TV has long been a staple for big brand advertisers wanting to reach a mass audience however a fundamental change in how we watch TV is taking place, particularly among younger viewers. This is driven by factors including ever-quickening internet speeds at home and on-the-go, and a wide range of affordable mobile devices and video on demand services.

With TV viewing habits changing, research firm Bell Labs expects online video to account for 77% of US TV viewing by 2020. Figures from Nielsen show that this change is already underfoot. A recent study in the US found that 18-24 year olds spent 1 hour and 45 minutes less watching TV in 2012 than they did each week in 2011, with much of this time being replaced with online and mobile video.

At Viewster we’re also seeing an increase in demand for online video. In 2012 we saw an eightfold increase in the number of videos viewed globally, showing that the trend is quickly spreading worldwide.

This shift is already having an impact on advertisers who are finding it difficult to reach some audiences through TV advertising. Instead they are choosing to invest a larger proportion of their advertising budgets in online video campaigns. Some 23 per cent of top brands have invested in an online video advertising campaign to date, according to a recent study by Kantar Media, and we expect many more to embrace it in the near future.

Of course, online video advertising pales in comparison to the global spend on TV advertising, which in 2012 topped $163 billion and TV advertising still continues to grow. Digital TV Research has predicted that global spend will reach $214 billion in 2017, though this will be largely driven by growth in the BRIC regions where growth is expected to range from 56 – 74 per cent by 2017 – considerably higher than in other more mature markets. In the years ahead, however, we expect to see TV advertising spend decline rapidly in mature markets as advertisers follow viewers online and discover the benefits that online video offers less-sophisticated TV advertising campaigns.

Greater targeting and personalisation

Aside from offering advertisers the opportunity to reach younger audiences, online video advertising boasts more sophisticated targeting and tracking, and greater personalisation of advertising. Plus, online video ads give viewers the ability to click-through – something TV cannot compete with.

Ultimately, online video will kill off TV advertising, in much the same way that the internet demolished newspaper ad sales.

With marketing budgets in many countries still tight, brands are trying to reduce ad spend wastage. Greater targeting of users through online video advertising means advertisers can achieve better returns by only advertising to the audiences that they want. This in turn eradicates the irrelevant advertising that has frustrated viewers and advertisers in equal quantities – sparing viewers from ads that are of no interest and reducing wastage for advertisers.

This level of targeting simply isn’t possible through traditional TV ad campaigns, where targeting is typically by region or by the anticipated audience of each scheduled programme. What’s more, greater insight into viewers’ behaviours means that online video advertising can be much more personalised. For instance, if one viewer spends most of their time watching travel TV programmes, they might be more open to advertising from a holiday company.

Similarly, someone who ‘likes’ action films on Facebook is more likely to react positively to a trailer for a new action film than someone who typically watches rom-coms. This level of targeting clearly has a great deal to offer and with many brands now discovering the power of big data in marketing, even greater targeting and personalisation looks likely in the near future.

Fast-forward: the future of TV

In the years ahead, even more of the video content we consume will be ‘on demand’ whether that’s through a connected TV, on the web or on a mobile device. As viewers move online, so will the advertisers as they increasingly struggle to reach the audiences they want through TV advertising.

In 10 years time we expect online video advertising to make up the lion’s share of all advertising spend globally, much like TV advertising today. For advertisers, this brave new world presents much change, but also much opportunity. With many audiences becoming harder to reach through traditional advertising on TV and other channels such as print newspapers and magazines, online video offers advertisers the chance to ‘recapture’ those same audiences while benefiting from greater brand engagement, targeting and personalisation, and insights garnered from big data. This means advertisers can maximise branding while at the same time minimise wastage like never before, achieving returns on their investment that are unheard of for traditional TV advertising.

Ultimately, online video will kill off TV advertising, in much the same way that the internet demolished newspaper ad sales. As newspaper readers went online, so did the advertisers, swapping print classified ads for more efficient and better targeted online ads. TV advertising will be no different. Advertisers will simply follow audiences online and advertise to them there.

Kai Henniges

Kai Henniges

Contributor


Kai Henniges is the CEO at Viewster.