NEW YORK: Online video budgets are increasing in the US, often drawing funds away from TV and display advertising, a survey has suggested.

The State of the Industry in Online Video study, from media company Digiday and video ad platform, polled 760 executives. It found that 72% of video buyers' budgets for this channel increased year on year during the first quarter of 2013.

Overall, budgets rose by 53% in the first quarter compared with 12 months earlier. This total can be measured against a 20% increase in 2012.
TV and display advertising budgets were affected by this development. Among those video buyers whose budgets had increased, 39% had moved money away from TV and 41% from display.

But as most buyers (80%) indicated that online video was a vital complement to TV, the report suggested that "the cannibalisation of display may proceed even more rapidly than that of television."

The average amount of TV spending that was redirected to online video amounted to 11%. In addition, some 28% of the increase in online video buying took the form of incremental growth.

A significant shift was seen in the percentage of advertisers buying direct from video content producers. Fully 93% said they did so in the first quarter of 2013, compared to just 52% a year earlier.

Moreover, two-thirds of brand advertisers who bought online video said they now used programmatic to do so, a development argued to have "big implications for ad agencies for whom buying sight, sound and motion for their clients has long been a cash cow".

But the report found there was only a modest shift in the category share of video buyers, with activity levels in retail, financial services and telecommunications marginally higher than the norm.

However, the study also remarked that it was "striking … that nearly every category across the board has found a way to employ online video in its marketing."

Data sourced from Digiday; additional content by Warc staff