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The new boom of online video advertising platforms

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Cable television, Europe, Germany, Informa, Patrick Smith, TheMediaBriefing Experts' Blog, Thomson-Reuters Corporation, United States of America, Guardian Media Group, Broadcast


online video ecology; in a grid

One thing I often hear from contacts in the consumer publishing world – including recently folks from Guardian News & Media and Future – is that video advertising is doing very well at the moment, outstripping growth in boring old display revenue.

Pre-roll, post-roll and the even more distracting “mid-roll” ads are a bright spot for many and eMarketer predicts video will increase 54 percent in revenue terms in 2012, growing faster than any other advertising medium. Kantar Video similarly predicts that online and mobile video ads will collectively be worth $5 billion by 2015, beating directories and outdoor spend.

As a consumer behaviour, the importance of online video is undeniably huge: According to figures from comScore in August this year, UK web browsers view 6.5 billion videos a month in total, up 29 percent inǽƒ_ª¶ù the last six months.

Some serious investors agree that video is a key part of the media ecosphere - a string of funding deals and mergers in the space has consolidated and boosted the video-specific adtech sector. Just a selection:

-- Adconion acquired Smartclip 

-- Blinx has bought Prime Visibility Media Group

-- YuMe received $12 million from Samsung Venture Capital … and so on.

In one of the biggest such deals this year, video ad network Brightroll raised $30 million in VC funding from Trident Capital and existing investors. The money is going to fund more foreign expansion – there’s already an office in London and one in Germany – and more development in mobile.

I caught up with Brightroll’s European MD Phil Cooper to ask what the big idea is.

“It’s quite evident that display and CPMs are in decline,” he says. “There has been a resurgence in people doing something interesting things with targeting and data… But there is a lot of brand advertising spend to come to online video.

“Brands are requesting more engagement with users and video really is the best place for that… the agencies are seeing the spread of media a little bit more – there is definitely a transition happening.”

Cooper admits that TV is in rude health in money and usage terms — “I’m not here to fight against TV – it’s not going to disappear over night,” — but he argues that the TV market is “increasingly fragmented”, especially in the US where the cable subscription model is under real threat from cheaper VOD providers.

An intriguing growth sector for Brightroll is in-game advertising. If you download the phenomenally successful Angry Bird mobile game, you may well be served an ad by Brightroll.

The analyst’s view

But what do the people that track this sector very closely think about the runaway growth of video ads? Is there substance behind the impressive figures?

Giles Cottle, principle analyst at Informa Telecoms and Media, tells me: "It’s big numbers, yes. We are going through the validation stage. The gist of it is that it’s about £2 billion to £3 billion a year. But of the (potential) growth that we’re seeing, we’re looking at between £15 and £20 billion and that’s still less than 10 percent of TV."

Cottle says that the US market is more ripe for video advertising given the turmoil in the monopolised cable TV model there. “The US is Brightroll’s most important market – the broadcasters their haven’t been as quick (as in Europe) to put their own content online.

"(Online video advertisers) have been able to develop much more quickly in the US because they don’t have that competition. Here, broadcasters are making between 60 and 80 percent of all video advertising.”

So while there's a real landgrab in online video ads, the competition from the new breed of IPTV platforms (much more on that here) may be a ticking point in the crowded UK/Europe market where "cord-cutting" is not such a material concern to the likes of BBC, Sky and Virgin.

And just to finish, a good thought in response to a recent newsletter from this author (I write eight a week, they’re free). I asked “when was the last time you clicked on an ad?”, openly wondering whether web advertising is based on the conceit that people do actually pay attention to ads. But Ilicco Elia, formerly head of mobile for the consumer division of Thomson Reuters and now head of mobile at the LBi agency, countered with this:

"Just to be contentious... @psmith when was the last time you clicked on a TV ad? does that mean they don't work?"

And that is what I’d call a good point

Picture by believekevin via Flickr on a Creative Commons licence

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