Advertisers Set Their Sights on Transition to Online Video

With the growing popularity of streaming video and original Web content, the Internet is becoming a place of disruption for the TV industry. Amidst other signs, one is significant: Nielsen ratings standards will begin to include online streaming audiences in their metrics in the coming fall. And another report from Ooyala suggests a very real change is on its way for the TV and ad industries.

“Global Video Index: 2012 Year in Review” was released by Ooyala, a company that specializes in online video and related analytics.

The report notes “that the amount of video watched on tablet devices and mobile phones in 2012 increased by 100 percent over the previous year, and also that advertisers are taking notice of the shift to online video viewership, with U.S. ad spending on streaming video content climbing 46 percent to reach $2.93 billion last year alone,” reports Wired.

“People are now starting to realize that a significant percentage of the television audience — and therefore, the advertiser’s reach — is happening online,” notes Bismarck Lepe, co-founder and president of products at Ooyala. “In the U.S., depending on the month, we’re already seeing between 10 and 15 percent of all video viewership, including television and DVDs, is happening on [Internet]-connected devices. That’s a huge jump from roughly about 1 percent when we started the company back in 2007.”

Because of online ads working in real-time, advertisers can tell if people are engaging with or skipping over the provided ads. “The question now is how the advertising model will change once Nielsen integrates this new information into their metrics,” suggests the article.

“I think that the traditional business model for advertising on television is being turned over,” says Jim O’Neill, media research analyst with Parks Associates. “It hasn’t reached the end of its life yet, but the business model is going to change, and the amount of choice online will mean that [marketers will] have a smaller, but more loyal, audience watching their content.”

“I have two sons who just graduated from college, neither one of them has ever been connected to a cable system,” explains O’Neill. “They’re connected to the Internet, and they watch everything on their tablets or on their laptops. They prefer that experience, and they are the ‘Never Were’s’ who really worry cable providers more than cord-cutters.”

It is the hope of people like Lepe, who understand the ongoing shift, that the half-trillion dollar video industry will shift profitably online. “Today, the entire video market is roughly half a trillion dollars, and that includes TV advertising and DVD sales, [as well as] paid access to content and VOD that you buy from your cable provider. And that half-a-trillion-dollar industry is going to migrate online,” he said.