I was (digitally) leafing through the latest Lehman Brothers Internet Data Book for August this morning, and came across these forecasts for total U.S. Internet online ad spending and online video ad spending.
Video ads are the hottest area of growth. Analyst Doug Anmuth thinks that online video ad spending will reach $1.1 billion this year (up 63 percent), and more than double to $2.4 billion over the next two years.
He also thinks that total advertising spending in the U.S. will go from $26.1 billion this year to $45.5 billion in 2012 (consequently increasing from 8.8 percent of total advertising spending to 13.7 percent).
Here are some tables with his estimates:
Also, to give some perspective on where online advertising is compared to TV advertising, he offers this comparison chart of the first decade of broadcast TV advertising VS. cable TV advertising Vs. Internet Advertising. The 30 percent growth rate for Internet advertising is double the rate of where cable advertising was at the same point in its history, and triple the rate of broadcast TV advertising. There, don’t you feel better already?
CPMs for video ads are still attractive but with video ad networks and independent video content properties spawning and growing rapidly these days, by 2012 CPMs will probably go down significantly.
That, plus the fact that video ads normally have higher ad serving fees (rich media and streaming fees), will leave not much profit margin…
I agree about the CPMs going down.
I mean from what I’ve seen, video advertising doesn’t have an amazing click-through rate. I’m sure for some sites it’s better than others, but in general, there’s nothing amazing.
nothing amazing _yet_.
Hummm…. i think you guys are missing the entire point of technology and the internet…. What we are supposed to be doing is creating more of the right advertising solutions that actually produce measurable and actionable results though sophisticated technology that hits the right person at the right time in the right context… CPM’s are going to go down for bad inventory and go down for poorly targeted inventory, but what advertiser in their right mind wouldnt spend more to hit the right person when it can actually make a difference.
Great article, when it comes to video “we ain’t seen nothing yet”. We believe that video will totally change the advertising landscape and will particularly affect the small business arena. That’s essentially the thesis behind Jippidy.com
Link to the report please?
Interesting information. I think that the video ad market hasn´t been explored to the fullest yet and it´s very like that its growth will skyrocket over the next few years. If it´ll be enough to change the face of advertising is yet to be seen but it´s certainly an exciting are for advertisers and businesses to look into.
http://www.KillerStartups.com
are there any reports showing anticipated growth in mobile ad spending, in particular, the 3GiP?
Video is definitely an insane growth area. Pity that brightcove is almost 5 years in, and still way behind that scrappy startup youtube. Too much money, too much planning…. aint always a good thing….
Otilia, what CPMs are you seeing now ? the costs should be between $0.5 and $1 per CPM. Assuming a CPM of $5, you can serve 1 ad every 5 videos and have a positive gross margin.
That’s about right, maybe a bit higher CPMs for really ‘interesting’ properties and ad products.
My point was that, while currently it may seem like a great idea to develop video content and monetize it at higher rates through in-video, in-stream ads, the excessive inventory will eventually drive down the CPMs at a level where the profit will be way less than initially predicted (not that there won’t be a profit at all) – also affected by ad serving fees higher than your usual, traditional display ads.
Interesting to watch VideoEgg’s CPE model and see if the market will embrace it.
Videoegg’s based on CPM now, right?
Flat rates for all publishers
Heyyyy… wait a minute… didn’t those Lehman guys do similar projections for the value of mortgage-backed securities at some point? If they start doing derivatives of online advertising futures I call bullshit
They sure did. And yes, this report is total bullsh*t. All you need is some cash to bribe these report writing companies and they’ll project anything you want.
That’s interesting. I definitely see the trend and websites already trying to capitalize on those stats. Not too long ago citysearch started offering video and jippidy.com looks like a promising site.
Looks like online advertising isn’t going away (but, PPC advertising, specifically, is a dying industry.. IMO)
So isn’t this a good reason to own comSCore stock? They’d be the best way to play this space, as higher online ad spend will need to be scrutinzed and scrubbed to see where the highest ROI is found…..SCOR already has a huge backlog and this growth should continue to ramp alongside the boom in online advtsg….
Does this feed fuel to the fire for a web 2.0 bubble? At what point is there too much advertising everywhere? If we are in the low spot of the “recession” cycle, then maybe Web 2.0 advertising will continue to explode. I think there will not be a bubble bursting for web 2.0 advertising. Its too lucrative and only becoming more engaging… http://www.read...ex.php?RTA=web2
Wouldn’t it be nice? I think the video numbers are low and the market numbers are ahead of everyone else on the Street…unfortunately, big ad spending dollars are slow moving and stubborn and it is going to take some time for them to recognize we are all here.
What this report does not address is that there are potentially billions of dollars in revenue waiting to be captured online in the college market utilizing emails as the vehicle for delivering quality impressions.
http://wrapmail...cebook-part-ii/
email marketing is dead
83% of marketers will be using email marketing as a tactic this year. And using emails from college students has never been done and is prime real estate for brands to reach college students in a targeted manner.
It’s alive and well my friend.
i see thanks for info
i agree.. email marketing is dead. of course, there are tons of websites out there that will throw out a bunch of stats indicating how much “potential” there is to capitalize on college students via email marketing.. but i don’t think they’re really considering at important piece of technology..
.. SPAM FILTERS =)
(level 1: my ISP has built-in spam filters… level 2: my email client catches everything else that passes through)
A picture or image in an email does not mean it’s SPAM. Period.
The idea here is analogous to banner advertising on sites, except that it is in an email. Here are the facts; there are 17 million college student in the US, each one of them has an email address from their school. The technology exists to serve VERY targeted ads in those emails, which are person-to-person emails, not blasts or newsletters. I assure you, many companies, both large and small, will pay to be featured in those emails.
This concept is like nothing anyone has seen. Don’t fight it.
Dave Kustin, WrapMail
The report seems to be bang on…..but what needs to be taken into account is that with the increase in the ad inventory, the video CPM rates will also plummet. Also, one important issue from the usability features on video ads is that videos are sequential in their rendering – akin to magnetic tapes. They do not hit you ‘at a glance’ like text or banner ads where ad messages are short and hence can be easily skimmed. One has to go through the entire video ad to get to the message, but not so with text/banner ads.
Video ads will have their place, but text/banner ads will not become obsolete….at least not in the short to medium term.
Some resources on advertising here for you to check out.
Cheers!
lots of money to be made
Online video is definitely the future of media consumption and by bringin the tv and pc closer together in your living room you’ll see CPM rates jump thru the roof. Imagine watching swimming for the Olympics and at the bottom of your TV screen a small unintrusive icon pops up saying ESPN.com has 10% off 3500 swimsuits or something like that.
I’m watch internet -delivered tv and movies on my tv. No set top box required, just a $20 cable tied into my laptop. Zipityzap dot com. Some of the new-age advertising is annoying – Hulu plays the same damn commercials over and over; and Tidal TV hogs up the bottom 1/3 of the screen with banner ads! But I really can’t complain – over 100 free channels and lots of movies.
email marketing does not have to mean MASS email. How about the emails employees send every day.
Corporations have websites
Employees send emails
Why not make every external email a showpiece for the company AND
make every employee a marketer
This will be as obvious as websites themselves one day! Want traffic to the website? Use the EXISTING email to drive that traffic.
It seems really cheesy, and way too commercial. It is like sponsoring, without getting paid. I wouldn’t work for a company that made this mandatory.
As for consumer facing, you could probably get the “make money online” types that are into multi-level marketing schemes where they collect points for taking part and referring.
The service lacks targeting capability and does not capitalize on intent.
Is there a link to the Lehman report that mentions video advertising growth?
Is it part of their Internet Data Book report?
I’ve seen a copy of the April Internet Data Book, but I haven’t see the August report.
Thanks.
I agree that email marketing is dying, but I wouldn’t call it dead yet. SPAM filters don’t always work and a few sneaky buggers can get in. I also think that video marketing is just going to get bigger – people don’t watch TV as much anymore because they can watch TV shows on the Internet whenever they want. It makes sense for advertisers to go to where the viewers are.
Wow thats a very useful statistic
This is a great post. I dont really care about competition too much as long as I am doing what needs to be done and I also find it hard to compete at social networking sites. There are a lot of people who do though. Interesting article.