The explosive growth of digital video was no surprise as the medium spread seamlessly across screens and devices. But no one could have predicted how soon consumers would be doing things like watching 360-degree videos on their smartphonesevery week, and how quickly mobile would challenge desktop as the primary choice for video viewing.
The results from a new global research study reveal the consumer behaviors and industry trends driving the evolution of digital video, and point the way for advertisers and publishers looking to make the most of digital video in 2017. Of course, there are many challenges, but with consumers making digital video a habit—92% watch videos online every day and 88% watch more video now than they did a year ago—there's good reason to keep the cameras rolling.
Digital video is stealing the scene
Digital video will see the largest increase in advertising spend in 2017. 83% of advertisers plan to increase their video ad spend this year—more than on any other media. These dollars will continue to come at the expense of TV budgets. Of the advertisers shifting spend away from broadcast/cable TV, 72% are moving it to digital video. And they're betting big on smartphone viewing, with 71% shifting that budget to mobile video.
85% of advertisers and publishers plan on buying/selling pre-roll (linear video ads) in 2017. They also plan on video banners (61%) and video expandables (60%) in 2017.
Marketers are optimistic about digital video's revenue-generating potential. Advertisers expect branded video content to drive the greatest revenue in 2017 (62%), followed closely by new video formats like 360, VR, AR (52%) and 1-5 minute videos (46%).
The planned increase in digital video investment is a smart move as more consumers are turning to their laptops, phones and connected TVs to watch videos. 68% prefer watching videos online or through a connected TV because it offers more flexibility. 53% prefer it because of the convenience of being able to access video content on any device. And 50% prefer it because they are saving money using these devices.
Advertisers and publishers are on the same page when it comes to what factors are fueling digital video growth:
- Social Media
- Advertisers 50%
- Publishers 60%
Better Quality Creative
- Advertisers 46%
- Publishers 50%
As digital video continues to dominate, marketers still struggle with issues of quality, technology, creativity and cost:
Advertiser top challenges:
- Network traffic / audience (23%)
- Quality of inventory (23%)
- Quality of consumer experience (21%)
Publisher top challenges:
- Too many platforms to adapt to (45%)
- Load times (38%)
- Cost of producing premium video (35%)
The small screen is the big opportunity
Mobile is fast becoming the screen of choice for consumers. 60% say they "can't live without their smartphones." And 67% watch videos on their smartphones every day, in line with the 70% who watch on desktop/laptop every day.
The industry is following their lead. 70% of advertisers and 79% of publishers expect to increase their mobile video spend by at least 25% in 2017.
Enthusiasm for mobile video is tempered by one significant challenge: long load times. 43% of advertisers are spending less on mobile video ads due to load-time lags. However, 40% are focusing on developing lighter ads that will load faster.
Search & social drive video views
With users fluidly crossing platforms and devices as they consume content, it's more important than ever for marketers to expand their distribution strategies. Right now, more consumers are discovering online video through search (57%), social feeds (50%) and recommendations (49%) than directly on publisher websites (34%). And they're sharing too—48% will post an online video to their social network if it interests them.
Shorter videos = bigger audiences
Shrinking attention spans are having an impact on video. While online video consumption is increasing across all video lengths, short-form video is growingthe fastest. 59% of consumers watch videos that are under a minute long every day. The percentages get smaller as the videos get longer:
- 45% watch videos 1-5 mins in length every day
- 42% watch videos 6-9 mins in length every day
- 40% watch videos 10-20 mins in length every day
- 31% watch videos 20 mins or longer every day
Live video is playing big
Consumers are tuning into live news, music and sports video streams. 68% watch live video more than once a week. And 74% watch live video content on smartphones.
Virtual reality is a real opportunity
2017 is the year of VR. 68% of consumers have watched a VR video at least once. And 28% of consumers who watch VR videos view them on smartphones. 31% of consumers expect to watch more VR videos this year than they did last year.
Consumers are eager to see a wide variety of content in VR video format:
- 43% - entertainment (movies and TV)
- 43% - travel/tourism
- 31% - science and nature footage
- 28% - virtual shopping
Advertisers agree that VR is on the rise. 70% of advertisers believe "there is a place for VR in the digital video marketplace." And 55% of advertisers are currently purchasing VR and plan to continue in the next 12 months.
360 video and AR are also gaining momentum. 49% of consumers who watch 360 videos view them on smartphones. 52% watch 360 videos once a week or more, and 49% experience AR videos at least once a week.
The new formats to watch
New video formats are generating excitement. 52% of advertisers and 60% of publishers expect "new formats" to be top revenue drivers in 2017. New formats include 360 video, vertical video, VR, AR and Outstream.
Of all the new formats, advertisers and publishers expect 360 video (62%) to be the top revenue driver in 2017, followed by Live video (39%). Sellers are less decisive about which format will be the top driver, with 360 Video (53%), Live Video (47%), and Interactive Video (45%) all at parity.
Why are publishers investing in new formats? 70% want opportunities for new inventory and 59% want to provide better consumer experiences.
Consumers expect more from video ads
Consumers expect video ads to be entertaining and relevant.
For videos that are 1 minute or less, 64% of consumers expect the pre-roll ad to be less than 15 seconds. And only 9% of consumers expect a 30-60 second pre-roll ad.
For longer videos (10+ mins), more than half of consumers expect pre-roll ads to be at least 30 seconds in length.
71% of consumers don't mind ads if they are entertaining. 67% don't mind ads that include a product or service that is relevant to them.
But they do have strong preferences regarding the types of ads they're served. 82% of consumers agree that they "would like to have some control over which ads they watch." 72% agree that "ads that run after a video are less intrusive than ads that come before a video." 77% would rather watch one longer ad instead of several shorter ads throughout the video.
More than 50% of consumers will stop watching a video after experiencing two buffering interruptions. 79% exit after three.
Branded video: the promise and the pitfalls
43% of advertisers are currently purchasing branded video and 63% see it as one of the biggest revenue opportunities, followed by new formats (56%) and 1-5 minute videos (45%).
But there are concerns. Advertisers cite measurement (44%) as a top challenge (up from only 30% one year ago). And 44% cite cost as a problem, too. Publishers list quality of content (20%) and costs (16%) as their biggest cruxes.
Programmatic powers video buys
Programmatic is an automatic choice for buyers. 100% of advertisers now use it for digital video buys, up from 91% in 2015. Advertisers are currently allocating 45% of their video advertising budgets to programmatic buys. And 82% of them expect to increase programmatic investment this year.
Publishers are embracing programmatic video, too, with 90% of them expecting to see an increase in revenue from programmatic video this year. The biggest opportunities they see are identifying "better merchandising of inventory" (90%) and "access to more buyer demand" (80%).
However, both advertisers and publishers still struggle with programmatic pitfalls:
- 55% - Integration into existing processes and systems
- 52% - Inability to access premium inventory at scale
- 50% - Difficulty of Creating Video Ads
- 47% - Risk of lower CPMs than direct sales
- 47% - Lack of existing processes and systems
- 45% - Perceived risk of losing direct buyer relationships
Digital video is here to stay
Digital video is dominating consumers' screens and marketers' budgets with no signs of slowing down. 74% of advertisers and publishers agree that it's the future of advertising. But 61% of them also believe that "there are still too many barriers in creating and implementing a viable digital video strategy." The solutions to these barriers start here, with research that reveals the trends and truths driving the marketplace and that points to where the industry needs to look next to make the most of the medium.