Growth in Digital Video Ad Market, YouTube Maintains Lead

According to eMarketer, Google’s YouTube is projected to take in about $1.13 billion in video-advertising revenue this year, up 39 percent from $810 million in 2013. However, the digital video advertising segment in the U.S. is expanding (YouTube’s 18.9 percent share is down from 21.2 percent last year), and YouTube is not expected to increase its market share significantly over the next three years. YouTube is also somewhat limited in its ad potential due to the amount of user-generated and short content.

youtube“YouTube has a bigger U.S. audience than rivals like Facebook, AOL, Yahoo or Microsoft and serves far more video clips,” reports Variety.

“However, YouTube is still hampered in its ability to monetize the bulk of that traffic, because much of its content is either too short to include ads or is brand-unfriendly user-generated material. To try to persuade advertisers to spend more coin, YouTube this spring launched Google Preferred, with packages targeted to the top 5 percent of content in verticals like music, beauty, food and entertainment.”

Jefferies & Co. predicts that YouTube will generate net revenue of $2.8 billion worldwide this year, and reach $3.5 billion in 2015.

“Digital video-ad spending is expected to grow 56 percent this year to reach $5.96 billion, according to eMarketer. But growth will taper off, slowing to 13.9 percent by 2018, when digital video spending will reach $12.82 billion,” notes the article. “One factor: The rise of mobile video ads will actually suppress overall spending, because smartphone video ads are shorter and often cost less than desktop video ads.”

Despite this growth, television is expected to remain the leading ad platform in the U.S. It is projected to generate $68.5 billion this year, 10 times the amount projected for digital video ads.

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