Advertisers are shifting their budgets from traditional channels to fund digital video—a trend that has accelerated during the past year, according to AOL’s “2015 US State of the Video Industry Report.”
Half of those buyers are reallocating their budgets to online video from TV, and 10% of digital video budgets have been funded through divestitures from TV, the report found.
The study, which surveyed nearly 300 brands, agencies, and publishers, found that consumer media consumption habits are calling for engagement through sight, sound, and motion in digital, so it’s no surprise that advertising dollars are following.
“When you think about how big TV budgets are, if, on average, a given buyer is taking 10% of that and pushing it into these digital channels and into digital video, it just marks the potential for dramatic growth in the space, which is fantastic,” said JoAnna Foyle, AOL’s SVP of client services and operations, in an interview with CMO.com.
Another key finding: Mobile and video are converging. In fact, according to the study, mobile video is proving to be a key area for increased investment, with budgets up 18% year over year.
According to AOL, half of all buyers increased their mobile budgets at an average of 8 percentage points since last year, with mobile comprising a third of their overall digital advertising spend. At the same time, buyers decreased their overall digital budget allocations to desktop, from 47% to 44%, and by 2016 said it will be down to 41%. Nearly a quarter of publishers saw an average increase of 7% in overall mobile revenue in the 2014-2015 period.
“We, as consumers, understand logically that mobile and video are coming together,” Foyle said. “Think about it this way: You’re on the train, and you're watching snippets of content because you missed Jimmy Fallon the night before. You’re watching his bit with Jennifer Lawrence. You’re watching movies on the plane. What we are seeing is advertisers starting to clear some of the measurement hurdles and are able to capitalize on those things.”
AOL’s study also found that programmatic video has reached critical mass among 91% of buyers and 88% of publishers. The report estimated that by the end of 2015, 32% of all digital video ad spend will be bought programmatically, making up nearly $2.91 billion in ad spend. That number is projected to grow to 38% in 2016, totaling $5.37 billion—nearly 86% growth in dollars directed toward programmatic digital video advertising—all in the span of one year.
An interesting point around programmatic, Foyle said, is that 68% of brand advertisers said they’re planning to bring programmatic video in-house in the next 12 months. “CMOs are trying to regain control of their advertising dollars and regain a direct connection or transaction of those dollars with the publishers,” she explained. “But a lot has to go into that for them to be successful.”
The study also noted a big growth around branded video content, with advertisers and agencies devoting good chunks of their video budgets to co-create content with publishers. AOL found that more than 30% of brands’ digital video budgets are dedicated to branded video, a number expected to rise 10% in the next year.
CMOs said they intend to grow their investment in branded video 10% in the next year.
“We define branded video as a partnership between a brand and publisher where the advertiser co-creates their own content, stories, through sound, sight, and motion experiences with their consumers,” Foyle said. “Consumers are craving more content. They’re excited and eager to watch content—but only if it’s authentic and high-quality.”
For more about the report, click here.
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