YouTube advertising revenue surges 50% to $5.6bn

Advertisers will spend a projected $5.6bn on YouTube in 2013, an increase of more than 50 per cent on the previous year, according to a report that underlines a shift away from traditional television ads. The sharp rise, which follows an explosion of viewing on mobile devices, comes as advertisers strive to reach younger consumers who have drifted away from television. Television’s share of advertising budgets has peaked after 30 years of growth and online video is now competing for ad spending. YouTube does not keep all of the advertising revenue that flows through its site, paying much of it to partners and “content creators”. The report, by media research firm eMarketer, predicts that YouTube’s net revenues will be $1.96bn once those partners have been paid, giving it 1.7 per cent of all global digital advertising spending. This is a larger market share than sites such as Twitter, AOL and Pandora, eMarketer said.


“Video ad revenues are expected to increase significantly in coming years for YouTube’s US operations, particularly as mobile video viewership grows,” said the report. Television remains the biggest global recipient of ad spending globally: in the US advertisers are expected to spend an estimated $66.5bn in 2013. But eMarketer is projecting only modest increases over the next three years. “There’s ongoing fragmentation in viewing,” said Dan Cryan, senior director of digital media with IHS, a media research firm. “TV viewing is more or less flat but total video viewing is going up and that’s being driven by things like YouTube and Netflix.”

YouTube, acquired by Google in 2006 for $1.65bn, has more than 1bn viewers every month and attracts about a fifth of all advertising spending on US online video. It has faced competition from rival sites such as Hulu, which expects to generate $1bn in advertising revenues in 2013, but it has maintained its lead. Hulu, owned by Walt Disney, 21st century Fox and NBCUniversal, has twice explored a sale only to call off proposed deals at the last minute.

Heightened advertiser interest in YouTube comes as a new generation of online video production studios have sprung up to cater for a younger generation that watches most of its television programming online.

Investors are clamouring to get a foothold in these companies: Maker Studios, one of the biggest online video networks, recently brought in investors to join a shareholder list that includes Time Warner, Elisabeth Murdoch and Robert Downey Jr, the film star.



Video Content Drives Social Engagement and Gains Ground on Mobile [Report]

A new report from Adobe shows the formidable impact that video content is having on our online viewing habits and how publishers and marketers can benefit from this upward trend by understanding what the public wants. The U.S. Digital Video Benchmark 2012 Review, which draws its data from just under 20 billion video starts on media websites as well as 10 billion videos ads served by Adobe media customers alongside 450 million Facebook posts, states that video content has twice the social engagement of text, links and static images. Not only is the medium finding success on social network sites, the report finds that mobile video views increased by a staggering 300% in 2012, and accounts for 10.4% of all video starts.

Adobe even made a video of the report so let’s take a look at that first for a quick overview:

Mobile Video

Although viewers in the US still continue to watch the majority of the video content via their PCs, consumption via mobile devices increased significantly last year. Mobile video views are up by 300% which makes up 10.4% of all video starts.

Video Content Drives Social Engagement, Gains Ground on Mobile [Report]

Video viewing via tablet devices tends to peak at the weekends and is driven by longer form content such as sports, films and TV shows. Mobile viewing habits tend to favour video consumption on a Monday, Thursday and Sunday and revolves around “content snacking” of shorter video clips.

Video Content Drives Social Engagement, Gains Ground on Mobile [Report]

Social Media

In 2012, video social engagement rose from 42% to 70% the year before with the viral reach of video content (the number of people who discover a video via a friend or a brand they follow) accounted for 77% of ALL reach via social networking sites. That compares to 55% for non-video content. Adobe found that this type of video also has a much higher completion rate. People are taking the time to watch the whole thing if the recommendation has come via their social circle.

Facebook still has the lead when it comes to these social referrals but Twitter is three times more likely to generate referral traffic for videos than other types of content such as text links or images.

Video Content Drives Social Engagement, Gains Ground on Mobile [Report]

Some other key findings:
• Digital video consumption has grown 30% year over year in Q4 2012.
• From Q3 to Q4 2012 alone, video consumption grew 13%.
• There has been 50% growth in video streams since Q1 2011.
• New TV and sports content drove the highest growth in video streams in Q4 2012.

You can download the report from Adobe here for further information on last year’s video trends in content and advertising.

Mobile and Video Grab a Greater Share of Digital Ad Budgets

Vast majority of US advertisers, agencies plan on using mobile and video in 2012

Marketers must diversify their ad investments across a wider variety of digital channels to keep up with today’s media consumption habits. Not surprisingly, digital ad agency ValueClick media found US marketers’ digital advertising budget allocation for 2012 was expected to mirror popular consumer usage trends, resulting in more spending on mobile and video efforts.

Almost half (49%) of US marketers surveyed by ValueClick planned to boost video ad spending, and 65% noted increases to their mobile budgets for 2012. These two channels also saw the smallest number of marketers who said they planned to decrease spending: 3% for mobile and 2% for video.

Change in Digital Ad Budget Allocation in the Coming Year According to US Marketers, by Channel, Dec 2011 (% of respondents)

In December 2011, 66% of US marketers said they planned to spend between 1% and 24% of their 2012 digital budget on mobile, compared to 50% last year. In addition, 52% of US marketers planned to allocate a similar portion to video, up nearly 27% from 2011.

Digital Ad Budget Allocation in 2012 by US Marketers, by Channel (% of respondents)

Additional data showed the vast majority of respondents (94%) planned to purchase standard mobile banner ads. Roughly half also planned to buy mobile rich media ads (53%) and mobile video ads (49%).

Types of Mobile Ads US Marketers Plan to Use, Dec 2011 (% of respondents)

Such high levels of interest in standard mobile display ads will help US mobile ad spending skew further toward rich media and banner advertising this year. Ad spending on these two formats will comprise one-third of total US mobile ad spending in 2012, or $861.7 million, according to eMarketer estimates. Video will account for 5.8%, or $151.5 million, of the year’s $2.61 billion in total US mobile ad spending.

US Mobile Ad Spending Share, by Format, 2011-2016 (% of total)

The greatest share of US mobile ad spending will continue to go to search, expected to account for 49% of all ad dollars this year. This is unsurprising, given that mobile is still working to achieve mass reach and scale—two common prerequisites for display advertisers. In the meantime, mobile search advertising will continue to dominate mobile ad spending.

In terms of mobile campaign measurement practices, additional data from ValueClick showed that, in December 2011, marketers were just slightly more likely to measure their mobile efforts with brand-health metrics as opposed to direct-response measures. And ValueClick found the highest percentage (63%) of US marketers measured mobile performance using clickthrough rate.

Methods Used by US Marketers to Measure the Performance of Their Mobile and Video Campaigns, Dec 2011 (% of respondents)

For now, mobile appears to be a channel equally employed for branding and direct-response objectives, and measurement metrics reflect that near-equal division.