Tags: Online | Video | Ads | Good Thing

Online Video Ads: Too Much of a Good Thing

By John Morgan   |   Saturday, 16 Mar 2013 04:33 PM

Media experts tout internet video as the wave of the future, but a glut of inventory and available space is producing an unwanted effect – lower prices.

The Wall Street Journal said prices for online video advertising sank last year by 10 percent to 15 percent, according to estimates by video ad company BrightRoll.

Competition is rising for a share of online video ad spending, which eMarketer predicted will exceed $4.1 billion in 2013, up 41 percent from last year.

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Traditional media companies, including newspapers, magazines and television outlets, are
jockeying for a piece of the pie for their web sites, the Journal said.

As a result, they are throwing up as much inventory as possible. Measurement firm comScore estimated that of the 39 billion content videos on the Web in December, about 23 percent carried video ads, up from only 14 percent the previous December.

“There is too much supply and this is good for the buyers,” said one publishing executive.

Indeed, BrightRoll estimated the average video ad CPM, or cost per thousand views, on top sites was $15 to $20 in 2012. That was a significant drop from the previous year, when the average CPM was $17 to $25.

Major online publishers Google, Yahoo and AOL will host an annual ad-sale event for marketers in April in New York. This year they will be joined by a host of other media companies such as Conde Nast, Weather.com, The Wall Street Journal, The New York Times and Time Inc., all of which will be pitching their online video ad opportunities.

EMarketer estimated online video advertising expenditures will almost double from $4.1 billion this year to $8.04 billion in 2016.

“In the future, online video will almost certainly prove so disruptive that TV advertising will have to integrate with it,” eMarketer predicted.

“Several factors are likely to contribute to that eventual fusion, most notably the availability of high-quality video content and associated advertising across five increasingly used digital screens—desktop computers, notebook computers, smartphones, tablets and connected TVs.”

Bismarck Lepe, co-founder of digital analytics firm Ooyala, told Wired, “People are now
starting to realize that a significant percentage of the television audience — and therefore, the advertiser’s reach — is happening online.

“In the U.S., depending on the month, we’re already seeing between 10 and 15 percent of all video viewership, including television and DVDs, is happening on [internet]-connected devices. That’s a huge jump from roughly about 1 percent when we started the company back in 2007,” Lepe said.

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