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

An Inside Look at Demand Side Perceptions of Digital Video Advertising Conducted, Analyzed and Prepared by Advertiser Perceptions0

“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 Buyer1

Deliverables•Presentation of Findings•Executive Summary•Tables•Data 2

Today’s DiscussionDigital Video Advertising… What do advertisers think?Insights and Perceptions• Outlook• Shifting Ad Dollars• Why They Buy• Selection Criteria• Obstacles and Accelerators• Past and Future Use• Preferences and PurposeSummary and Conclusion3

Influencing the Migration from TV to the InternetThe question isn’t If or When, it’s How Quickly4

Methodology and ProfileMethod • All interviews completed online • Cash Incentives • Blind Survey • Timeframe: November 17th – December 6th 500 Respondents in Total Count PercentSample: Marketer and Agency contacts from Marketer 148 30% Advertiser Perceptions Media Decision Maker Agency 352 70% Database Higher Level Titles 219 44%Qualification Lower Level Titles 281 56%• Digital and/or Television media decision Television Decision Making 311 62% making involvement• Spending $1million or more in next 12 months Digital Decision Making 427 85%Directional Data is used in this presentation 5 5

Methodology and Profile ContinuedRepresents 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) 6

Advertisers are Optimistic•Spending•Share•Growth 7

Spending | Next 12 Months Majority plan to increase digital video advertising; 22% Growth Predicted “More reach, easier to track ROI.” 55% Agencies • Agencies are more bullish than marketers • TV and digital media decision makers are aligned • On average, spending will grow by 22% 69% Marketers “Online video advertising is trending better than television. Consumers show a higher engagement rate with online video.” Media SupervisorQ: 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 sharespent 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 8

Spending | Next 12 Months Majority plan to increase digital video advertising Digital Video Advertising Digital Video Share Influencers of Ad Budget 17% Agencies 19% Marketers 15% Total Ad Budget Online Decision Makers 18% TV Decision Makers 18%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 9

Shifting Ad Dollars•Migration•Reasons Why 10

Shifting Ad Dollars | Next 12 Months Majority are likely to migrate a portion of TV ad budget to Digital Video “Digital video advertising is more trackable and targetable. Production is less expensive. Overall, Total Ad more efficient its a Budget “Digital video advertising spend.” Media Planner gives me more bang for the buck!” Brand ManagerQ: 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.11

Shifting Ad Dollars | Next 12 MonthsThe reasons why they differ slightly by certain key influencers Digital Video Advertising InfluencersMarketers = ROI Delivers Better ROIMore marketers will migrate TV ad Agencies 53%dollars to Digital Video based on the Marketers 62%belief that it will deliver better ROI Online Decision Makers 55% TV Decision Makers 57% Digital Video Advertising is Influencers Where Audience is MovingAgencies = AUDIENCEMore agencies and television Agencies 47%decision makers will shift TV ad Marketers 41%dollars to Digital Video in an attemptto follow their target audience Online Decision Makers 44% TV Decision Makers 50%Base: ALL RESPONDENTS12

Why They Buy•Decision Making Criteria•Obstacles•Migration Accelerators 13

Digital Video AdvertisingDecision drivers in their own words…“We think we can target our ads more effectively thru digital videoadvertising than with TV advertising.” VP Advertising, Consumer Products“Because consumers are watching more and more television online - so weare following the eyeballs. Also, the economics work better for our clientsand their budgets - much more affordable.” Senior Media Planner“The ability for prospect to skip ads on television or to go to the Internet fortheir viewing needs. The traffic between online and television simply are nolonger in the same ballpark.” Chief Marketing Officer VERBATIMS14

Digital Video Advertising | Most Important Decision Making Criteria Targeting, Results, Reach and Cost Drive Digital Ad Decisions Percent Rating Decision Making Criteria as being Very Important (4, 5 on a 5-Point Scale)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.15

Digital Video Advertising | ObstaclesIn their own words…Mass Reach:“Client’s perceptions of digital video advertising vs. the massreach of TV.” Media SupervisorBrand Building:“Strong evidence and case study showing effectiveness forbrand awareness and promotional activities, as well asalignment with target demographics.” Brand ManagerMeasurement:“Research behind the numbers to show clients the results” Senior Media Planner VERBATIMS16

Digital Video Advertising | ObstaclesTargeting, Results, Reach and Cost are Hindering Greater Usage of DVAPercent Selecting ObstaclesQ: Which of the following reasons are hindering your greater use of digital video advertising?Base: All Respondents.17

Digital Video Advertising | Migration AcceleratorsIn their own words…“An ROI analysis showing our money will be better spentwith this shift.” Agency Planner“Better proof-of-performance from digital media distribution.” Marketing Manager“Stronger metrics and more cost per engagement basedmodeling.” Agency Media Supervisor“Stronger ROI/metrics to show how video can ultimatelylead to sales.” Senior Brand Manager VERBATIMS18

Digital Video Advertising | Migration AcceleratorsBetter ROI Measurement and Standardized MetricsPercent SelectingQ: Which of the following, IF IMPROVED would lead to your greater use of digital video advertisingBase: All Respondents.19

Media Decision Making for Digital Video Advertising…Primary Involvement: •Decision Making •Budgets •Creative, Tactics, Placement•Other Marketer Concerns20

Who Is Most Responsible In the DVA Decisions. . .Roles for DVA Decisions are Unresolved | Agencies Believe That TheyShould Decide Whether to Use and How Much $ to Allocate | MarketersFocusing on Creative, Tactics and Placement? 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% Marketer (Net) 37% 28% 59% Creative, Tactics, and/or Placement of DVA: Agency (Net) 62% 71% 41% Marketer (Net) 26% 17% 47% 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. Base: ALL RESPONDENTS21

Agreement with Statements About DVA Agencies and Marketers have Similar Concerns Agreement Rated 4, 5 on a 5-Point Scale Total Agency Marketer If I had more proof and/or certainty that my ads/campaigns ran, I would spend more on digital video 72% 69% 80% advertising Id rather buy digital video advertising in an "upfront" 41% 39% 46% versus in real‐time Not having a digital video upfront limits my digital video 41% 39% 45% ad spending Digital video advertising is too difficult to buy 35% 32% 43% Consumers dont really engage with digital video ads 35% 32% 41%Please indicate how much you agree or disagree with each of the statements below as they pertain to digital video advertising.22

Use of Digital Video Advertising•Past•Future•Purpose•Preferences23

Digital Video Advertising | Preferences Pre-roll, CPM and 15 SecondsQ: 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.24

Digital Video Advertising | Past UseAgencies Using Pre-roll | Marketers are Not Committed to Any FormatPercent SelectingQ: Please select the digital video ad types have you used in the past 12 months.Base: All Respondents.25

Digital Video Advertising | Future Use It’s growing Percent SelectingQ: Which digital video ad types will you use in the next 12 months?Base: All Respondents.26

Digital Video Advertising | Purpose for Use Product/Brand Awareness, Store/Website Traffic and Product Info. “More targeted advertising possible through digital video advertising.” CMO “The social media and its network has a broader reach to our branded consumers.” Marketing Director “Digital Video advertising works.” Agency Buyer VERBATIMSQ: 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.27

Digital Video AdvertisingWhat Do Advertisers Think?Good News for DVA Action Items• Spending will increase Accelerate Migration• Share of ad budget will increase• Ad dollars will migrate from TV to Digital • Improve ROI measurement• Use will increase • Create better standardized metrics • Demonstrate audience shift to digital Sell More Observation Focus on the decision driversMarketers are lagging in nearly • Targeting • Resultsall areas • Reach• Education and greater exposure to Digital Video Advertising is warranted Offer products advertisers prefer• Managing perceptions of ROI from Digital • Create Offerings that Marketers will Commit to Video Advertising and television’s audience movement to digital should be a priority28

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

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