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Online video ads surge

News, 13 May 2015

LONDON: Global advertising revenue from online video is set to grow 70% over the next three years, according to new figures, with television expected to suffer as a result.

Data from insights provider IHS and video analytics company Vidiro highlighted how the worldwide market doubled between 2011 and 2014 to reach $11.2bn.

It predicts it will increase another 23% in 2015 to hit $13.8bn and two years later annual revenues will total $19bn.

"Online video advertising is exploding," said Eleni Marouli, a senior analyst at IHS Technology. "Video has become a fixture in media plans as advertisers are familiar and happy with its format."

Online and on-demand video are making inroads into traditional linear TV viewing with TV advertising budgets being cannibalised in some markets. IHS said, for example, that TV would account for only 28% of all advertising in Western Europe by 2017. Warc data suggest TV currently accounts for a third of all European adspend.

IHS also noted that not only was online content consumption growing, so too was content production, as tech companies which traditionally focused on improving ad formats to increase their revenues were investing heavily in content to compete for TV ad budgets.

"YouTube leads the pack by combining a content strategy with an aggressive advertising strategy," said Anna Stuart, a senior analyst at IHS Technology.

Facebook too is becoming ever more prominent in this market, having surpassed YouTube in 2014 as the leader in online video impressions. It "will be a significant threat to online video publishers for ad revenue", said Marouli.

"We forecast that it will account for 25.7% of all online video ad revenue by 2018."

If YouTube currently leads the pack, then Facebook has one of the strongest video strategies both in terms of content and monetisation, according to the IHS white paper.

It is working closely with premium publishers to distribute content and is expanding its video ad solutions to provide strong format and targeting capabilities, the report said.

Data sourced from BusinessWire; additional content by Warc staff