Brands, marketers, agencies, rights holders and adtech platforms—(the demand side), have all clamored for more premium in-stream video inventory (supply side), or greater access to existing supply, though in 2016 the market is still defined by inventory scarcity despite a proliferating device base.

In today’s fragmented device universe marketers are buying what they know and what works: pre-roll formats on the desktop. There is, however, momentum behind mobile/tablet/VOD inventory demand moving the budgetary needle.

The total market is forecast at $4.7 billion in 2016, and expected to increase at a moderate single digit rate through 2018; in-stream spend continues to be constrained by scarcity or measured demand (i.e. undersold inventory on emerging platforms).

In fact, we estimate in-stream video inventory across all platforms/devices increased by 28.4% in 2015, while spend actually declined by -5.6% due to higher levels of unsold/undersold inventory (i.e. mobile/tablet VOD) which led to lower average blended CPMs as mobile inventories continued to flow into the channel and private/public exchanges.  

Insertion frequencies, on average, including all sites, networks and channels, declined in 2015 to 2.17, off 12% over 2014. Even so, after two years’ worth of both single digit then negative ad spending growth we expect the market to snap back in 2016 with inventory increasing by 6% and spend by 42.6% as CPMs equalize and emerging platform inventory is better  absorbed into budgets.

Currently digital on-demand television (both brand extension and internet pure-play publisher content) is being monetized against broadcast ad loads across all platforms (i.e. ad insertions per number of video plays, or number of advertising minutes per programming hour/half-hour), though the desktop remains the most exploited screen/platform, according to AvailPlay Video Monitoring Services by AccuStream Research  

A 30-minute show (22 minutes of runtime as defined by a linear television clock) has a range of 6 – 10 minutes of in-stream/online advertising, broken up into 3 – 4 pods, each pod with 1 – 7 ad units/avails of varying spot length.

A 60-minute show (43 minutes of runtime as defined by a linear television clock) has approximately 17+ minutes of in-stream advertising, broken up into 5 – 9 pods, each pod wit 1 – 7 ad units/avails of varying spot length.

Our research concludes:

  • VOD platforms deliver the most consistent content/ad playback experience, but on-demand services are the most immature and thus undersold at present
  • The desktop is the most exploited device type, and delivers a fairly consistent experience with available audience/user information valuable to marketers
  • Android is a highly fragmented series of OS-powered platforms, which can result in inconsistent playback and as well as inventory allocation
  • iOS benefits from some of the most sophisticated/supported apps 
  • Non-desktop playback inconsistency and lack of deterministic audience profiling are contributing factors to lower CPMs and undersold inventory
  • Allocation of in-stream inventory exhibits the characteristics of a sine curve, as increases are followed by periods of absorption
  • Despite the fact that in-stream inventory is relatively scarce, the emergence of new points of access are typically undersold as brands access the value or ROI of campaign buys based on formats/execution, consistency of playback, app design and competitive pricing

Including YouTube, in-stream video inventory is averaging a 2016 eCPM of $12.33 (eCPM is calculated as spend divided by all allocated inventory, including unsold/undersold or TrueView avails). VOD is a premium ad avail, but the market is significantly undersold, and there are limited numbers of channels publishing for VOD.

As for YouTube, it’s one of the most highest spend generating video-centric audience platforms online, both desktop and non-desktop. Inside partner channels, there is a combination of strategies with regard to insertion frequencies and TrueView/skippable inventory.

YouTube exploits Auto, Music, Comedy, Beauty/Fashion, How-to, and Cooking/Health with in-stream video inventory. The desktop, however, is by far the most exploited device, including 2016 on the YouTube service.

SECTION ONE.. 1

FOCUS ON THE 2016 – 2018 DIGITAL VIDEO ADVERTISING BIG PICTURE: MORE INVENTORY, SPEND.. 1

LINEAR BROADCAST TELEVISION AD LOADS STREAM INTO NON-LINEAR/VOD/ON-DEMAND CHANNELS. 1

AN ADUNDANCE OF IN-STREAM INVENTORY COMBINED WITH AD SERVING COMPLEXITIES HAS CONTRIBUTED TO UNEVEN DIGITAL AD PLAYBACK: THE “FRANKENSTEIN” WORKFLOW FACTOR   2

IN-STREAM AD PLAYBACK PERFORMANCE GRADES BY DEVICE TYPE: 2015 – 2016. 2

PUBLISHER/PROGRAMMER AND IN-STREAM VIDEO MONETIZATION TRENDS 2016 - 2018   5

Fixes to execution headaches include larger libraries, better navigation, hiring digital media ad sales and adtech specialists along with updated adtech solutions. 6

Digital insertion frequencies mirror the broadcast television interruptive model and with comparable ad loads. 7

YOUTUBE CHANNEL AD INSERTION FREQUENCY ANALYSIS ILLUSTRATES CONTINUING MARKETER DEMAND FOR DESKTOP INVENTORY. 10

YouTube/Google moving more aggressively to monetize mobile/tablet inventory in 2016   12

The Enduring, Cross-Channel Effectiveness of the Pre-roll Ad Format: YouTube reduces Desktop TrueView skip inventory on some of its most popular thematic channels in 2016   15

3rd Party IP Video AdTech: Addressing the In-stream playback disconnect 16

DIGITAL VIDEO IN-STREAM INVENTORY AND MEDIA SPEND PERFORMANCE 2015 – 2018: DOUBLE DIGIT CAGRs. 19

IN-STREAM DIGITAL VIDEO INVENTORY FORECAST AT 283 BILLION AVAILS IN 2016; SPEND AT $4.7 BILLION.. 20

VOLATILITY SEEN IN DIGITAL VIDEO SPEND DRIVEN BY THE EMERGENCE OF UNSOLD/UNDERSOLD NON-DESKTOP/VOD INVENTORY. 23

Insertion frequency declines in 2015 to lowest level since 2012 following two years’ worth of increases. 25

IN-STREAM VIDEO CPM PRICING: 2007 – 2016. 27

THE EVOLUTION AND MATURATION OF YOUTUBE IN-STREAM ADVERTISING: 2009 – 2015   28

YOUTUBE EXHIBITS HIGHER IN-STREAM INSERTION FREQUENCIES ON THE DESKTOP, LOWER ALLOCATION OF SKIPPABLE INVENTORY. 30

YOUTUBE MOBILE/TABLET INSERTION FREQUENCY DOUBLES TO 12.4% IN 2016. 34

SECTION TWO.. 38

DIGITAL VIDEO ADVERTISING: TOTAL IN-STREAM SPEND DECLINED BY -5.6% IN 2015 AS PROGRAMMERS TRIMMED INSERTION FREQUENCIES AND MORE MOBILE/TABLET INVENTORY WAS PRICED INTO eCPMs. 38

YOUTUBE DRIVES IN-PLAYER MEDIA SPEND OF $578 MILLION IN 2015 (DOMESTIC ONLY)  40

HULU, YOUTUBE, AOL, CBS TELEVISION, ABC, NBC AND ESPN ARE IN-STREAM VIDEO SPEND MARKET LEADERS. 43

SECTION THREE.. 47

BROADCAST NETWORKS, SPORTS, LEAGUES AND INTERNET GIANTS CAPTURE MOBILE DIGITAL VIDEO SPEND SHARE. 47

YOUTUBE GENERATED OVER 455 BILLION VIEWS IN 2015, 53% ON THE DESKTOP   52

WHERE INVENTORYS IS NOT SCARCE:  ABUNDANT IN-STREAM VIDEO AVAILS DRIVE MORE BRAND SPEND TO YOUTUBE IN 2015. 55

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