Podcast Video | Posted by Phil Leigh on June 23, 2009
If you would like to learn five major conclusions from our new research report entitled Future Developments in Video Advertising, this video is for you.
1. The advertising market will shrink for several years to come. Even five years in the future aggregate advertising spending will be smaller than it was in last year. We project total advertising revenues of $245 billion in 2013 as compared to $285 billion in 2008. Internet advertising will gain share from 8% to 22%.
The Great Recession of 2009 is leading sponsors to radically change long-held assumptions about the use of media in marketing and advertising. In short, advertisers will face new competition from their own sponsors as sponsors intensify use of Internet media as a direct channel to their customers. They will allocate a greater share of marketing budgets to enriching their own websites as interactive, lead-generation properties. Similarly, they will self-manage more of their email marketing and employ embedded video in press releases, product promotions, and corporate communications.
2. Video will migrate to the Internet. Cable and Satellite networks are evolutionary dead-ends that cannot hope to compete with the innovative pace enabled by the Internet.
Consumers are learning to get unlimited Internet access at their TV, most commonly by connecting it to a laptop computer. The computer’s onboard WiFi links over a home network to the Internet thereby transforming the laptop into an Internet Gateway for the TV. The configuration permits users to watch any Internet Video on the TV screen. Given a remote mouse and keyboard consumers get a lean-back viewing experience 15 – 20 feet distant from the screen.
An estimated 10 million Americans watch Internet Video on TV monitors via computers. It is an intermediate forcing factor ultimately leading to two alternatives. One is the browser-centric TV. Second would be something like an Apple TV but with its own Apps Store. Such a store would be similar to the one for the iPhone but instead enable websites like Hulu.com and TV.com to provide simple (typically free) interfaces permitting their programs to be watched on TV via the applicable hardware.
3. Product promotion campaigns will replace product advertising campaigns. To the detriment of the advertising industry, the Internet will redefine product promotions to fit into a larger context. Historically product promotions were nearly synonymous with product advertising. The applicable marketing budget was allocated to the advertising agencies and media buyers responsible for the creative work and media placement.
Increasingly, sponsors will incorporate their own use of the Internet into product promotion. By enriching their websites, press releases, email marketing, and corporate communications with Digital Media they will trigger transactions and generate leads in activities that bypass the advertising industry.
4. Ad rolls will become shorter. There are three reasons why Internet Video advertisers will be able to cut back on the time designated for commercials.
First, is the avoidance of ad-time allocations for local network affiliates or Cable Systems. For example, websites like Hulu.com that host popular TV shows don’t need a local TV affiliate to stream the shows over the Internet. This frees-up about 4 – 5 minutes per hour. Second, unlike DVR users, viewers of streamed Internet Video cannot fast-forward through the advertisements. Third, Internet Video can employ non-disruptive interactive overlay ads. As a result, the typical hour-long TV show on Hulu takes only 48 minutes including 6 minutes of ads.
5. Advertising Industry Bypass will promote interactivity. Websites with the highest “click-through” rates are those engaged in triggering transactions. Examples include Amazon.com and iTunes. As sponsors gain experience with using Internet media to connect directly with customers they also will be focused on inducing transactions. Thus, as an indirect consequence of bypassing the advertising industry sponsors will learn how to increase click-through rates thereby advancing the state-of-the-art for interactive advertising. In short, Internet advertising and Internet retailing will overlap.