Does Online Video’s Growing Viewership Mean More Advertising Money?

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Online video is exploding in viewership, and larger companies that have worked with television, along with newspapers, magazines and other traditional formats are looking to online video as the future of entertainment and other content. Recently, prominent magazine publisher Conde Nast entered the scene when they announced their own online video network featuring web series tailored for Glamour and GQ readers.

But does all of that translate to more advertising revenue? Predictions from eMarketer reported by The Wall Street Journal shows that spending for online video ads will likely reach $4.1 billion in 2013, an increase of 41 percent from last year. In comparison, television ad spending will likely top $66.4 billion this year.

While more companies turn to online video, the amount of space available for ads have jumped, and the rates for online video advertising are down 10-15 percent from 2011. The article states that advertisers are blaming the large inventory and automated buying of ads for the lower rates, basically making online video a buyer’s market.

BrightRoll notes that in 2012, video ads on prominent sites like YouTube on average costs $15-20 per CPM, or cost per thousand views. In 2011, the average hovered around $17-25 per CPM. The Wall Street Journal reports that this means that lower ad rates for online video are now on par with television ads.

For some companies like Reckitt Benckiser, which produces household products like Lysol and medicines like Mucinex, they can see their sales double from online video campaigns because online video is less cluttered with ad space and also its cheaper cost.

However, The Wall Street Journal adds that top-tier brands want to spend their ad money on content that is professionally produced and that television still offers the greatest reach. So far, the general consensus from big advertisers is that they’re not impressed with what online video has to offer. This means that content creators have to find ways to focus their content on those advertisers’ target markets if they want to score more advertising dollars.