Linear TV makes up the bulk of video ad dollars today, with about $160 billion worldwide being spent on broadcast advertising, compared to just $5.4 billion in IP-delivered video. But a rapidly growing number of connected devices will soon disrupt what we think of as TV advertising, by combining TV-sized reach with all the interactivity, targeting and analytics advertisers have come to expect from web video ads.
The online video ad market has grown substantially over the last few years, but so far it has yet to really make a dent in TV advertising. While the TV ad market is growing more slowly than online on a percentage basis, it continues to add billions of dollars every year, compared to just the hundreds of millions that are sneaking into online video. For those that thought online video would soon begin to steal budget away from TV, that hasn’t happened — yet.
But things start to get interesting when TVs get connected and more of the video we watch is streamed rather than delivered over traditional TV broadcast. As seen in the graph below, the real opportunity for advertising growth is in targeting that increasingly influential medium. The graph, which is based on data from Booz & Co. projections for the video ad market, was first shown to me by Videoplaza CEO Sorosh Tavakoli as evidence of where the “TV ad market” is actually going.
Advertising for video on PCs and web browsers, video delivered to mobile devices and video delivered to tablets will all grow significantly in the coming years, but will pale in comparison to the growth of advertising for streaming video on connected TVs. And as monetization of streaming video to connected devices grows, the share of ad dollars going to traditional TV services will shrink.
http://gigaom.com/video/connected-tv-ad-market
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