• by Alex Weprin , August 24, 2018

The video advertising market, comprising both TV and digital video, is expected to grow from $91 billion in 2018 to $103 billion in 2023.

That growth, however, will come almost entirely from the online video side of the market, according to research from Forrester Analytics. While TV will continue to secure the lions share of video advertising, the growth of online video over the next five years will be significant.

“With a finite population and hours in a day, having more users in more categories also implies fragmentation,” the report says. “Online video is a beneficiary of this disruption, while TV’s grip on viewer attention is beginning to loosen.”

Forrester estimates that online video ads will grow from about 21% of the market in 2018, to 34% of the market in 2023, rising alongside the amount of time consumers will spend watching streaming video.

Around 200 million viewers in the U.S. will watch online video in 2018, not too far off from the TV audience of 258 million. Over the next five years, the TV audience is expected to erode, while online viewing is poised to rise.

Perhaps the most notable finding for marketers is that Americans remain exceptionally tolerant of advertising in video content. Almost 194 million users watch free, ad-supported streaming video.

“Free streaming remains dominant, as most viewers are willing to accept ads to view content more cheaply and with greater recency,” The Forrester report says. “Two-thirds of U.S. online adults say that they don’t mind seeing ads in online videos in exchange for free video content; 72% say that they would rather watch a TV show that contains ads immediately than wait for an ad-free version.”