Video’s day is dawning. As the latest Internet Advertising Bureau (IAB) Digital Adspend report shows; video has at last usurped the banner as display’s primary ad format in the UK, with investment now at almost £700 million.
And ousting banner ads is just the start. The report also reveals that video (46%), alongside content and native advertising (14%), has driven all display growth in the past year —as budgets for other formats either remained static or decreased.
Yet, while video’s takeover isn’t surprising — its rise to digital power has been on the cards for about a decade — such speed is impressive. In early 2016, video advertising revenue was only at £480 million.
So what happened? Is the sudden surge in video advertising a result of a connected ‘millennial’ generation – or, are consumer habits evolving across all demographics?
Millennials aren’t the only drivers of change
Is the sudden surge in video advertising a result of a connected ‘millennial’ generation – or, are consumer habits evolving across all demographics?
Millennials, and their Generation Z successors, are undeniably technologically savvy. Both have (almost) always had internet access and expect constant connectivity as standard. They own an average of seven smart devices and use at least three on a daily basis. So it’s easy to see why these plugged-in generations could be cited as the cause for increasing spend; AOL research has found that consumers aged 18-24 and 25-34 alike spend over 20 minutes of each day viewing short-form video.
But they’re not alone. Studies have shown that consumers aged 45 (Generation X) upwards actually spend more time on the web than millennials and Generation Z. And the same AOL study also found that short-form video viewing for individuals aged 45 or above is growing significantly. So it’s clear that the growing appetite for online video is a much wider trend.
Demand for portable mobile content
The UK is an increasingly mobile nation, with smartphone penetration now at 76% and 57% of overall internet time spent on mobile. Hence, advertising investment in mobile has risen too; according to the IAB report, spend soared by £655 million between the first quarter of 2016 and 2017 to reach £2.37 billion, making up 43% of the digital ad market.
And this brings us to the growth of online video. As consumer usage of mobile for on-the-go entertainment has increased, so has video consumption. The IAB report also found that 52% of mobile video viewers watch more content on their devices now than they did last year, and 60% of those engaging with content on their smartphone do so while ‘out and about’.
Consequently, this spike in mobile video viewing might go some way towards explaining the sudden spending hike; especially when we consider that 70% of all video ad expenditure is now mobile.
Social and the call for unobtrusive ads
Platforms vary by generation — Instagram for Generation Z, Facebook for millennials and baby boomers, Twitter for Generation X — but for most cohorts, social media is a necessity. In the UK alone, social networks reach 85% of online adults and global social usage is now 2.8 billon.
Video has taken up position as the leader of digital advertising, but the causes for its rise to power also suggest that staying there won’t be easy.
Along with rising social adoption has come increasing frustration with ads that disrupt news feeds, which in turn has fuelled greater use of formats that fit in with their environment, such as native outstream video. By seamlessly aligning with news feed headlines, such ads provide maximum relevance and value for social users; as opposed to non-native outstream video ads that often obscure content without warning and fuel irritation. So, it makes sense that in the past year, video and native in-feed ad spend have grown; with in-feed accounting for 28% of digital spend in the IAB report – 91% of which (£395 million) is allocated to social. However, eMarketer predicts that in future, growth will be increasingly publisher based, as more publishers adopt the format and build it into their own product offering alongside custom content studios. Indeed, a third of ads purchased through our exchange last year were native video formats that ran across publisher feeds.
What does this mean for the future of digital advertising?
Video has taken up position as the leader of digital advertising, but the causes for its rise to power also suggest that staying there won’t be easy. Driven by demand from consumers for convenient access to engaging content and the need for unobtrusive ads, the popularity of video is dependent on marketers consistently delivering value with their content. Video advertising will continue to grow on the premise that publishers maintain their adoption of the format. A recent survey conducted by Sharethrough supports this as consumers cite growing trust in publisher brands over social media, when it comes to providing news.
With mobile and social continuing to influence and shape consumer behaviour across the generations, expectations of seamless digital experiences will also continue to increase. Consequently, brands will need to harness the potential of video advertising and put context firmly at the forefront.