A media analyst says digital video ad revenue for traditional TV companies is expected to get to $2.1 billion in 2016 — up from $1.5 billion in 2015. That’s a 40% increase in advertising on platforms like Hulu, station apps and websites and online syndication.
The $640 million acquisition is the Internet company’s latest attempt to boost its revenue. The deal marks Yahoo’s first major purchase since reaping a $9.4 billion windfall in September by selling part of its stake in a rapidly rising Internet star, Chinese e-commerce service Alibaba Group Holding Ltd.
While eMarketer is predicting 56% revenue growth for digital video ads this year, there are hurdles to online video spending that will slow its growth over the longer term. “There are factors holding back digital video ads, not the least of which is that television advertising is still incredibly popular,” says Martin Utreras, senior forecasting analyst at eMarketer.
A new survey of media buying agencies, conducted by Strata, found that 45% of those polled are more interested in digital/online video than they were a year ago, while streaming/online radio saw a 53% increase. Overall, 67% of agencies said that their clients’ primary focus for campaigns is video advertising (including traditional TV, cable, and network, as well as digital video).
YouTube, broken out from Google’s overall business, is potentially worth more than Twitter with a valuation up to $40 billion, according to an analysis Jefferies. The report looked at the growth of digital video advertising and YouTube, a top beneficiary of this growing segment. Jefferies said online video ads would be a $17 billion market in the U.S. by 2017 and that YouTube will grow from $5.9 billion in video ad sales this year to $8.9 billion in 2016.
As traditional TV platforms project small gains in their $70 billion business, new digital TV video businesses are looking at major hikes in the coming years to a smaller $4 billion business — with cost per thousands seeing, at best, modest hikes.
Online long-form video and ad insertions have begun to mirror TV viewing with higher rates of success, according to a study released Tuesday. The 2012 Adobe Digital Video Advertising Report suggests that completion rates on mobile devices at 94% indicate higher engagement from viewers more open to watching ads on the go in exchange for content.