How Advertisers Can Capitalize on the Explosive Growth of Digital Video

The explosion of video is like a siren song for Canadian advertisers, but the seas can still be rocky. Advertisers have to work smart to navigate consumers’ high expectations, from the type of content they want to see, to how they want to see it.

AOL’s annual State of Industry Video report found 70 per cent of Canadians are watching online videos daily, making it a tempting channel for savvy advertisers. And with almost half of all Canadians (43%) watching on a smartphone, video content is literally within their reach almost every moment of the day.

It’s a compelling story for advertisers looking to cash in. With the ubiquity of connected devices and high-speed internet access, content consumption patterns are changing as almost half of Canadians expect to watch more full-length TV shows (46%) and full-length movies (41%) online this year than they did in 2016.

Because of this, more than two-thirds of Canadian advertisers now believe “digital video is the future” (70%), and as a result, are continuing to tap their TV budgets to increase their online video spend. Of the advertisers who have shifted ad budget away from broadcast/cable, 73 per cent are moving it to digital video. The advantages in advertisers’ minds are clear – those surveyed feel that digital video offers “better quality creative” (45%) and “better targeting and personalization of video ads” (49%).

But being successful is about more than shifting budget from one screen to another. Advertisers have to balance Content, Experience and Relevance to win with Canadian consumers.

Content

Today, more than one-third of Canadians—and 42 per cent of millennials (aged 18 to 34)—are using ad-blocking software, so it’s no surprise that one in five advertisers (22%) believe ad-blockers are “the biggest barrier” to diving into mobile video advertising.

However, for the time being, the majority of ad-blocking software is installed on desktops. And it is the job of marketers to develop quality ad content that doesn’t lead consumers to download ad blockers on their mobile devices. Over half of Canadians say they don’t mind watching ads before online videos “if they are entertaining” (55%), and three in four (74%) expect an ad to last 15 seconds or less if it’s before an online video that’s under a minute. So, if marketers are going to slow the spread of ad blockers to mobile, it’s a good idea to keep ads as short and entertaining as possible.

Not so coincidentally, “video under one minute” (48%) and “in app video ads that increase interactivity and engagement” (38%) are viewed by advertisers as the biggest mobile video opportunities in the marketplace today.

Experience

Almost half of Canadians (47%) watch live online content across all devices at least once per week, with breaking news (56%) and sports (34%) being the two most popular live categories.

With people now using their mobile devices to watch content that was once exclusively reserved for television, slow-downs are almost inevitable. Since much of the longer-form content contains mid-roll advertising, the video itself is still buffering while the ad is playing, so the experience becomes less seamless than you would expect from a broadcaster.

To improve the consumer experience, almost half (47%) of Canadian publishers say they are currently exploring solutions to reduce load times for video ads on mobile. And this is a very good thing considering more than half of Canadians (54%) say they will stop watching an online video if there’s one or two buffering interruptions, and one in five (22%) will give up after just a single buffering delay.

Relevance

Relevancy is the key concern among those blocking ads: 50 per cent of current or previous users of ad blockers say the ads are irrelevant to them, and almost half of Canadians say they don’t mind pre-roll video ads “if they include a product or service that’s relevant to them” (47%).

Therefore, it’s no surprise to see that “better targeting and personalization of video ads” (49%) is seen by advertisers as the primary growth driver in digital video advertising. Additionally, in what represents a big bet on mobile, 54 per cent of Canadian advertisers are shifting their TV budgets to mobile video, with more than one-third of advertisers (36%) expecting their clients’ digital ad spend on mobile to go up by at least 25 per cent in the next year.

Looking at what appears to be an ocean of opportunity, marketers can move ahead full sail with mobile video, but they’ll only escape ad blockers and reach their destination— a place in the pocket of every Canadian – if they learn to consistently produce smart content and incredible consumer experiences that are hyper-relevant to their target audiences.

Andrew Consky is Director of Research for AOL Canada.