September 18, 2014
With a lukewarm set of upfronts this year, the buzz seems to imply that as TV and cable dollars fall, mobile video stands to make a killing, but that doesn’t seem to hold true—depending on whom you talk to.
Here’s what a recent article in the Wall Street Journal’s CMO today had to say:
“Many top Web video outlets are claiming strong ad demand following the ‘NewFronts’—as the Web’s upfronts are called—particularly YouTube, which aggressively targeted cable-television budgets this year.
Digital ad buyers, though, say that while some TV money has moved to Web video this year, the creation of a true marketplace for original Web content that competes directly with television is still more desire than reality, at least among major online ad companies.”
For web video’s part, Google said YouTube was sold out of inventory in many prime spots by early August. “Yes absolutely, we’ve had lots of interest from the broadcast and cable buyers,” Torrence Boone, who heads up YouTube’s agency business said.
That interest has been driven by multiple factors, including YouTube’s decisions to cherry pick and sell its top channels as part of a “Google Preferred” offering, which offers buyers more TV-like ratings guarantees, he told the WSJ.
AOL also says it saw strong sales to web originals.
However, others aren’t as certain.
“This dip in TV commitments was more about need for flexibility,” argued Amanda Richman, president of Investment and Activation at Starcom told the WSJ. “The ad spending lost to broadcast and cable “may manifest itself in Web video spending. But it also could go to programmatic, to mobile. I think they all make an impact.”
“Among the big Web video companies,” she added, “I don’t see a single winner there. For them, it is a year-over-year chipping away growth versus a windfall.”
Among the online video companies, YouTube’s revenue is set to rise 39% to top a billion dollars this year, even in the face of dwindling market share, which is projected to fall 2% to 19% driven by increased competition, according to a recent Los Angeles Times report based on a study by Emarketer.
In Europe, a recent study shows a clearer picture.
Programmatic video platform Adap.tv’s European State of the Video Industry report found that more than half of agency respondents had shifted spend away from broadcast to invest in video ads, driving a 42 percent increase in video ad spending as a whole year-over-year.
“With the advent of new data-driven practices – including the rapid adoption of private marketplaces and the growth of programmatic TV – there are new opportunities (and obstacles) that advertisers, agencies and publishers must understand in order to continue to capitalize on consumer demand for video,” the report said.
So what does the future hold here? It may depend on whether current subscription services open their channels to ads.
Looking at the overall U.S. digital video ad market, the EMarketer study said it expects revenue to increase 56% this year to nearly $6 billion overall.
“One key factor holding back the digital video ad market … is the fact that more and more digital video content is streamed through subscription services such as Netflix or Amazon Prime Video–neither of which support advertising,” the firm said in its report.