Nothing beats video advertising for engaging consumers, forging emotional connections and building brand awareness. Unfortunately, the two major delivery vehicles for video ads face enormous, intractable problems due to attrition, cultural changes and flat-out fraud.
Any advertiser that sinks significant money into TV and online video ads faces an uncomfortable truth: That a significant and growing percentage of dollars spent in those mediums is wasted.
"The New Reality of Digital Video Advertising," a recently published guide from RMG Networks, explores the specific nature of this waste, including revealing stats like the ones listed below. The guide also educates readers about the leading solution to this problem, a third delivery option that is free of fraud and superior to television and online for reaching professional, frequent-shopping, elusive audiences.
Let's look at the numbers:
• Broadcast ratings are down 50 percent in the past 12 years
Broadcast TV audience ratings have dropped fully by half since 2002. The networks are in a viewership free fall, yet they're charging marketers more than ever.
• 5 million people have ditched cable since 2010
"Cord cutters," particularly younger ones who will shape future TV ratings, just aren't wedded to the current model of television.
• Broadcast and cable CPMs were up 5 percent last year
The rise is perplexing, given the falling ratings. In short, advertisers are paying more for less because they think there's no other option.
• 54 percent of online ads are seen by no one
That's a shocking number for a medium where spending is expected to rise nearly 17 percent in the U.S. this year.
• Consumers skip 94 percent of online pre-roll ads when they can
When skipping is an option, people don't think twice. Pre-roll is widely despised by impatient Web viewers. Putting a 30-second ad in front of a 60-second video is like running an hour-long commercial before a movie.
• 36 percent of online ad impressions are fraudulent
More that one-third of web ads are served to fake bot traffic. In February, IAB chairman Vivek Shah said bluntly that Internet advertising is facing a "crisis."
• Online video pre-roll demands a 300–400 percent CPM premium
That's a hefty markup considering the rampant fraud. And the situation is only expected to get worse, as the perpetrators of fraud become ever more sophisticated in their practices.
Read the full text of "The New Reality of Digital Video Advertising":
Data sources: Morgan Stanley, Nielsen, SQAD, ISI Group, MoffettNathanson, comScore, Interactive Advertising Bureau.