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Consumers spend nearly 159 hours watching video each month: Study

MUMBAI: Consumers spend nearly 159 hours watching video each month, including nearly 147 hours on TV. And ad dollars follow suit. Nielsen research found that roughly $78 billion was spent on TV advertising in 2013, and eMarketer estimates that online video will attract $5.72 billion in 2014.

However, consumers are increasingly viewing video across screens. And, as online video advertising matures and mobile video usage proliferates, marketer demand for online video advertising is sure to continue rising.

The video landscape is in a time of major flux, with digital viewing on the rise, advertisers seeking integrated campaigns and yet TV networks still holding most of the cards. But with the emergence of new technologies—and new measurement capabilities—video advertising is poised for change. Last year, Nielsen and Simulmedia brought together a core group of researchers, marketers and C-suite executives from all sides of the media industry to discuss the future of video advertising.

Separate… But Equal? Some in the marketplace believe this means an imminent and total convergence of TV and online advertising, but Nielsen’s discussions underscored that this ignores the way video ads are actually bought and sold today. The agency model is built on two separate buying structures: one for TV and one for digital. While that’s starting to shift as advertisers seek multiscreen campaigns, Nielsen’s conversations demonstrated that, for the time being, the online and TV video ad markets will remain separate as they are now—but the movement toward integration is real and accelerating.

Move to the Middle. Interestingly, the participants noted that both TV and digital are absorbing some characteristics of the other as we move further down the platform-agnostic “video” path.

The scale and size of the TV ad machine allows the ads to influence the lives of consumers on a scale that no medium has ever matched, yet collecting information about TV viewers—and connecting viewership to buying habits—has been expensive and challenging. In comparison, online video content is inherently more measurable. Online video and “second screen” devices like smartphones and tablets generate massive amounts of valuable delivery and interaction data, as do, to a lesser extent, set-top boxes and smart TVs.

Now, TV as an ad platform has started to absorb many of the characteristics of the digital ad world, particularly its abundance of rich viewing data and audience metrics. Enhanced measurement techniques are also making precision marketing and the connection of ad exposure to offline sales a reality. Participants agreed that this presents TV companies, which already have large audiences, valuable content and tens of billions of dollars in advertising revenue, with the opportunity to be pivotal players in the future of video advertising.

The Trust Factor. The long history of TV lends itself favorably to how its ads are perceived by both consumers and the industry itself. In 2013, 62 per cent of consumers indicated that they trust ads on television and 68 per cent take action based on TV ads. Meanwhile, the relationships cultivated between key influencers and decision makers in the television advertising industry influence transactions of media buying, selling and planning.

On the flipside, the programmatic tendency of the digital ad market lends itself to cost effectiveness and ease in measurability, yet removes the “human touch” from the buying process. Paul Marcum, Head of Global Digital Innovation, Bloomberg Media Group, said “There’s a serious problem with trust online with programmatic” about automation in online advertising. Building and managing trust between buyers, sellers and third parties will play a significant role in determining the way television and online video advertising eventually come together.”

To Be Continued… Given the openness of Nielsen’s discussions and the desire across the ecosystem to bridge the online and TV divide, the future of the video advertising industry does look bright.

As media measurement companies come together, the marching orders are clear: the need for solutions that measure across silos will be of critical importance for media buyers and planners. This will allow for a more seamless integration of video measurement—on whatever device it’s viewed.

The future of advertising is hinged largely on precision-based planning tools that help marketers reach the right consumers, not simply the most people. Impact-based rather than reach-based advertising mechanisms will be a principle factor leading the convergence of TV and online.

The marketer participants stressed that tomorrow, just as today, they are pressed to prove their ROI on each dollar they spend on advertising. Tools that allow them to reach the right customers—and then demonstrate purchases made or actions taken—some of which already exist, will win the day.