Digital ad budgets cannibalise TV revenues

Digital ad budgets cannibalise TV revenues

More than two-thirds (68%) of marketers and agency executives expect to see their digital video ad budgets increase in the next twelve months.

According to the second annual Digital Content NewFronts: Digital Video Spend study from the Interactive Advertising Bureau (IAB), the optimism about the medium comes on the heels of a strong uptick from spring 2013 to spring 2015 in budget allocation to digital video by brand advertisers and media buyers. The former increased its commitment to digital video by a whopping 90% over that two-year time period.

For the most part, the buy-side expects that greater investment in digital video will come from rising advertising budgets in 2015, and a shift in funds away from broadcast and cable television. Two-thirds (67%) of the survey’s respondents said that they anticipate their broadcast and cable TV ad budgets to stay the same or decrease in the next year.The study further revealed that two-thirds of marketers and agency executives (67%) believe that original digital video will become as important as original TV programming within the next 3 to 5 years. In order to close the gap between digital video and TV programming, both groups will be looking for digital to demonstrate its ability to develop effective sales and branding opportunities, and produce metrics that are consistent with TV.

In addition, eight in ten advertisers and agency executives who attended the 2014 NewFronts agree that their participation resulted in more spending on original digital video content and/or motivated them to increase their 2015 budgets. The marketplace event has been directly responsible for driving more than a third (36%) of buy-side attendees’ spend on original digital video advertising over the past 12 months. This marks a double-digit increase of 24% in the NewFronts’ impact on share of spend over the same time in 2013.

Whether they have attended in the past or not, the majority (77%) of brand advertising decision-makers are aware of the NewFronts, with those in automotive, telecommunications, and retail verticals being most familiar. Among those advertisers with knowledge of the marketplace, three-quarters plan to attend in 2015 – representing a 111% increase from 2013.

Advertisers across automotive, CPG, financial services, retail and telecommunications have plans to devote more dollars to digital video, and the majority (67%) anticipates moving a portion of spend out of TV to do so.

CPG, financial services and telecommunications marketers expect the greatest impact to be on their cable TV budgets. In comparison, despite planning cuts to broadcast and cable TV, two-thirds (63%) of Automotive advertisers say they are most likely to get the funding from expanding budgets.

“This study demonstrates unequivocally that digital video is a fierce competitor for advertising dollars,” said Sherrill Mane, senior vice president of research, analytics and measurement, at IAB. “Brand advertisers and media buyers have been dramatically increasing their commitment to digital video, so all signs point up for this captivating form of storytelling as the industry rallies for the NewFronts.”

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