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Demand for digital video ads outpacing supply

The market for digital video advertising continues to expand at a faster rate than the viewing of content, according to a new report from US firm FreeWheel, which found that video view volume increased 10% annually in the second quarter of 2012, while video ad volume increased 68% in the same time period.

FreeWheel, which has developed an advertising management system for enterprise-class media companies, based its findings on over 12bn videos and 10bn video ads served in the three months to June.

Q2 video ad views outpaced not only those in the seasonally-light first quarter of this year, but also those in the fourth quarter of 2011, which encompassed the Christmas holiday season and a traditionally higher spending quarter for advertisers.

The report exhorts producers of digital video content to become more aggressive both in terms of how much content is made available online, and also how broadly that content is distributed.

Advertising revenue growth is expected to ultimately plateau in line with video view growth rates, unless much more long-form and mid-form content is released and distributed.

Unsurprisingly, long-form content (20 minutes plus) is found to be the most heavily-monetised by advertisers over the past year: publishers and advertisers took advantage of the additional placements created as more long-form content was released into the market, increasing the average ad load to eight, according to FreeWheel – a big increase from an average of under three video ads per video for long-form content in Q2 2011.

Mid-form (5- 20 minutes) and short-form (<5 minutes) videos had lower monetisation rates: mid-form monetisation is currently at 1.32 video ads per video, while there are .56 video ads per short-form video.

Video ad completion rates for all content lengths rose to their highest since FreeWheel began reporting on this data in 2010: an average of 91% of all ads in long-form content completed in the second quarter of 2012, while 80% of ads in mid-roll content completed, and 69% of ads in short-form content completed.

In terms of ad placement within content, mid-rolls and post-rolls grew at a much faster rate than pre-rolls over the three-month period: this correlates to the increased number of advertising pods in long- and mid-form content, as well as higher video ad loads per pod, since these content lengths permit more advertising slots.

Finally, the PC/Mac environment still predominates for online video views, although devices such as smartphones, tablets and gaming consoles are starting to catch up, with views on these devices topping 1bn in the second quarter of this year – double that of the preceding quarter.

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