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Future Bleak for User-Generated Digital Video Ads

TDG: Future Bleak for User-Generated Digital Video Advertising
New Report Finds Professional Online Video to Command Highest CPMs and Generate Vast Majority of Online Video Ad Revenue

Dallas, TX, July 15, 2008 - User-Generated Video (UGV) will continue to account for close to half of total online video streams between 2008 and 2013, but disappointingly will produce no more than 4% of ad-related online video revenue at any time during this period. According TDG’s latest analysis, Online TV and the Future of Digital Video Advertising, the prospects for online video advertising have little to do with UGV, except as an indirect way of drawing more viewers to professional online video sites capable of generating sustainable ad-related revenue.

According to Mugs Buckley, a veteran of TV and video advertising and author of TDG’s new report, UGV currently accounts for 42% of online video streams, yet generates less than 4% of video ad-related revenue. Conversely, professional online video (including both short-clip and long-form content) accounts for 58% of streams and 96% of ad-related revenue, a reality unlikely to change over the next five years.

While the business of online video remains immature, Buckley notes that the continued growth in online TV viewing among consumers and the push to get this content directly to the TV will cultivate the larger audience for professional online video content.

Online Video Streams versus Ad Revenue by Content Type – 2008

Click to enlarge

According to Buckley, online digital video advertising is in many ways superior to TV advertising. While TV is a great medium for giving advertisers reach that is both broad and scalable, the Internet uniquely delivers on three increasingly important attributes: engagement (the ability to interact with the viewer), measurement (the ability to quantify consumer reaction), and audience tracking (the ability to compare behavior over time). Armed with these unique abilities, advertisers can more easily determine Return-on-Investment (ROI) and customize ads for specific audiences, even adjusting the ads dynamically based on real-time audience profiling.

Online TV and the Future of Digital Video Advertising is the most comprehensive report to date on the business of online video-related advertising. It provides detailed forecasts regarding streaming video consumption and ad-related revenue by both amateur and professional classifications, as well as distinguishing between short-clip, long-form, and other forms of professional online video. It also contains a thorough set of recommendations for those looking to enter the online video market space.


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