Digital video adverts are the future: 74% of advertisers and publishers agree

92% of consumers are now watching videos online every day, with 88% viewing more video than they did a year ago. These figures are testament to digital and mobile video growing at an incredible pace.

According to a new report from AOL Advertising, digital video will see a large increase in ad expenditure as 83% of advertisers are planning to boost their video budgets. Naturally, these budgets will come at the expense of other media with 72% of marketers moving away from cable TV and towards digital video. Indeed, 71% of marketers are preparing to shift budgets to mobile video.

Pre-roll video will be particularly popular in 2017 with 85% of advertisers and publishers planning to buy and sell them, followed by video banners (61%) and video expandables (60%).

Advertisers predict branded video to drive the highest revenue (62%), followed by more engaging video formats such as 360, VR and AR (52%) and also 1-5 minute videos (46%).

However, some of the top challenges advertisers are still facing today are network traffic and audience issues (23%) as well as inventory quality (23%) and consumer experience quality (21%). Publishers are having to deal with slightly different problems including too many platforms they have to adapt to (45%), load times (38%) and the cost of premium video (35%).

Consumer perception and needs present new challenges for advertisers and publishers

With 68% of consumers now enjoying online video through their connected TV due to flexibility, the rise in digital video investment is a smart move. A little more than half of consumers also said they preferred online video, because it was more easily accessible from any device and it saves them money using these devices.

Mobile devices have already become an extension of a consumer’s personal experience. Indeed, 60% said they couldn’t live without their smartphone, whilst 67% view videos on smartphones every day, compared to 70% watching it on desktop.

For advertisers that means distribution strategies may have to be adjusted. Consumers are discovering online videos via search (57%), social feeds (50%) and recommendations (49%). Just 34% are using publisher websites to discover video. However, almost half of consumers (48%) are happy to share videos to their social networks.

The study also noted that a decrease in attention spans is having an impact on video, with 59% of consumers viewing videos that are less than a minute long. Indeed, percentages tend to point toward favouring shorter formats:

45% view videos 1-5 minutes in length every day; 42% view videos 6-9 minutes in length every day; 40% view videos 10-20 minutes in length every day; 31% view videos longer than 20 minutes every day.

Live video has also made quite the impression on consumers with 68% now viewing events live more than once a week. 74% watch live video content on their smartphones.

A majority of consumers (64%) now expect pre-roll ads to be less than 15 seconds long and just 9% of consumers expect to see 30-60 second pre-roll ads.

Entertaining videos are generally preferable, with 71% of consumers not minding video ads as long as they’re entertaining, and 67% don’t mind ads which include relevant products or services.

However, 82% prefer to have some control over the ads they see, whilst 72% would prefer ads to run after videos as opposed to before or during. Another 77% also said that watching one longer ad instead of multiple shorter ads is preferred.

Half of consumers would stop viewing a video after two buffering interruptions and 79% exit after three.

The rise of the new video formats

Virtual reality is big in 2017. Accordingly, 68% of consumers have watched VR videos at least one, whilst 28% are watching them on smartphones. 31% of consumers expect to see more VR videos this year compared to last year.

Advertisers agree. 70% of them do see VR taking a place in the digital video marketplace, whilst 55% are currently buying VR and plan to continue to do so over the coming 12 months. In addition, 360 video and AR are also gaining momentum with half of consumers now watching 360 videos on their smartphones and 52% viewing 360 videos once a week.

New formats are exciting for a variety of reasons, but advertisers are naturally most enthusiastic about the potential for driving revenue in 2017.

Publishers and marketers expect 360 video to be a leading revenue driver (62%), followed by Live video (39%). Such enthusiasm is led by publishers seeking opportunities for new inventory (70%) and 59% wanting to offer a better consumer experience.

However, sellers have a different understanding of the marketplace and predict 360 Video (53%) and Live Video (47%) to follow more narrowly, with Interactive Video (45%) ranking third.

Branded video content is seen as another important revenue driver for 63% of advertisers, followed by new formats (56%) and 1-5 minutes videos (45%).

However, measurement (44%) remains a top concern as well as costs (44%). Publishers worry more about the quality of the content (20%) and costs (16%).

Meanwhile, programmatic has made significant gains across the advertising landscape. 100% of advertisers in this study said they were now using programmatic to buy digital video, up from 91% in 2015. As of right now, 45% of their video ad budgets are going towards programmatic buys and 82% expect to increase their programmatic investments in 2017.

Publishers have also embraced programmatic video with 90% now expecting an increase in revenue. Some of the core issues they are foreseeing are improved merchandising of inventory (90%) and access to greater buyer demand (80%)

These findings signal that digital video is here to stay, driven by consumer demand and marketers’ increasing budgets. There’s no slowing down as new and more engaging formats are set to flood the market. 74% of advertisers and publishers agree that digital video is the future of advertising. However, challenges remain and will have to be overcome in order to drive the marketplace.