AVOD in US continues to see growth, but SVOD gains in popularity

Programmatic ad spending in the U.S. grew more than 105% in 2016, with advertisers spending $6.18 billion for digital video ads purchased programmatically, up from $3 billion in 2015, a number that is expected to grow to more than $10.65 billion in 2018.

eMarketer, in its Q4 2016 Digital Video Trends: Monertization, Audience, Platforms and Content report, says that nearly two-thirds (60%) of all digital video ad spending this year was programmatic, compared with 39% last year and an expected 74% by 2018.

That triple digit growth in video ad spend – which the industry has seen since 2014 – is expected to moderate somewhat over the next two years, but still show a healthy 40% growth in 2017 and 23% growth in 2018 as the percentage of total digital video ad spend continues to swing toward programmatic.

While eMarketer’s numbers don’t include Facebook, they do include YouTube, which has nearly 21% of all U.S. video ad spend in 2016. The researcher expects YouTube’s net U.S. video ad revenues to reach $2.89 billion in 2018, up from $2.16 billion in 2016. While its growth rate will stay in the double digits over the next few years, it’s share of U.S. video advertising will decrease as other players gain.

All of that ad growth comes despite a fairly even split among the U.S. audience that show just 53% prefer watching ad-supported digital video. Increasingly, service providers are looking to monetize via subscriptions.
Amazon Prime Instant Video, for example, has looked to make itself attractive to users by offering its service on a standalone basis and Hulu now offers just a pure SVOD service with no ads in addition to a limited-ad subscription service. It’s relegated its AVOD-only service to Yahoo.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn