Bloomberg Intelligence: Is video advertising ready to battle TV?

This analysis is by Bloomberg Intelligence analysts Sean Ford, Geetha Ranganathan, Paul T Sweeney and Jitendra Waral. It first appeared on the Bloomberg Terminal.

Online video is skyrocketing. Facebook is in. Twitter is in. Verizon is in. Bloomberg Media is definitely in. How is the advertising industry reacting to it? This Bloomberg Intelligence analysis explores online video’s advertising surge and how it could affect TV advertising. 


Mobile may generate about half of all U.S. video ad spending by 2019, according to Bloomberg Intelligence. Photo: Nicky Loh/Bloomberg

Digital video ads chipping away as traditional TV format slips

  • U.S. online video ads may continue to rapidly grow as consumers spend more time on mobile relative to desktop platforms. 
  • With the migration of users to smartphones and tablets, mobile may generate about half of all U.S. video ad spending by 2019. 
  • Content owners may generate additional revenue streams using digital platforms such as YouTube.
  • Some of the top advertising agencies, including WPP, Interpublic, Publicis and Omnicom are expanding their digital exposure as ad dollars shift from traditional TV to digital platforms, including online video.

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U.S. TV ads hold on to top spot, as inflection point approaches

  • The days when U.S. TV ads feature at the top of the advertising pyramid are numbered given a recent revision to 2016 ad forecasts to 2% from 4.5% as digital-ads gain share. 
  • The inflection point may occur in 2017, as digital ads could increase 12% to $77.37 billion, while TV ads gain 2% to $72.01 billion, according to eMarketer. 
  • Digital ads may account for 38.4% of the market in 2017, relative to TV’s 35.8%. 
  • Despite the strength in scatter, Olympic and political, TV is still losing share.

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Along with online video ads, virtual reality is a major trend in 2016. Photo: David Paul Morris/Bloomberg

Online video ads, virtual reality are poised to lift off in 2016

  • Improving measurement of rapidly rising online-video viewership and enhancing the quality of advertising may help key internet companies boost ad sales in 2016. 
  • Twitter and Facebook are counting on autoplay videos, while Google has streamlined YouTube with a focus on its app and YouTube Red subscription service. 
  • Facebook’s push for ratings for online video is also key to attract TV ad budgets. 
  • Virtual reality headsets launching in 1H will create new revenue opportunities for Facebook, Sony and Nvidia.

Facebook, YouTube, Twitter to drive video, social ad segments

  • Two of the fastest growing internet advertising segments are online video and social media, driven by increasing traffic and advertiser acceptance.
  • Global ad agency networks are betting bigger on digital ads, with Internet being the fastest-growing ad medium.
  • Ad agencies may be well positioned to advise their clients when issues of ad fraud and ad blocking arise.
  • Social ads may increase 40% to reach $22.2 billion in 2016 and might rise to $45 billion by 2019, according to Magna Global.

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