Market Size Opportunity: Growth of Video Over IP Networks
Let’s start at the top and work our way down to the categories. First, the outlook for branded entertainment marketing is very good and is forecasted for double-digit growth through 2012, despite slower economic expansion in the period. The sector is projected to grow at a 12.8% CAGR from 2007 to 2012, exceeding $40 billion by the end of the forecast period.
Key 2007 trends affecting each segment of branded entertainment:
Spending on event sponsorship and marketing, the largest segment of branded entertainment, rose 12.2% to $19.18 billion in 2007. This segment attracts new customers by using face-to-face engagement, which is lacking in many traditional advertising and marketing strategies.
Paid product placement spending grew 33.7%, to $2.90 billion, in 2007; the segment’s compounded annual growth rate (CAGR) was 40.8% from 2002 to 2007. “Higher DVR penetration, combined with increased TV program product integration, helped drive paid product placement spending,” said PQ Media President & CEO Patrick Quinn.
Spending on Advergaming and Webisodes increased 34.8%, to $217.0 million, in 2007, fueled by efforts among marketers to reach the 18-34-year-old demographic, which is watching less television and spending more time on the internet playing videogames and downloading videos.
The total Annual online advertising revenues have increased significantly for six consecutive years, after declining in 2001 and 2002.
From the $40 billion projected in 2012, $3.4 billion of the growth will be from online video which is a sub-set of the $51 billion total online pie.
Adoption Rates Soar and Advertisers Play Catch-up:
·Online video is currently taking, and will continue to take consumer time share from other forms of media, with user minutes growing from 30 billion monthly minutes in 2007 to 200 billion monthly minutes in 2010 (according to Nielsen’s U.S. broadband projections).
·A near tripling of total videos viewed per month from 7.2 billion in Jan '07 to 21.4 billion in July '09.
·A 229% increase in the average number of online videos watched per viewer per month from 59 in Jan '07 to 135 in July '09.
·It will increase to 190 MM Internet Users or 88% of the Web population by 2012
·Online video spending will reach $4.6 billion in 2013, up from $587 million in 2008 (a sevenfold increase).
·The Audience is Global not just the US
·A necessity for ALL multinational Mega Brand Advertisers ($250 billion Market) and embedded video is the most used tactic to get high ranking pages for Search Engines Optimization (SEO)
·The Largest Spending increase 78.9% is supposed to happen in 2012.
·Video is only trailing display ads and each with respect to trended spending until 2013.
·A 331% jump in the number of minutes of video watched per average viewer per month from 151 minutes (2 hours 31 minutes) in Jan '07 to 500 (8 hours 20 minutes) in July '09.
·Jason Kramer, chief strategy officer of Interpret LLC, says that "... unlike television consumption, which mostly happens during hours of 8 pm to 11 pm, people across all demographics are watching online videos consistently throughout the day and night, with the exception of dinnertime... this fundamental shift in consumer behavior opens up opportunities... [to] leverage online video to reach target audiences more often than just once a week."
·There are similar spikes in online video consumption for people at work, as well as at home, with approximately 70% watching during the day and at night.
·There are spikes in online video consumption among men, women, students and full-time employees during the hours of 12 pm-3 pm, and then again between 9 pm-1 am.
·The lowest amount of online video consumption is around dinnertime from 6 pm-9 pm.
·Regardless of time of day, one-third of people who watch a video share it with friends, family members and colleagues.
·27% of respondents who remembered seeing an ad searched for more information about the product featured after watching high engagement videos, versus only 13% for low engagement videos.
·28% visited an advertised brand or product's website after viewing a high engagement video vs. only 10% for low engagement videos.
·High engagement videos account for 47% of ad recall.
·Executives at winning Web retailers (those with sales growth exceeding the industry average of 3%) ranked expanded video capabilities second only to online behavior tracking as the most promising technology for engaging customers.
Key Marketing Trends Regarding Spending
·Retail Advertisers Continue to Drive Consumer Ad Spending – 2008 Annual Results.
·In 2009, growth will be fueled by retailers who want to:
Provide a better user experience
Drive traffic to conversions
Improve conversion rates
Retail Advertisers continue to represent the largest category of ad spending, accounting for 22% of revenues for the full year of 2008 or $5.0 billion, down from the 25% ($5.4 billion) reported in 2007.
·Retail video viewers represented about 23% of total visitors to retail Websites in October 2008, up from 17% the year before.
Leading Categories of Spending:
·While only 36% of Web retailers have already deployed product and education videos on their Websites, 53.3% expect to do so within a year. And of these, 17.3% said they expected to do so in six months or less.
·66.8% of U.S. marketers plan to focus their online marketing budget on video in 2009.
·Financial Services advertisers represented the second-largest category of spending at 13 percent of 2008 full year revenues or $3.0 billion, down from the 15 percent ($3.2 billion) reported in 2007.
·Automotive advertisers accounted for the third-largest category of spending at 12 percent of 2008 full year revenues or $2.8 billion, up slightly from the 12 percent ($2.5 billion) reported in 2007.
·Computing advertisers represented the fourth-largest category of spending at 12 percent of 2008 full year revenues or $2.7 billion, up slightly from the 11 percent reported ($2.3 billion) for the full year of 2007.
·Telecom companies accounted for 9 percent of 2008 full year revenues or $2.0 billion, up slightly from the 8 percent ($1.7 billion) reported in 2007, while Leisure Travel (airfare, hotels & resorts) accounted for 6% of revenues ($1.4 billion) compared to the 7 percent or $1.5 billion reported in 2007.
·Media accounted for 5 percent of revenues for the full year of 2008 or $1.3 billion, down slightly from the 6 percent ($1.3 billion) reported in 2007.
·Consumer Packaged Goods and Food Products represented 6 percent of full year revenues ($1.5 billion) up from the 4% or $925 million reported in 2007. Entertainment accounted for at 4% of 2008 full year revenues ($917 million), down slightly from the 5% ($1.0 billion) reported in 2007.
