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.

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“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.

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Going Native: How Marketers Are Reinventing the Online Video Advertising Experience

An interesting new rapport from Forbes, about “native advertising”

Summary: Over the past decade, content marketing, specifically in the form of online video, has become a fundamental tool for connecting with consumers. Native video, a more recent phenomenon that meshes in appearance—if not substance—with the overall feel of a publisher’s website, is achieving even greater viewer engagement.

“Native advertising” has emerged as the convergence between original brand video content and dramatically new approaches to distribution that ensure an ad matches the look and feel of a website and does not interrupt the viewing experience in the manner of a television commercial. While the term “native” ads has not fully caught on with marketing executives, the core elements of native ad types are favored by them, which suggests this market will grow as awareness increases. For this study, Forbes Insights, in association with Sharethrough, a native video advertising platform company, surveyed 136 marketing executives. Forty-six were from companies with revenues between $500 million and $1 billion, and the rest were from companies with at least $1 billion in revenue. The vast majority (99%) were located in the U.S.

UK web advertising spend to hit £5bn

Facebook ad revenue expected to increase by 84% as mobile and online video income also soars

UK internet advertising spend is likely to reach £5bn in 2012, with Facebook on track for an estimated 84% revenue surge to £175m.

Figures from the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers reveal brands spent £4.8bn in 2011, up by £687m. The 14.4% leap marks the highest growth rate in five years.

FMCG became the second-biggest-spending sector on display ads, at just 0.2% less than financial services, which has a 15% share of the total.

Retail brands are now the third-biggest-spenders on display with a 12% share, having accounted for 10% of total display in the second half of 2010.

The UK needs to see growth of just over 4% in 2012 – pretty much a certainty given historical levels – for the market to be worth £5bn annually.

Strong growth in 2011 was partly due to an explosion in advertising on mobile devices and tablets, which rose 157% to £203m last year.

Online video advertising doubled year on year to £109m as online TV services such such as the ITV Player and Channel 4’s 4oD increased in popularity.

These two sectors have helped fuel the overall display advertising market – banners and interactive ads seen on most websites – to more than £1bn for the first time.

Display advertising grew by 13.4% to £1.13bn in 2011.

The IAB said that the display ad market has been pumped up by fast-moving consumer goods companies such as Unilever and Procter & Gamble finally latching onto the sector.

The big FMCG companies are the biggest UK advertisers on traditional media, such as TV, press and radio, but have been slow to recognise the benefits of display ads.

One of the biggest beneficiaries of the surge in display advertising is Facebook, which figures from Enders Analysis estimates doubled revenues in 2011 to just under £100m.

This unofficial estimate – Facebook does not disclose its financial performance – is expected to surge by a further 84% this year to £175m.

The stalwart of UK internet ad spend is search advertising. which is dominated by Google.

Search, which accounts for 58% of total UK digital ad spend, grew 17.5% in 2011 to £2.77bn.

The growth has come from the British public’s love of web search and the cost-effective nature of search advertising.