Online video is upending media consumption habits around the world, causing rapid changes in behaviour as people become accustomed to having endless high-quality video on tap wherever they are at any time in the day.
At Zenith we have been tracking the growth of online video viewing and advertising in our annual Online Video Forecasts report, the fifth edition of which we have just published.
The amount of time people spend viewing online video has grown rapidly, at an average rate of 32 per cent a year between 2013 and 2018, boosted by improvements in display sizes and quality of mobile devices, faster mobile data connections, and the spread of connected TV sets. This year the average person will spend 84 minutes a day watching online video, and we forecast this to rise to 100 minutes a day in 2021.
China and Sweden have the keenest online video viewers, with the average person in each country expected to spend 103 minutes a day watching online video this year. These are the only countries where online video viewing exceeds 100 minutes a day, but by 2021, Zenith expects Canada, India, Mexico, the UK and the USA to join the list.
We forecast that advertising expenditure on online video will rise from US$45bn this year to US$61bn by 2021, at an average rate of 18 per cent a year, compared to 10 per cent a year for internet advertising as a whole. Meanwhile television adspend will shrink from US$183bn to US$180bn over the same period, as ratings continue to drop in key markets. Online video will therefore rise to the equivalent of a third of the entire TV market in 2021, up from a quarter this year.
Video inventory is in high demand, and to meet the need, publishers have supplemented video ads that appear before, during or after video content with in-stream ads – video ads that pop up beside other content, such as text, images or social media posts – and out-stream or ‘in-read’ ads. Out-stream ads are now common and, in some markets, comprise the majority of video advertising: in the UK, 57 per cent of video adspend went to out-stream advertising in 2018.
In-stream ads reach consumers who are actively seeking to view video, and are leaning forward to pay attention to it. Out-stream ads, in contrast, reach consumers who are primarily interested in the content that the ads sit alongside, and who can quickly and easily scroll past them. They are commonly viewed with the sound off.
Out-stream ads are less likely to engage viewers’ attention and influence their opinion of the brand being advertised, so they are less valuable on a cost-per-view basis. That’s one reason social platforms are investing in their mobile TV products, such as Facebook Watch and Snapchat’s Shows, which provide a more television-like experience and a more valuable advertising environment. The balance may soon begin to shift back towards in-stream advertising.