This article is one in a series reporting on key sessions at LMA Fest 2022, Aug. 16-18 in Chicago. Here we report highlights of the session titled “The bright future for local video advertising and how your company can execute,” led by Michael Beach, CEO, Cross Screen Media.
Should media companies be bullish on local video advertising? Cross Screen Media’s Michael Beach thinks so, and he shared some key statistics to support that assertion for attendees during a session at LMA Fest.
Beach started with a few definitions to get everyone on the same page. Given the quickly evolving, volatile video ad market, this was especially helpful:
- “Linear video” refers to broadcast and cable outlets.
- “CTV” is included in digital.
- “Convergant TV” is everything: broadcast, cable, CTV, social video, and mobile/desktop.
Looking forward, Beach expects three megatrends to have impact on the future of video advertising. First, all screens will be bought and sold together in cross-screen format(s); second, all video advertising will be bought and sold against audiences vs. age/gender; and advertisers will place more value on performance brand/sales/life/etc. vs. reach/frequency.
While broadcast is still king, we should be keeping an eye on CTV. Streaming’s share of total TV time increased 77% during the pandemic – and it will be king in 10 years, he said.
Similar to how early digital display dollars did not keep pace with the consumption rate of digital media, currently big video spend does not line up with consumer behavior. However, that is quickly changing.
About 1 million current local advertisers are spending in this fashion:
- Linear is about 77k advertisers, spending in total $8.6 billion, averaging $111, 000 each
- All video is 137,000 advertisers who spend in total $18.2 billion, averaging $133,000 each
- Local CTV/Mobile/Desktop only is $17.6 billion spent in total by 814,000 advertisers, each spending about $22,000.
Along with video ad spend growth, video ad CPMs (costs per thousand impressions) are going to be lining up quickly: Every 10% shift in consumption from linear TV to streaming reduces the ad impressions by 8%. The U.S. video ad market is projected to grow by 23% ($31 billion) by 2025. More ad dollars purchasing fewer impressions will drive an increase in CPMs, Beach said.
In these environments, local video advertisers will be asking the following questions:
- What networks/platforms should I buy? (ABC, CNN, Roku, etc.)
- How many people did each screen reach?
- How many targets did I miss?
- How can I do better next time?
Additionally, as the user numbers continue to migrate, pulling the ad dollars along (thus reconnecting usage proportionally to revenue opportunities), advertisers will be open to buying video across all platforms, using uniform technologies, effectively creating real opportunity for newspaper, television and radio companies alike.