Global consumers will spend an average of 67 minutes a day watching online video this year, up from 56 minutes last year, according to research from Zenith, published today.
By 2020 the average person will be spending 84 minutes a day watching videos online, according to Zenith’s Online Video Forecasts 2018. In that year, China will have the keenest viewers, with the average person spending 105 minutes a day watching online video, followed by Russia (102 minutes) and the UK (101 minutes). This rapid rise in consumption is leading to a shift in the way brands plan campaigns across both television and online video.
This is the fourth edition of Zenith’s annual Online Video Forecasts report. It contains historical data and forecasts of online video consumption and advertising, together with commentaries on the development of individual markets by local experts. This year’s edition covers 59 key markets, including Australia. Online video refers to all video content viewed over an internet connection, including broadcaster-owned platforms such as Hulu, ‘over-the-top’ subscription services like Netflix, video-sharing sites, e.g. YouTube, and videos viewed on social media.
Global online video consumption grew by 11 minutes a day in 2017, that is expected to grow by an average of nine minutes a day each year to 2020. It accounts for almost all the growth in total internet use, and is growing faster than media consumption overall, so it is taking consumption time from traditional media. Although some of this extra viewing is going to non-commercial platforms such as Amazon Prime and Netflix, plenty of it is going to commercial platforms, so the supply of commercial audiences is rising rapidly.
In Australia, online video is the fastest growing channel within digital and now makes up 7 per cent of the total digital ad market, up from 5 per cent in 2017.
Australia is among the countries with the highest penetration of online video on mobile globally – with around 87 per cent of the total population regularly accessing the internet on their mobile devices and with 14 million consuming social media on their mobiles. High penetration and faster internet connection has resulted in 43 per cent of online video being consumed on mobile devices. With the promise of 5G mobile networks, Zenith expects this figure to continue to grow.
While growth in Australia has been strong, online video growth has slowed down. For example, from 2016 to 2017 online video grew by 58.2 per cent. However, from 2017-2018 that growth has reduced to 34 per cent. Zenith expects this downward trend to continue and the market to normalise. As a result, channels such as display continue to decline.
Viewing time of online video continues to increase in Australia, at 8 per cent year-on-year and that trend is expected to continue. Similar to 2017, Facebook and Google are the dominant platforms in terms of reach and investment when it comes to online video.
Video ad growth remains high but is falling steadily
Globally, Zenith estimates that online video ad spend grew 20 per cent in 2017, to reach US$27 billion. Growth peaked at 36 per cent in 2014 and has fallen steadily since then, but still remains very high. Zenith forecasts 19 per cent growth in 2018, and an average of 17 per cent annual growth to 2020, when online video ad spend will reach US$43 billion. Video’s share of online display advertising is rising steadily: it accounted for 27 per cent of display ad spend in 2017, and it is expected to account for 30 per cent in 2020.
The supply of online video audiences has been growing ahead of demand in recent years: online video viewing grew 91 per cent between 2015 and 2017, while ad spend grew 52 per cent. The cost of online video advertising has, therefore, come down substantially. As the growth of video consumption continues Zenith expects prices to stabilise, with mild increases from 2019 onwards.
The report noted online video advertising is still only a fraction of the size of television advertising, but because television is stuck at 0 per cent to 2 per cent annual growth, this fraction is rising rapidly. The online video ad market was 10 per cent of the size of the television ad market in 2015, and 14 per cent in 2017. By 2020 online video ad spend is expected to be 23 per cent of the size of television ad spend.
According to Zenith, online video and television complement each other well, with most brands initially using online video to add incremental reach to their existing television campaigns. But with the rapid growth of online viewing more brands are planning television and online video together to optimise frequency. By cutting out television spots that lead to very frequent exposure among heavy television viewers, and using online video to target – and retarget – light television viewers, brands are using television and online video together to cut out both overexposure and underexposure within the target audience, maximising recall at a reduced price.
Online video is also evolving, rather than replicating broadcast TV advertising, stand-alone video ads that appear within text or images, or within a social news feed have become more common. This is changing the structure of online video creative. Because a viewer can simply scroll past them, out-stream ads need to grab the viewer’s attention from the very first second, either with an arresting image or with a celebrity with a dedicated following. They do not have the narrative leeway available to interruptive ads.
“Online video is driving growth in global media consumption, as smartphones with high-speed data connections make high-quality video available to people on the move, and smart TV sets give viewers unparalleled choice in the living room,” said a spokesperson for Zenith.
“The rapid rise in video viewing makes online video the world’s fastest-growing advertising format, creating new strategic and creative opportunities. Brands that do not currently have a strategy for online video need to think about getting one.”