Insiders, Researchers Share Views on Advertising’s Future; Social Video Expected to Soar

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NEW YORK – New research says ad spending on YouTube and Facebook videos will jump by 130 percent during the next five years, according to Juniper Research. 

The research adds that advertising dollars going toward free video-on-demand (VOD) content will soar to $37 billion by 2022. Users watching those ads will reach nearly 4.5 billion globally. Just last year, the estimate for free VOD ad spending was $16 billion.

Juniper attributes the growth to the proliferation of free live video content across social platforms, not just on YouTube and Facebook, but also Instagram and Snapchat. More live content begets more viewers, the report suggests, and that, in turn, will pull more money out of advertisers looking to reach these viewers.

“This content will increasingly be of interest to advertisers, especially in view of Facebook’s monthly active user base of over 2 billion people,” said Lauren Foye, senior research analyst at Juniper.

Additional research from MAGNA Global is bullish on video out-of-home and cinema advertising. MAGNA predicts an annual growth rate in ad dollars of 2.7 percent through 2022 for both. It also projects a decline in ad spending for other traditional media: television, radio, and print. 

The trade group Digital Placed Advertising Association estimates that this year, 53 percent of out-of-home video ad spending will be digital. 

Researchers say consumers are bombarded by ad messages as cable networks collectively averaged 15 minutes and 49 seconds of commercial time each hour. Now some cable networks are reducing ad loads, with the thinking that the fewer ads viewers are exposed to, the more likely the messaging will be remembered. Some television networks also are offering six-second ads.

Some analysts suggest millennials are redefining the media landscape so publishers and advertisers to need to adapt. Just two years ago, a prevailing sentiment at the Consumer Electronics Show (CES) was that ads needed to be short-form and make an impact within three seconds. 

But this year, some at the CES noted that both millennials and Gen Z want to engage with content that’s purposeful and meaningful. YouTube “vlogers” and other social media personalities regularly publish 10-, 12- and even 15-minute videos that their followers watch to the end.

Emmanuel Probst, an op-ed contributor for MediaPost News, says as the most recent CES illustrated, the ability to serve purposeful and contextually relevant content to millennials will likely funnel additional media investments.

“But with additional investment comes increased scrutiny and accountability,” Probst writes. “Brands must better measure and understand their ROI on ad spend. Brand marketers must embrace the creative tools and media partnerships they have at their disposal to achieve continuous improvement in both sales and brand outcome.” 

However, Publicis Groupe’s Rishad Tobaccowala predicts the ability of advertising to actually reach consumers will decline 20 percent to 30 percent during the next five years.

“We will increasingly have less and less advertising,” he said at an event in New York last week.  

He contends this drop will be due to several factors, but especially because it’s simply not a good experience for most people. “We are so disrespecting people’s time that they are spending more and more time in advertising-free environments,” he asserted, citing the rapid adoption of ad-free content platforms such as Netflix as proof.

As a result, Tobaccowala said he doesn’t believe Netflix will adopt an “advertising model,” because it is antithetical to the reason consumers are adopting it in the first place.