IAB: An Inside Look at Demand Side Perceptions of Digital Video Advertising (2011)

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An Inside Look at Demand Side Perceptions of Digital Video AdvertisingConducted, Analyzed and Prepared by Advertiser Perceptions

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“Digital video is becoming an ever more common way that our target is consuming what was traditionally broadcast content --and our target is spending more time online, and video is another way to reach and engage the target.” TV Media Buyer

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Deliverables

•Presentation of Findings•Executive Summary•Tables•Data

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Today’s Discussion

Insights and Perceptions• Outlook

• Shifting Ad Dollars

• Why They Buy

• Selection Criteria

• Obstacles and Accelerators

• Past and Future Use

• Preferences and Purpose

Summary and Conclusion

Digital Video Advertising… What do advertisers think?

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Influencing the Migration from TV to the InternetThe question isn’t If or When, it’s How Quickly

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Methodology and Profile

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Method• All interviews completed online • Cash Incentives • Blind Survey • Timeframe: November 17th – December 6th

Sample: Marketer and Agency contacts from Advertiser Perceptions Media Decision Maker Database

Qualification• Digital and/or Television media decision

making involvement• Spending $1million or more in next 12 months

Directional Data is used in this presentation

500 Respondents in Total Count Percent

Marketer 148 30%

Agency 352 70%

Higher Level Titles 219 44%

Lower Level Titles 281 56%

Television Decision Making 311 62%

Digital Decision Making 427 85%

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Represents Leading U.S. Advertisers by Ad Category

• Alcoholic Beverages• Apparel (Fashion)• Automotive • Consumer Electronics • Consumer Packaged Goods (Cleaning, Food and Beverages)• Energy• Entertainment (Movies, Music, TV and Books)• Financial (Financial Services, Insurance, and Real Estate) • Home (Shelter)• Pharmaceuticals • Quick Service Restaurants • Retail• Technology (Computers, Hardware, Software, Services, Office

Products)• Telecommunications • Toiletries and Cosmetics (Beauty)• Travel (Transportation, Hotels and Resorts)

Methodology and ProfileContinued

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•Spending•Share•Growth

Advertisers are Optimistic

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Spending | Next 12 MonthsMajority plan to increase digital video advertising; 22% Growth Predicted

Q: Imagine the amount of your total online display (not including search) advertising budget as a whole is a pie, and each of these media types is a share of the pie. In the next 12 months, would you expect the share spent on each to increase, stay the same or decrease?Q: What overall increase in digital video advertising do you expect in the next 12 months compared to the past 12 months?

Base: ALL RESPONDENTS

• Agencies are more bullish than marketers

• TV and digital media decision makers are aligned

• On average, spending will grow by 22%

“Online video advertising is trending better than television. Consumers show a higher engagement rate with online video.” Media Supervisor

“More reach, easier to track ROI.”55%Agencies

69%Marketers

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Influencers Digital Video Share of Ad Budget

Agencies 19%

Marketers 15%

Online Decision Makers 18%

TV Decision Makers 18%

Spending | Next 12 MonthsMajority plan to increase digital video advertising

Q: What percentage of your total online display advertising budget will be spent on digital video advertising in the next 12 months?Base: ALL RESPONDENTS

Total Ad Budget

17%

Digital Video Advertising

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•Migration•Reasons Why

Shifting Ad Dollars

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Shifting Ad Dollars | Next 12 MonthsMajority are likely to migrate a portion of TV ad budget to Digital Video

Q: Why are you (extremely/somewhat likely)to shift ad dollars from television advertising to digital video advertising in the next 12 months?Base: Those extremely/somewhat likely to shift ad dollars from television advertising to digital video advertising in the next 12 months.

Total Ad Budget

“Digital video advertising is more trackable and targetable. Production is less expensive. Overall, it's a more efficient spend.” Media Planner

“Digital video advertising gives me more bang for the buck!” Brand Manager

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Shifting Ad Dollars | Next 12 MonthsThe reasons why they differ slightly by certain key influencers


Influencers Digital Video Advertising Delivers Better ROI

Agencies 53%

Marketers 62%



Marketers = ROIMore marketers will migrate TV ad dollars to Digital Video based on the belief that it will deliver better ROI

Influencers Digital Video Advertising is Where Audience is Moving

Agencies 47%

Marketers 41%



Agencies = AUDIENCE More agencies and television decision makers will shift TV ad dollars to Digital Video in an attempt to follow their target audience

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•Decision Making Criteria•Obstacles•Migration Accelerators

Why They Buy

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Decision drivers in their own words…

“We think we can target our ads more effectively thru digital video advertising than with TV advertising.” VP Advertising, Consumer Products

“Because consumers are watching more and more television online - so we are following the eyeballs. Also, the economics work better for our clients and their budgets - much more affordable.” Senior Media Planner

“The ability for prospect to skip ads on television or to go to the Internet for their viewing needs. The traffic between online and television simply are no longer in the same ballpark.” Chief Marketing Officer

Digital Video Advertising

VERBATIMS

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Digital Video Advertising | Most Important Decision Making CriteriaTargeting, Results, Reach and Cost Drive Digital Ad Decisions

Q: Thinking about digital video advertising, please tell us how important each of these criteria are in your decisions to spend on your digital video advertising. Base: All Respondents.

Percent Rating Decision Making Criteria as being Very Important (4, 5 on a 5-Point Scale)

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In their own words…

Mass Reach:“Client’s perceptions of digital video advertising vs. the mass reach of TV.” Media Supervisor

Brand Building:“Strong evidence and case study showing effectiveness for brand awareness and promotional activities, as well as alignment with target demographics.” Brand Manager

Measurement:“Research behind the numbers to show clients the results”

Senior Media Planner

Digital Video Advertising | Obstacles

VERBATIMS

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Digital Video Advertising | ObstaclesTargeting, Results, Reach and Cost are Hindering Greater Usage of DVA

Q: Which of the following reasons are hindering your greater use of digital video advertising?Base: All Respondents.

Percent Selecting Obstacles

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In their own words…

“An ROI analysis showing our money will be better spent with this shift.” Agency Planner

“Better proof-of-performance from digital media distribution.”Marketing Manager

“Stronger metrics and more cost per engagement based modeling.” Agency Media Supervisor

“Stronger ROI/metrics to show how video can ultimately lead to sales.” Senior Brand Manager

Digital Video Advertising | Migration Accelerators

VERBATIMS

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Digital Video Advertising | Migration AcceleratorsBetter ROI Measurement and Standardized Metrics

Q: Which of the following, IF IMPROVED would lead to your greater use of digital video advertisingBase: All Respondents.

Percent Selecting

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Media Decision Making for Digital Video Advertising…

Primary Involvement:•Decision Making•Budgets•Creative, Tactics, Placement

•Other Marketer Concerns

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Who Is Most Responsible In the DVA Decisions. . .

Total Agency Marketer

Whether to Use Digital Video Advertising:

Agency (Net) 47% 55% 28%

Marketer (Net) 41% 33% 60%

How Much Budget to Allocate for DVA :

Agency (Net) 55% 65% 31%


Creative, Tactics, and/or Placement of DVA:

Agency (Net) 62% 71% 41%


Q: To the best of your knowledge, please tell us which role/function is most responsible in the following aspects of decision-making for digital video advertising.


Roles for DVA Decisions are Unresolved | Agencies Believe That They Should Decide Whether to Use and How Much $ to Allocate | Marketers Focusing on Creative, Tactics and Placement?

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Total Agency Marketer

If I had more proof and/or certainty that my ads/campaigns ran, I would spend more on digital video advertising

72% 69% 80%

I'd rather buy digital video advertising in an "upfront" versus in real‐time

41% 39% 46%

Not having a digital video upfront limits my digital video ad spending

41% 39% 45%

Digital video advertising is too difficult to buy 35% 32% 43%

Consumers don't really engage with digital video ads 35% 32% 41%

Agreement Rated 4, 5 on a 5-Point Scale

Please indicate how much you agree or disagree with each of the statements below as they pertain to digital video advertising.

Agencies and Marketers have Similar ConcernsAgreement with Statements About DVA

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•Past•Future•Purpose•Preferences

Use of Digital Video Advertising

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Digital Video Advertising | PreferencesPre-roll, CPM and 15 Seconds

Q: And which one digital video ad type do you prefer?Q: Which one type of pricing do you prefer for digital video advertising?Q: In your personal opinion, what is the appropriate length of a digital video ad?Base: All Respondents.

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Digital Video Advertising | Past Use Agencies Using Pre-roll | Marketers are Not Committed to Any Format

Q: Please select the digital video ad types have you used in the past 12 months. Base: All Respondents.

Percent Selecting

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Digital Video Advertising | Future UseIt’s growing

Q: Which digital video ad types will you use in the next 12 months?Base: All Respondents.

Percent Selecting

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Digital Video Advertising | Purpose for UseProduct/Brand Awareness, Store/Website Traffic and Product Info.

Q: Why are you (extremely/somewhat likely)to shift ad dollars from television advertising to digital video advertising in the next 12 months?Base: Those extremely/somewhat likely to shift ad dollars from television advertising to digital video advertising in the next 12 months.

“More targeted advertising possible through digital video advertising.” CMO

“The social media and it's network has a broader reach to our branded consumers.”

Marketing Director

“Digital Video advertising works.”Agency Buyer

VERBATIMS

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Digital Video Advertising What Do Advertisers Think?

• Spending will increase • Share of ad budget will increase • Ad dollars will migrate from TV to Digital • Use will increase

Accelerate Migration• Improve ROI measurement• Create better standardized metrics• Demonstrate audience shift to digital

Sell MoreFocus on the decision drivers• Targeting• Results• Reach

Offer products advertisers prefer• Create Offerings that Marketers will Commit to

Good News for DVA Action Items

Observation

Marketers are lagging in nearly all areas

• Education and greater exposure to Digital Video Advertising is warranted

• Managing perceptions of ROI from Digital Video Advertising and television’s audience movement to digital should be a priority