While a massive inventory of display ad space exists online in tandem with relatively low demand, the exact opposite is true of the digital video market. Supply is low, and demand is high. Video ad CPM stands at $24.60, compared with $1.90 for display ad CPM, noted Terence Kawaja of Luma Partners at L2’s recent Media (R)evolution clinic in New York. “Video ad spend is off the charts,” he said, referencing a chart showing significant growth projected through 2018.
Video ad spend is still dwarfed by TV ad spend, which is forecast to reach $70 billion for 2015. But audiences are starting to spend as much time with online content as linear TV, especially as more people cut the cord and spend their evenings with digital content. Peak viewership for BuzzFeed video is during TV’s traditional primetime, said Media (R)evolution speaker Greg Coleman, president of BuzzFeed. Coleman said BuzzFeed’s videos garner a billion views each month. The company claims its reach among Millennials now rivals that of the largest TV networks, as shown in the BuzzFeed chart below.
BuzzFeed cites a Cisco forecast that online video will be the most highly penetrated residential service globally by 2018, outpacing digital cable, time-delayed TV, video on demand, online music, online gaming and social networking. The rising popularity of digital video is creating a rush to produce and monetize content. Traditional publishers—including The Economist, Time and The New York Times—are increasingly embracing video, while ambitious new players like Vox Media are evolving beyond editorial to become programing entities.