The media industry is currently at a tipping point for ad revenues associated with IP-delivered video content, as growth in demand for such content is not being matched by a comparable level of investment in advertising across connected devices, according to new research from video ad management platform Videoplaza and analyst house IHS Screen Digest.
The report adds that TV remains advertisers’ first choice for reaching audiences on a national scale, but with flat growth rates on the horizon (CAGR of 1.4% in Western Europe and 2.5 % in the US), media companies must diversify to reach their increasingly connected audience.
IP-delivered video ad revenues are thought to currently reach around €300mn across the five largest European markets. The renaissance in brand advertising online is still PC-led, according to the report’s authors, with IP-delivered TV advertising yet to reach other screens.
There are an estimated 124mn connected living room devices in Western Europe and North America, according to the study, which adds that by the end of 2014 there will be more connected living room devices than PC or TV households.
The growth in connected devices is thus leading to a double fragmentation, say Videoplaza and IHS Screen Digest – of the traditional audience and also of increasing sources of content, thereby driving up the costs and increasing the competition to reach viewers scattered across platforms and devices.
“The tipping point is happening now – 8% of online display advertising revenue in 2011 came from video,” said Daniel Knapp, Director of Advertising Research at IHS Screen Digest. “We expect high growth in the sector to continue in 2012, with a revenue increase of 53% in the big 5 European markets.
“Media companies realistically have a 12-24 month window of opportunity to get prepared before the audience significantly shifts on to multiple devices. With fewer and fewer barriers to IP-delivered video, the competition from new players in the connected space is also set to intensify. This means that broadcasters should act fast to monetise their content equity.”