Forrester report: Video ad spending expected to hit $103B in 2023
Marketers shouldn't abandon TV, but they should add other distribution channels to the mix.
Advertisers will spend a staggering $102.8 billion dollars a year on video ads by 2023, according to a recent Forrester report. That number is up from $90.7 billion this year.
Forrester Analytics: Video Advertising Forecast, 2018 To 2023 (US) (subscription required) analyzed data collected from various sources, including its ForecastView service. Online video includes both free and paid streaming from web-based services, TV networks and social media.
There are a number of important lessons marketers can learn from this data.
Online video is on the rise, but don’t count TV out yet
Online video’s share of ad spending is expected to grow from 21.2 percent to 34.3 in 2032, edging out TV’s share. And the number of online video viewers in 2018 (200 million) is fast approaching the size of the TV audience (258 million).
Interestingly, 81 million will only watch video from a TV network’s website or app in 2018, but advertisers aren’t there. Only 10 percent of marketers are expected to increase their ad spending more than 6 percent next year. This leaves an opportunity on network sites and apps.
From the report:
At first, the thought of optimism around TV may seem counterintuitive. The subscriber count is down for cable and satellite TV. And ratings are down for NFL games, the most important series of programs on the US TV schedule. The greater availability of online content is squeezing the time viewers can spend on TV. However, there are reasons for optimism. Even though traditional TV users and the amount of time spent on offline video is declining on average, the reach of TV is still expanding when we account for TV Everywhere and the rise of virtual TV services, or vMVPDs (Virtual Multichannel Video Programming Distribution), which we consider to be part of TV rather than online video. Viewers still want TV programming but are accessing it in new ways via TV Everywhere and vMVPDs.
TV Everywhere refers to the concept of watching TV on any screen, such as a phone, pad, desktop monitor or traditional TV screen. According to the report, TV Everywhere is expected to grow from 89 million users in 2018 to 111 million in 2023.
The report also says that vMVPD usage shows potential, nearly doubling from 24.2 million users this year to 44.3 million in 2023.
Another sign that TV is a fertile ground for advertisers is an expected growth in TV upfront ad sales (a 5.9 percent increase in spending, up to $19.7 billion in 2023). Also, a majority of marketers (70 percent) say that traditional TV is effective or very effective for building brands, and a good number of them (55 percent) say the same for short-term sales.
Customers don’t mind watching ads for free content — for now
Almost 194 million US consumers are watching some form of ad-supported free streaming in 2018. Two-thirds of US adults don’t mind seeing online video ads in exchange for free content; 72 percent would rather immediately watch a TV show with ads than wait for an ad-free version.
But there are signals that customers are losing patience. The report notes that there was a decline from 2016 to 2017 in the share of users willing to swap ad views for content, from 71 percent to 66 percent.
Keep TV — and video — in the mix
Forrester Analyst Jim Nail told me that marketers should “absolutely continue to invest in TV — marketing measurement models still show it has the highest ROI, even with the fragmentation, multi-tasking, etc. that it faces.”
But, Nail said, “given the shift in viewing away from linear, advertising planning and buying has to change.” He said that it’s a good idea for marketers to include other distribution channels in the mix:
Part of this is adding OTT and other distribution channels of long-form episodic video entertainment. But online video deserves a place on the schedule, too. This introduces the discipline of omnichannel video advertising: how do you determine the right allocation among the different video forms? How do you maintain a consistent message while adapting executions to the characteristics of each channel? What language do you use to talk about it: impressions? GRPs? Reach? Frequency? Something new?
For digital advertisers, the report shows that while the “banner,” i.e, static, ad forms will persist, online advertising has been rapidly shifting toward video, and that will continue. So digital specialists must learn a new advertising skill — storytelling — that is the essence of video and not necessary in static ad forms.
Opinions expressed in this article are those of the guest author and not necessarily MarTech Today. Staff authors are listed here.