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Video Ads vs TV Ads By The Numbers Comparison by Augustine Fou

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video ads, tv ads, comparing on CPM basis and estimating productivity of the ad spend

video ads, tv ads, comparing on CPM basis and estimating productivity of the ad spend

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  • 1. Augustine Fou- 1 - Video Ads vs TV Ads Dr. Augustine Fou http://linkd.in/augustinefou acfou @mktsci .com January 2014
  • 2. Augustine Fou- 2 - U.S. TV vs Digital Video TV ad spending $66B 2013 Digital video ad spending $4B
  • 3. Augustine Fou- 3 - Executive Summary • The number of video ad impressions is still 1/10th the number of theoretical TV ad impressions. • But when you take into account the lower CPM cost and the better ability to track views and actions after the view (e.g. click), video ads have a greater measurable impact and therefore greater “productivity” in terms of ad dollars spent. • Brand advertisers should ask: • Whether their TV ads were even seen; don’t just ask for reach • How TV ads compare on CPM basis to other tactics • If there is a feedback mechanism, like clickthroughs, to calculate effectiveness and impact (with TV ads there isn’t)
  • 4. Augustine Fou- 4 - Video Ads vs TV Ads Comparison
  • 5. Augustine Fou- 5 - Comparison (Jan 2014) Network/Cable TV • 23-32% ad load • 204B ad impressions /month • $12-28 CPM • 40% of ads NOT skipped = 80B productive impr Online Video • 3% ad load • 27B ad impressions /month • $8-12 CPM • 74% viewed to completion = 20B productive impr DON’T‘ KNOW IF USER SAW IT Know user saw ad and have further metrics of clicks
  • 6. Augustine Fou- 6 - Video Ads Better than TV Ads • Video ads have 2x message recall than TV ads • Video ads have 2x brand recall • Video ads are 50% more likeable • Video ads have 50% more general recall Source: IAB/Nielsen via AdWeek May 2013
  • 7. Augustine Fou- 7 - Calculating TV Ad Impressions
  • 8. Augustine Fou- 8 - TV “Ad Impressions” # of Viewers x Length of Show = Viewer Hours Ad Impressions = Viewer Hours x 30 ads/hr Assumptions: - Use the maximum # of ads per hour (30) - Top 25 Network and Top 25 Cable Shows Accounts for majority of views and therefore ad impressions (underestimate) Calculation Methodology 1
  • 9. Augustine Fou- 9 - Network TV Ad Load 30% ads • For every 30 minute episode, there are about 9 mins of ads (or 10 – 12 ads ) – used How I Met Your Mother as proxy 32% ads • For every 60 minute episode, there are about 19 mins of ads (or 20 – 24 ads ) – used 24 as proxy
  • 10. Augustine Fou- 10 - Cable TV Ad Load 23% ads • For every 30 minute episode, there are about 7 mins of ads (or 8 – 9 ads ) – used Spongebob Squarepants as proxy 30% ads • For every 60 minute episode, there are about 18 mins of ads (or 16 – 18 ads ) – used In Plain Sight as proxy
  • 11. Augustine Fou- 11 - TV “Ad Impressions” TV Ad Spending dollars / CPM of TV Ads Calculation Methodology 2 $68.5B divided by $28/CPM = 2.4 TRILLION /year Assumptions: - Every user views every ad (which of course is false)
  • 12. Augustine Fou- 12 - U.S. Ad Spending by Media Source: eMarketer, August 2013 eMarketer shows TV still growing strongly Digital will continue to grow at the expense of print and other offline forms
  • 13. Augustine Fou- 13 - Comparative Media Costs Cost per Thousand (CPM): Cost to reach 1,000 users or impressions Broadcast TV $28 Radio $10 Magazines $16 Newspaper $16 Out of Home $5 Internet $3 Traditional vs digital media costs Traditional media CPM Digital media CPMs Comparing costs of various media Relative costs of media how do media costs compare media costs compared Understanding the Economics of Digital Compared to Traditional Advertising and Media Services Digital media compared to traditional advertising digital versus traditional marketing Augustine Fou- 13 - Source: Morgan Stanley Research 2010
  • 14. Augustine Fou- 14 - Online Video Ad Impressions
  • 15. Augustine Fou- 15 - UPDATE: Dec 2013 Source: comScore, dec 2013 via MarketingCharts Nov 2013 26.8B video ads per month
  • 16. Augustine Fou- 16 - UPDATE: Dec 2013 Source: comScore, dec 2013 via MarketingCharts Nov 2013 reach = 56% frequency = 155 ads /mo
  • 17. Augustine Fou- 17 - Video Minutes and Ads Source: comScore June 2013 Viewers watched 1,250 minutes of online video in May 2013 (20.8 hours/mo or 42 mins per day) Video ads accounted for 27.9 percent of all videos viewed and 2.6% of all minutes spent viewing video online
  • 18. Augustine Fou- 18 - Video Ad Formats (length) Source: tnooz.com Feb 2013
  • 19. Augustine Fou- 19 - 9.4 ads per video for long form videos of 20+ minutes 1.3 ads per video for videos of 5-20 minutes 0.66 ads per video for videos of <5 minutes Number of Ads per Video Source: tnooz.com Feb 2013
  • 20. Augustine Fou- 20 - Display ad eCPM $1.06 March 2013 Mobile ad eCPM $0.72 March 2013 Video ad eCOM $9.99 March 2013 Video Ad CPMs Source: Turn, October 2013
  • 21. Augustine Fou- 21 - So What? “On a CPM basis, video ads win; on a „viewed‟ basis, video ads win; on an ad-load basis, video ads win; and on a measurability to ROI basis, video ads win. TV advertisers should more aggressively shift ad spend to digitial video even if they choose to keep and use the exact same creative.” - Dr. Augustine Fou
  • 22. Augustine Fou- 22 - Dr. Augustine Fou – Digital Consigliere “I advise clients on optimizing advertising across all channels. Using video ads to supplement or replace TV ad spend, means we can shift towards more detailed measurement and calculation of ROI.” FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM) MCKINSEY CONSULTANT CLIENT SIDE / AGENCY SIDE EXPERIENCE PROFESSOR AND COLUMNIST ENTREPRENEUR / SMALL BUSINESS OWNER PHD MATERIALS SCIENCE (MIT '95) AT AGE 23 @acfou ClickZ Articles: http://bit.ly/augustine-fou-clickz Slideshares: http://bit.ly/augustine-fou-slideshares LinkedIn: http://linkd.in/augustinefou
  • 23. Augustine Fou- 23 - Related Articles State of Online Video Ads By: Augustine Fou, December 2013 Why Digital Kicks Traditional By: Augustine Fou, March 2012 Video Ads Destroy TV Ads By: Augustine Fou, April 2012 Mythbusting Advertising By: Augustine Fou, June 2012 Augustine Fou- 23 - Video Ad Benchmarks By: Augustine Fou, April 2013 Video Ad Fraud Investigation By: Augustine Fou, October 2013 The Magnitude of Digital Ad Fraud By: Augustine Fou, November 2013 The Biggest Lies of TV Advertising By: Augustine Fou, May 2012
  • 24. Augustine Fou- 24 - APPENDIX April 16, 2012. 24
  • 25. Augustine Fou- 25 - Comparison (mid-2012) Network/Cable TV 132 hrs of TV per viewer/mo* 41.8 hrs of ads per viewer/mo 32% time spent on ads 24.5B ad impr by Top 25 Network Shows 5.1B ad impr by Top 25 Cable Shows 30B ad impressions per month Online Video 22 hrs of video per viewer/mo 19 mins of ads per viewer/mo 1.5% time spent on ads 8.4B video ad views (March 2012) * Source:: http://www.emarketer.com/blog/index.php/time-spent-watching-tv-tops-internet/ DON’T‘ KNOW IF USER SAW IT Know user saw ad and have further metrics of clicks
  • 26. Augustine Fou- 26 - Free Video Ad Impressions http://www.youtube.com/watch?v=316AzLYfAzw 25 million impressions in 10 days If the ad is content, now online video makes it possible to reach as large if not larger audiences than network TV shows AND you know users actually played the video.
  • 27. Augustine Fou- 27 - Video Ad Viewers are Impatient Completion Rates (ads viewed to completion) 78%: 0 – 15 second ads 74%: 16 – 30 second ads 61%: 31 – 60 second ads 54%: >60 seconds Source: Vindico via MarketingCharts, April 13, 2012
  • 28. Augustine Fou- 28 - Time Spent w/ Major Media PER DAY Digital 5 hrs 9 mins TV 4 hrs 31 mins Radio 1 hr 26 mins Print 32 mins Source: eMarketer August 2013
  • 29. Augustine Fou- 29 - What % of ads are viewed? Network/Cable TV 30B TV ads aired /mo • Nielsen estimates 56% ads skipped by DVR • IPG/YuMe estimates 63% ads avoided • 60% ads skipped was used to calculate • 40% TV ads not skipped (possibly viewed) 12B TV ads viewed /mo Online Video 8.4B video ads shown /mo (March 2012) Completion Rates (% ads viewed to completion) • 78%: 0 – 15 second ads • 74%: 16 – 30s ads viewed to completion • 61%: 31 – 60 second ads • 54%: >60 seconds 6.2B video ads viewed /mo • Source:: Nielsen (2010) estimates that around 56% of ads are never seen (because they are skipped using DVR) • http://blog.nielsen.com/nielsenwire/media_entertainment/do-americans-watch-more-dvrd-commercials-than-you-think/ • IPG/YuMe (2011) shows that 63% of TV ads are ignored (because users turn away or are doing something else when commercials come on). • http://adage.com/article/adagestat/smartphones-a-bigger-distraction-dvrs/227725/
  • 30. Augustine Fou- 30 - MAJORITY of Users Skip TV Ads 65% 65% 54%
  • 31. Augustine Fou- 31 - DVR Owners Watch 23m Source: Nielsen Dec 18, 2013 DVR owners watch 23 mins of 30 minute episodes Source: Netflix
  • 32. Augustine Fou- 32 - DVR Penetration 7 in 10 Source: LRG via MarketingCharts Dec 2013
  • 33. Augustine Fou- 33 - Comparative Costs Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions $450 $250 $140 $30 $15 $7 $2 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Direct Mail Mail Order Catalog Drive Time Radio Prime Time TV Online Video Ads Online Display Online Search Source: Why Digital Kicks Traditional Tactics in Cost Effectiveness, March 16, 2012
  • 34. Augustine Fou- 34 - Advertising CPMs (Offline) Cost per Thousand (CPM): Cost to reach 1,000 users or impressions Augustine Fou- 34 -