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How Much Further Can Digital Video Grow?

By Joy Baer October 12, 2015 | 9:06am

By Joy Baer

It’s not news that digital video continues to be an increasingly important part of advertising media plans. Just this past quarter, two-thirds of agencies polled in the most recent STRATA Agency Survey say that they are more interested in streaming/online video than they were last year.  That’s a 45% increase from 2Q14. In fact, The Wall Street Journal recently reported that demand for digital video ad space is outpacing premium publisher supply. While it’s clear that digital video is a dominant force, what is less certain is how much further it can grow.

All signs from the STRATA Agency Survey continue to point up. Overall, video remains the key advertising medium for agencies. Video as a whole (including TV and digital video) is the top choice for over half (55%) of agencies.

But digital video is under a microscope as advertisers chase key demos and IP addresses, looking at new ways of reaching the right audiences. And given the scarcity of premium publisher digital video inventory, nearly half (49%) of agencies surveyed say that it is either very important or important to access video aggregators/ad networks such as YuMe, Videology, or Tremor.

Advertisers are also willing to pay more. Our survey found that just under half (48%) of agencies say extending their video buy into premium online video from cable/broadcast networks was either very important or important. Meanwhile, 71% say it is either very important or important to access online video sites (e.g., YouTube, AOL, Twitch, etc.).

Regardless of how advertisers reach their targets, it all comes down to ROI. Here there is some ambivalence among agencies. While 47% say they feel they are getting a good value for their money, 41% aren’t sure.

While many are still grappling with the ROI question, newer technologies emerging in the ad tech space should help buyers spend their money more wisely. Many are finding more ways to monetize digital video. Digiday recently reported that Google is testing promoted video ads in their search results, which could bring in even more cash. Google is trying to capitalize on two markets: digital video and search. In fact, STRATA’s survey found search is used by 64% of agencies in campaigns.

Based on current trends seen in the STRATA Agency Survey and the marketplace, we expect to see growing interest and ad spend in the digital video. For now, advertisers will continue to scoop up space first, and deal with ROI later.

For more information on the STRATA Agency Survey, please visit http://www.gotostrata.com/surveys/AgencySurvey.html

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