IAB suggests digital video will continue to surge

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The IAB released a 2016 ad spend study yesterday to coincide with the this year’s round of NewFronts presentations.

The study surveyed 360 respondents at varying professional levels on the buy-side of the advertising and marketing industry, and provides a glimpse into the industry’s perception of digital video advertising.

Here are some key highlights from the report: 

• Advertisers are pouring more and more into digital video. Respondents said, on average, they plan on spending over $10 million on digital and mobile video advertising this year. This is an 85% increase from 2014’s average spending of $5.5 million. The growth of digital video is seen as largely the result of the influx of video on social platforms like Facebook, Instagram, and Snapchat as well as the uptick in video on publisher websites. 
• Advertisers are shifting funds away from TV towards digital video.  72% of respondents said they were reallocating spending from TV ad budgets to digital video. This trend is in line with the general decline in TV viewership nationwide, compared to the uptick in video viewers on social media platforms like Facebook and Snapchat. Last week, Snapchat announced that it was seeing 10 billion video views per day, and Facebook revealed in their Q3 2015 earnings that it received 8 billion video views per day.    
• Content creators will increase spending on original videos. The study found that advertisers will spend $4.5 million on average on original video programming in 2016, a 114% increase from the $2.1 million spent in 2014. The demand for original digital video content is being driven by the availability of native ad inventory, as well as by the perceived strength of original digital video relative to traditional TV content. On average, one-third of original digital video spending goes to native ads, according to the study, and 75% of respondents believe that original digital video will become as important as TV programming in the next three to five years. 
• Programmatic buying for digital video will continue to rise. The share of digital video ad spend that is bought programmatically is expected to hit 41% in 2016, up from a 26% share in 2014. The prominence of programmatic buying will likely increase due to a surge in header bidding usage, which allows premium ad spots typically sold through direct-buys — namely video — to be bid on in the programmatic exchange. 

Dollars are increasingly flowing from traditional ads to digital, as strong growth in mobile, video, and social spending continue to change the face of the US media market.

Over the next five years, marketers will especially embrace mobile. Mobile will drive up spending on video, search, display, and social, and propel the migration of ad dollars away from traditional media, including newspapers and magazines.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report that forecasts spending trends for the major digital ad formats — including search, display, and video — and mobile vs. desktop. It also examines trajectories for social ad spending and programmatic ad buying, which cut across digital formats. Finally, the report looks at how spending on traditional media formats will grow or contract over the next five years, as digital, and particularly mobile, rises.

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Here are some of the key takeaways from the report:

• Mobile will be the fastest-growing advertising channel and buoy spending on each of the digital formats. US mobile ad revenue will rise by a 26.5% CAGR through of 2020.
• Digital video ad spending is rising faster than search and display. US digital video ad revenue will rise by a CAGR of 21.9% through 2020.
• Mobile search will overtake desktop search ad revenue by 2019. Mobile search ad spend will rise by a 25.2% CAGR, while desktop search ad revenue will decline during the same period.
• Mobile display ads, including banners, rich media, and sponsorships, will overtake desktop display-related spending even earlier, in 2017.
• Social media ads, which cut across display and video, are seeing fast adoption. US social media ad revenue, which includes video and display ads, will grow by a CAGR of 14.9% through 2020.
• The rapid embrace of programmatic ad-buying tools is fueling a dramatic uptick in the share of digital ad spending coming through programmatic channels. Programmatic transactions will be a majority of total US digital ad spend this year.
• Unlike digital, traditional ad revenue will remain flat overall through 2020. Total traditional ad revenue will rise by a CAGR of just 0.4% between 2015 and 2020.

In full, the report:

• Forecasts ad revenue for emerging digital ad channels and formats like mobile, video, social and programmatic over the next five years
• Explores why ad revenue is flowing from desktop to mobile
• Examines the stagnation of traditional advertising channels like TV, magazines, and newspapers

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