2010 Promises Massive Digital Video Adoption — and Advertising Potential

Meghan Keane/Econsultancy

If there was any doubt among media buyers about putting money into online video advertising, 2010 should be the year to change that. Consumers are increasingly turning to the digital space to watch video. Moreover, the influx of professionally produced content is making the digital space more friendly to large advertisers.

As with most any medium, if the eyeballs are there, advertisers will follow. Now it's just up to the medium to deliver on the predictions coming in for the next year.

According to a new survey from eMarketer, video content is being consumed online at a rapidly growing clip. eMarketer found a quarter of Internet users were watching TV online in 2008. Almost 30% did so in 2009. And 77% of all internet users in the U.S. will watch videos online by 2014.

Hulu has played a huge part in expanding the audience for online video viewing. According to comScore, Hulu ranked second only to YouTube in overall streams viewed in April, with an audience of 38.7 million monthly unique visitors.

In the past year, the quantity of professionally produced "made-for-online" video has greatly expanded.  And because the content is improving, digital is no longer a place that advertisers are wary of. User-generated-content has long been a topic that scares brands. But even YouTube has greatly expanded its inventory of professionally produced content online. In addition, Netflx' streaming video option is getting users more comfortable watching feature content online.

Among people who already watch video regularly online, half are streaming TV shows according to eMarketer's numbers. In 2011, that number will jump to 56%.

And those numbers get much higher for younger viewers. A recent report from Retrevo found that 29% of all people under 25 get all or most of their TV online, compared with only 8% of the entire video-watching population. Meanwhile, Andersen Analytics' recent survey of 1000 college students found that 86% of 18- to-24-year-olds surveyed identified as online video watchers. But in the previous week, 69% of respondents had watched an entire TV episode or movie online. That's a significant number for advertisers to take note.

And the growth in full-length video watching is not limited to younger viewers. According to Ipsos, the number of people watching full-length movies online more than doubled between September 2008 and October 2009.

Advertisers are taking notice. Chris Allen, director of video innovation for Starcom USA, tells MediaPost:

"It seems to be an advantage to bring digital along with TV as we start to get into pricing discussions.

Of the 361 industry executives surveyed for MediaPost's "Video Marketplace Study, a majority of respondents who currently are not involved in online video campaigns plan to work on them in the next year.

With adoption of devices like the iPad on the rise, the case is increasingly being made for digital video advertising. Interaction rates (which measure the number of people who expand and engage with ads) ranged from .9% to 1.5% in the first month after the iPad release, up to 6 times the number for comparable expandable ads on desktop computers. The iPad is just one way that the digital video viewing experience is being streamlined and improved. And though currently high interaction rates may be due to the novelty of the platform, the improved experience for watching video and surfing online is prime for advertising. An idea that has not gone unnoticed among advertisers.