The burgeoning business of online video is generating more than $8 billion in advertising revenues but could be doing so much better, if only the industry did a better job helping advertisers measure their impact across platforms.
That’s the conclusion of a new study by Tubular Labs and Vorhaus Advisors, who looked at what’s coming in compared to the size of the audience for online video and branded content, for both digital publishers and online creators.
The report, called The $13B Missing Revenue for Digital Video Publishers, puts online video ad revenues worldwide at $8.2 billion, prodigious for an industry that barely existed at the turn of the last decade.
But as audiences for online video continue to swell – boosted by 5G mobile’s rollout, international uptake of smartphones and the launch of more premium video services – the report suggests the potential online-video ad market is far larger than what publishers now receive.
Indexing industry revenues against a proportionate share of audience, the report estimates total revenues would be closer to $21.6 billion from “the three big platforms,” YouTube, Facebook and Instagram. That’s a gap of about $13.4 billion in unrealized revenues.
“Vorhaus Advisors believes there are substantial advertising revenues, around the world, that are not being realized by video creators and publishers, even though much effort and expenditure has been undertaken to build valuable digital audiences that advertisers are interested in,” the report reads.
The report includes both ad-revenue shares and branded content income for both publishers and influencers. And in terms of missed opportunities, the gap could mushroom, to more than $20 billion over the next three years, Vorhaus projects.
The problem lies in part with advertisers, who continue to over-index spending with legacy media. But the report says advertisers aren’t fully to blame. The online-video industry still largely offers metrics that make it difficult for advertisers to understand and capture value in the digital video chain, said Mike Vorhaus, the Vorhaus Advisors founder and former head of Magid Advisors.
“Our key finding is that social video on Facebook, Instagram and YouTube is worth $21 billion, but only $8 billion is currently being realized,” Vorhaus said. “When you break down the mechanics of the global social-video business, the $13 billion gap is largely due to insufficient metrics for media and advertisers to transact on in social video.”
The lack of a unifying standard makes it difficult to value online audiences against campaigns in traditional media channels, and fails to truly capture audience reach and depth, Vorhaus said.
That undermines advertisers that want to make deals with publishers and creators, especially for campaigns that reach across multiple online platforms and into traditional channels as well.
The model for estimating video income was developed by Tubular Labs. Vorhaus Advisors called the projections “conservative,” implying the potential for an even larger gap in coming years than even the report says.
Tubular, which tracks online video, is developing new kinds of metrics to improve the situation, said Tubular CEO Rob Gabel.
“We’re committed to realizing the full potential of global social video,” said Gabel.
Earlier this year, Tubular was a founder of the Global Video Measurement Alliance, which recently launched an audience beta program with standardized time-based views across platforms, de-duplicated reach, total watch time, average watch time per unique viewer, audience demographics and location, and special reporting features.
Those time-based metrics are designed to give advertisers a more complete measurement of where audience eyeballs are directed, a crucial question in a distracted age.
Other GVMA members include Viacom, Discovery, Ellen Digital Network, Vice, Buzzfeed, Group Nine, Media Chain, Corus Entertainment, and Brut.
The full Vorhaus/Tubular report can be downloaded here: https://tubularlabs.com/research-guides/13b-missing-revenue-digital-video/