Internet TV advertising market set to grow 476 per cent in five years: analyst

Analyst Frost & Sullivan claima the Australian Internet TV advertising industry will grow at a compound annual growth rate of 42 per cent from 2011 to 2016, increasing in value from $54 million to $311 million.

The company’s latest report on the Australian Online Video Market, written in association with media and technology company, The Video Network (TVN), showed that the growth follows a surge in online video streaming in Australia – which grew 550 per cent from less than 2 billion videos in 2007 to 11 billion in 2011.

According to the company, it was primarily driven by cheaper bandwidth, more online content choices and higher data caps. On an individual basis, Australians are now watching around 10.2 hours of online video per month, catching up to US and UK consumers who watch 17.3 and 17 hours of online video per month, respectively. TVN co-managing director, Peter Ostick, said, “While this sector is in its early days, Internet TV is already reaching upwards of 12 million viewers per month according to comScore statistics, which represents a huge potential for advertisers within this emerging market.”

Frost & Sullivan senior research manager, Phil Harpur, identified the factors at work making online video attractive to Australian viewers.

They include: increasing numbers of consumers using their PC/laptops, tablet PCs and smartphones for entertainment, their ease of use of subscription-based video content, cheaper video production, availability of Internet capable TVs and HD videos and bandwidth and data improvements.

According to Ostick, advertising agencies and marketers are increasingly recognising online video as an integral part of the overall advertising solution as online video consumption grows and the industry becomes more sophisticated.

Harpur said the expected growth in expenditure on online video advertising, which is currently around two per cent of the total online advertising spend, will accelerate as media buyers test and use the medium, the number of online video viewers develop and the amount of professional video content rises.

“But for it to grow at its true potential, quality content needs to be produced at a much higher rate. The expected increase in availability of long form video content will go some way towards remedying this, opening up advertising opportunities, especially for mid-roll advertising,” he stated.

Frost & Sullivan anticipates Internet TV advertising to outperform all other major online advertising segments such as online display (banner ads), advertorials, integrated site content, sponsorships and e-newsletters.

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