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Why The Future Of Online Advertising Looks A Lot Like Television

This article is more than 8 years old.

Ever since the first display ads appeared on our computer screens some two decades ago, the Internet's big promise over existing advertising has been the ability to target audiences more precisely and measure the impact of the ads.

That promise has partly come true, and it remains the key factor in online ads now taking more than $2 of every $10 spent on all advertising. But the singular appeal of online advertising's precision targeting employed largely by direct marketers such as retailers and financial services firms may soon fade in favor of more television-like advertising from brand marketers. According to a couple of new ad industry forecasts, one out this morning from ad agency Zenith OptiMedia, TV-like video ads are driving much of the growth in the ad industry and likely will drive much more.

In fact, online video is now the fastest-growing ad category, according to ZO, growing 34% last year to nearly $11 billion. And the agency expects it to grow an average of 29% a year through 2017, when it would top $23 billion. Lots of reasons why: For one, mobile video consumption is exploding, thanks partly to larger screens on smartphones and generally faster connections like 4G. There are also a lot of other Net-connected devices, from tablets to game machines to connected TVs.

That doesn't mean the same old television ads will necessarily become the dominant form of advertising online as well, though marketers still simply rerun no small number of TV ads on YouTube, Yahoo, Facebook, and everywhere else. But it does mean that the classic "sight, sound and motion" of TV ads--which, after all, still works very well--increasingly will drive online advertising as well.

It's not just about online video's visual appeal and ability to tell stories and plant images in people's minds like classic brand advertising, though. It's also now about sheer audience size. Facebook's nearly 1 billion daily active users, Google's huge display ad network including YouTube, Yahoo's legacy audience of hundreds of millions of people--they all offer TV-scale advertising opportunities.

Even more, Facebook in particular can offer the kind of basic demographic information that TV advertisers are completely familiar with, allowing them to add video advertising to their workflow with minimal changes. Simple demographics may sound primitive next to the precision of online advertising, but again, it works and there's no small advantage to everyone in the system in not having to use different targeting methods for different media.

"High quality [age- and gender-based] data such as that which Facebook can append to media trading is highly useful in helping marketers target audiences for engagement in digital environments, and will help Facebook continue to expand the share of digital media advertising sales it captures or influences," Pivotal Research analyst Brian Wieser said in notes last week to clients. "Most marketers who buy any TV ad inventory in its traditional form – which will remain as the dominant type of video inventory for years and years to come regardless of these new package launches – will want to conform their digital video measurement to the measurement service provided by the traditional TV incumbent."

If they're smart, marketers and agencies won't try to turn video advertising into television, much as some would like to. After all, television itself is slowly starting to offer better targeting, so it's no time for video advertisers to forget about the fundamental advantage of Internet-based targeting and tracking, especially across the multiple devices people use throughout the day. But it won't be long before video ads make your smartphone look a little more like the boob tube.

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