Ad Spending Around Original Digital Programming Has Nearly Doubled in the Past 2 Years

IAB report also found 80% plan to invest even more

Advertisers are increasingly interested in digital original series like AwesomenessTV's The Commute. Awesomeness TV
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While original programming has always been the lifeblood of TV, digital video has often been defined by homemade clips and  self-made stars. But the gap appears to be narrowing.

According to a new report commissioned by the Interactive Advertising Bureau (IAB), spending on ads that support original digital video content has nearly doubled in the past two years. Each spring, the IAB runs the annual Digital Content NewFronts, which let digital networks present their original programming to potential advertisers.

The average annual ad spend around original digital video content—defined as being professionally produced for digital consumption—is around $4.4 million for 2017, up from an estimated $2.4 million in 2015, the report compiled byAdvertisers Perceptions said. The report is based on a survey of 358 marketing and media buying professionals—with about half working at agencies and half on the client side—who manage annual ad spends larger than $1 million.

Video is a hot space across the board, with the average digital/mobile video ad spend increasing 67 percent from 2015 to $9.4 million annually, per the report.

The survey also found that 80 percent of brand and agency executives plan to further increase spending on the format this year.

Original digital video will represent, on average, around 47 percent of total digital video budgets in 2017, the report said. Native advertising will play a prominent role, representing around 42 percent of that investment.

“Original digital video is an inventive and engrossing medium that is increasingly being leveraged by advertisers to reach and engage consumers,” said Anna Bager, svp and general manager of mobile and video for IAB. “As video evolves with the introduction of VR and 360-degree technologies, we can expect to see original digital video play an even bigger part in brand strategy.

According to the survey, the influence of IAB’s NewFronts event is growing. Respondents said they plan to allocate 40 percent of original digital video budgets at this year’s event, up from 37 percent last year.

“The study underscores the strength of the NewFronts as a critical industry event where marketers and media buyers find inspiration and budget allocation happens—all driving further growth across the original digital video landscape,” Bager said in a statement.

Despite the rosy outlook for original digital video, advertisers still have some concerns, such as 38 percent of respondents citing quality of content as the primary obstacle. Price, viewability, ROI and targeting challenges were not far behind in the survey’s findings of potential roadblocks for original video.

There seemed to be wide variance in the response based on market sector. While advertisers in the household goods and retail sector were in line with the overall response, the largest concern area mentioned by the auto sector (43 percent) was viewability, while the food and beverage industry’s top concern (35 percent) was ROI versus other formats. In financial services, the chief concern (34 percent) was price.

The consensus, though, was that original digital video programming will “become as important as original TV programming within the next three years,” a statement that 75 percent of respondents either “somewhat” or “completely” agreed with. The same percentage agreed the format reaches an audience that TV can’t. Furthermore, some 76 percent at agencies at least “somewhat agree” that the format is “more engaging than TV commercials,” with 66 percent of marketers concurring.

@ErikDOster Erik Oster is an agencies reporter for Adweek.