There’s just one problem — it won’t happen anytime soon. According to consulting firm PwC’s annual media report, online video will increase from $2.3 billion in 2012 to $5.9 billion by 2017. The figure represents 9 percent of future online ad spending, but this is still a small amount compared to TV ads — which PwC predicts will pull in $81.6 billion, or 37 percent of all ad dollars in 2017 (the figure includes ads “around broadcasters TV content” so adjust accordingly.)
This slow growth forecast jibes with the assessment of industry experts who spoke at a VideoNuze ad event last week in New York City. Their explanation was simple enough — brands already feel their budgets are spread thin by TV and they’re not in a mood to experiment.
“If you followed viewers across all screens, we’d have to add at least 70 percent to the budget … our clients say ‘we don’t have have any more money and everything’s more expensive,’” said Michael Bologna, Director of Emerging Communications at GroupM.
Bologna and Digitas’ SVP of Media, Adam Schlachter, both said that media companies’ recent “NewFronts” in New York (a boozy, glitzy preview of new shows intended to resemble the Upfronts in LA), had at best “sparked a conversation” but did not lead to any resolutions to turn on the cash spigots.
The main problem, for now, appears to be a lack of consensus on how to measure the effectiveness of online video ads. Here’s how PwC puts it:
There are [..] challenges facing audience-measurement researchers seeking to provide more accurate data for their clients: …Until progress is made on these, migration of advertising revenues from traditional TV to online video platforms will lag consumer adoption of these new services.
The ongoing status quo (whatever its cause) appeared to frustrate at least one audience member at the VideoNuze event, who demanded that someone explain why TV stations charged more even as they bring brand messages to fewer people.
“We don’t want to pay the failure tax any more. It should be more like the stock market [where value declines with performance]. The agency must say, if your audience goes down, you get less.”
The panel host, Forrester’s Jim Nail, suggested a culture of risk aversion may explain the status quo: “Nobody gets fired for buying ABC, NBC, CBS and Fox.”