathanson estimates one of the biggest digital-video generators — YouTube — will gross $11 billion a year in revenue, netting $5 billion after factoring in YouTube's revenue split with content creators.

Even with strong online digital video growth, the research company says the online video business needs to improve in five areas: greater reach, better engagement, more high-quality produced video, improved measurement and better brand safety.

1 comment about "Forecast: Internet Video To See Continued Growth, Traditional TV Registers Ad Declines".
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  1. Ed Papazian from Media Dynamics Inc, June 29, 2017 at 1:19 p.m.

    While I agree that digital video "ad spending" will continue to increase I'm not so sure that I buy the idea that this will be mainly at the expense of traditional TV branding ad investments. For one thing, I doubt that we will see the declines in TV ad spending that are predicted unless a far greater attrition in viewing time than is now evident suddenly materializes. Although we are not ready to release our estimates for ad volume or CPMs for the current upfront it is likely that spending will be higher, not lower than last year. Another factor that should be considered, aside from digital medias' many issues regarding ad visibility, reach, etc.----is the fact that 30-second commercials, which are essential for basic branding storytelling, are not in vodue in most digital video venues due to the low attention span of the audience. If that is correct---and it may well be---then this, in itself, places a huge limitation on digital ad spending for TV-style branding advertisers. Yes, digital video "ad spending" will, no doubt, continue to grow---as it should---but much of this growth may be fueled by non-branding dollars, not necessarily from TV budgets.

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