Online Video Wins Big in Ads Sales, Siphoning From Broadcast TV

Online video sales are taking off, and they’re stealing money directly from TV.

That info comes from research firm Standard Media Index (SMI), which found that TV ad spending was down slightly in July, while ad spending on online video sites soared. SMI creates a comprehensive overview of ad sales by monitoring 80 percent of total U.S. ad spending. Yesterday, it reported that TV ad spending was down 2 percent in July 2015, as compared to July 2014. Broadcast sales fell by 2 percent while cable sales rose by 1 percent. SMI notes that multiple high-profile TV events that month—such as FIFA Women’s World Cup, Special Olympics 2015, and the ESPY Awards—still didn’t help TV achieve stronger ad sales.

OnlineVideoAdsIn contrast, SMI notes that digital ad sales are driving the market, and that online video sites were up 63 percent in ad revenue compared to the previous year. Social media sites grew by even more, charting a 93 percent year-on-year increase. Advertising verticals pumping money into those ads include pharmaceuticals, non-alcoholic beverages, and quick-serve restaurants.

“The digital sector continues to drive the overall market, with social almost doubling its revenues on an annualized basis and video also up more than 60 percent,” notes James Fennessy, chief commercial officer at SMI.

Ad spending overall was up 7 percent in July compared to the previous year.

In a blog post written by Fennessey, SMI debuted analysis showing that digital ad spending is taking money directly from TV ad budgets.

“With the research results in, our report showed that organic growth for digital totaled $1 billion and affirmed that it was siphoning share away from other media, with the bulk of it coming from television,” the post said.

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