Summary:

One of the reasons online video is the fastest growing ad segment is because nearly half of all Americans are watching some form of streamin…

It Will Be The Year Of ‘Interactive TV’

One of the reasons online video is the fastest growing ad segment is because nearly half of all Americans are watching some form of streaming, according to Nielsen’s Cross-Platform report. But online video is still a long way off from attracting half of marketers’ advertising dollars.

One of the most tired questions heard at online advertising conferences is the lament that ad spending by major marketers is barely catching up to the shift by audiences to online. For one thing, the lack of apples-to-apples audience measurement is a continuing problem. Secondly, many advertisers complain of the lack of premium inventory available for online video. But for the most part, it’s simply that the structure of ad budgets and the methods of buying and selling remain largely stuck in traditional ways.

Go local: The availability of self-serve ad functions — such as Google’s latest program within DoubleClick for Publishers — is helping to unlock marketing budgets, especially incremental ones at the local level.

A glance at Nielsen’s figures suggests that finding adding more local ad options may be the key toward driving more interactive video ad spending. When it comes to video-on-demand in general, Nielsen finds that no two regions are alike:

– The south spends the most time watching TV, with New Orleans taking the top spot.
— Baltimore has the highest video game console penetration.
— Dallas has the highest DVR penetration.
— Consumers in the East South Central region (Tennessee, Kentucky, Mississippi, Alabama) spend the most time watching video on the Internet.
— Miamians are most likely to have a mobile phone in their pockets.
— Bostonians have the highest internet-enabled computer penetration.

Cord-tightening: Subscription shifts underscore that Americans are putting a new emphasis on broadband.
Nearly three-fourths (72 percent) of U.S. TV homes pay for both a cable-plus TV subscription (cable, satellite or Telco) and broadband internet access. In fact, households with both cable-plus and broadband saw year-over-year growth of nearly 7 percent. In other words, still more evidence that cord-cutting is still a long way from really impacting cable companies.

TV is still king: For all the excitement over online video, the TV set is still the thing. But interactivity has surely helped, rather than hurt, TV viewing — quite the opposite of the cannibalization that newspapers have seen from digital. Over the past two years, time-shifted TV viewing rose 31 percent with “near-constant growth.” says Nielsen. Americans spent more than four times per week watching VOD content on a TV as they do online video. Americans 25-64 spend the most time watching time-shifted content but Americans 65+ and kids 2-11 are catching up, with double-digit growth in time spent over last year.

Video’s rapid evolution: In some ways, online video ad spending will rise exceedingly fast from its small beginnings. But in more general sense, it will take time until video publishers realize significant revenues. So how long will will online video’s evolution take?

In a report this past summer, eMarketer has projected that by 2015, 76 percent of internet users, or 195.5 million people will be watching online video each month. In the same period, it predicts online video advertising spending will surge from $1.97 billion to $5.71 billion in that period. In the meantime, as video and TV draw closer together through various over-the-top and streaming services, expect the advertorial model of online video to be a more attractive option for media companies looking for more bang for the buck.

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