US online video market poised for sharp growth

Marked growth of the US online video advertising sector, currently worth $1bn, is set to continue over the next year, according to a major new report by the Internet Advertising Bureau (IAB).

Around 69% of advertisers and 55% of agencies plan to increase their online video advertising in the next 12 months, triggering a 22% increase in the market over the same period.

Healthy figures peppered the IAB’s results. One particularly bright finding is that those surveyed (namely 500 digital and/or television media decision makers that intend to spend $1 million or more in the next 12 months) envision spending 17% of overall digital marketing budgets on online video.

Respondents cited a number of factors influencing a move towards online video. High levels of consumer engagement ranked highly, as did the medium’s trackable nature and targeting capabilities. Many respondents favoured the low production costs of online video. Many are planning to shift ad dollars away from television in chase of better ROI, reaffirming the evolution, or should we say, revolution, in the allocation of marketing budgets.

In terms of formats, pre-roll remains the most popular, although in-banner, expandable banner, mobile video, rich media overlay and post-roll formats are also in demand, indicating online video’s versatility.

As has been revealed in previous surveys, IAB analysis finds that most respondents consider 15 seconds to be the most appropriate length, with the preferred pricing model being CPM.