TrueView ads on YouTube allow advertisers to only pay for ads that are watched to completion.
Users have the option to skip these ads after five seconds of viewing, and a new study by LaunchLeap found that 59% of millennials opt for skipping.
Although the metric may sound discouraging, it’s actually a good thing for users, advertisers and YouTube. Those who skip ads are likely uninterested from the outset, and an option to skip provides for a user-friendly experience while ensuring advertiser dollars are spent on those who are arguably more engaged. In addition, 29% of millennials indicated that they watch video ads to completion, which is reportedly better engagement than Snapchat, where users watch only thee seconds of a video ad, according to Ad Age.
Here are a few implications of ad-skipping on YouTube:
- When they don’t skip, people pay attention to YouTube ads. Based on eye-tracking technology, Google and Ipsos found that attention paid to YouTube ads is 84% higher than advertising on TV. In addition, the audience size of 18-49 year olds on YouTube during prime time is larger than the top 10 TV shows combined. However, it is important to note that measurement comparisons between TV and online video are not exactly an apples-to-apples, due to different audience definitions. In any case, YouTube will increasingly become part of ad planning discussions among TV advertisers.
- Send out the message quickly. As younger generations skip ads, it’s important that brands convey a memorable marketing message in the first few seconds of the ad. This way, brands can still make an impression on ad-skippers or entice users to watch the entire ad placement.
- YouTube Red needs more unique content. The study reaffirms the notion that users can easily dismiss ads on YouTube, even in the absence of ad-blockers. For the subscription service, YouTube Red, this means that the value proposition must go beyond an ad-free experience. And it is. The company is doubling down on expensive, high-quality content, and building production studios in YouTube offices worldwide, which the platform’s top creators can tap into.
Consumers continue to increase their time spent consuming digital media, while advertisers continue to increase their ad budgets into digital channels.
The influx is not expected to let up in the near future. The US digital advertising industry will continue to experience remarkable growth through 2021 to reach nearly $100 billion in annual revenue, driven primarily by the sustained migration of ad dollars from traditional TV to digital video and the continued increase of social spending.
Overall, the strong growth of the US digital ad market can largely be attributed to increased time spent by consumers on digital media and brands’ increased comfort with allocating budgets to digital formats, particularly on digital video. In a recent 2016 survey of almost 400 US ad agencies and marketers, the IAB found that two-thirds of respondents plan on increasing spending on digital video in the next year.
Moreover, mobile will become the top destination for digital ad spending as advertisers continue to attempt to resolve the disconnect between the rapid growth in time spent on phones and tablets and the relatively small share of ad budgets that are allocated to such platforms — known as the mobile opportunity gap. In fact, mobile is set to eclipse desktop ad spend by 2018.
Dylan Mortensen, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on U.S. digital media ad revenue that forecasts revenue trends over the next five years and outlines the key growth drivers for overall digital ad revenue in the U.S.
Here are some key points from the report:
- US digital ad revenue is expected to reach nearly $100 billion by 2021, according to BI Intelligence estimates. This represents compound annual growth of 8% from the $68.9 billion expected in 2016.
- Mobile is positioned to become the top destination for digital ad spending as advertisers continue to attempt to close the “mobile opportunity gap.”
- Digital video advertising will grow faster than any other segment over the next five years, as consumers shift time spent online to phones and tablets. Revenue in this category is forecast to rise from $8.5 billion in 2016 to $23 billion in 2021.
- Social advertising in all formats is gaining traction and will be among the key drivers of digital ad growth in the next five years. Social ad revenue is poised to climb to $30.8 billion by 2021, up from $15.5 billion this year.
- Artificial intelligence, augmented and virtual reality, and sponsored content will help propel further digital ad growth in the next decade.
In full, the report:
- Forecasts US digital ad revenue through 2021.
- Highlights the rising popularity of digital media with consumers and brands.
- Explores why digital video advertising growth will exceed all other formats over the next five years.
- Outlines emerging technologies that will help propel ad growth in the next decade.
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