In-App Video Replacing TV

The Q2 eMarketer survey tells us that

US digital video ad spending is on a faster growth track than previously estimated. It will grow at annual double-digit rates into the next decade, reaching $22.18 billion in 2021. At the same time, subscription-based services are proliferating, indicating that both pillars of digital video monetization—advertising and consumer spending—are healthy.

The younger the viewer, the more likely he or she is to favor digital video over TV. In fact, generation Z, now entering college, is predicted never to sign up for cable TV at all, which has led companies like At&T to offer a new over-the-top streaming service called DirectTVNow, which offers most of the common and premium channels for a flat fee of $50 per month. Unless you are a sports junkie, that’s good enough, and for sports or film junkies you can subscribe to HBO and ESPN for $5 each.

This will change the kind of ad formats advertisers can and should use.  Through DirectTVNow, advertisers will be able to

dynamically insert ads into live programming. But this too will vary network by network and be limited to the two minutes of commercial time per hour that AT&T can sell. The commercials that networks sell nationally will mostly remain the same.

There’s no denying the potential for TV services delivered to individual internet addresses to drastically alter the TV ad model. More data and the technology to serve ads to specific households or signed-in individuals makes TV delivered over the web an attractive opportunity for advertisers.

As of now, most of viewer’s online video is still spent on TV: 4 hours of TV compared to 1:12 on video. But by next year, TV viewing will fall to 3:57 to 1:15. Notice that the time people spend viewing video stays steady; we only have so much time after work, sleep and family, but the way video is viewed is changing. It took TV viewing a while to declines, but it did.

DirectTVNow just debuted six months ago, and will take time to catch on. But it shows where the industry is going, and if I were an advertiser, agency, or brand, I’d be looking to develop an expertise in in-app advertising targeted to specific affinity groups, such as the ones that favorite the CW network, or the ones that favorite MSNBC. These ads should be for branding, and they should engage the specific consumer.

We just happen to have one of those in our repertoire. It’s called “Watch and Engage,” and it is beginning to be adopted by the early adopter brands who understand that the future of brand advertising is not in TV, but in streaming media services.