Streaming Ad Market to Take Off with Broadband Adoption

Increased residential adoption of broadband will spur new types of marketing messages, and that will cause spending on streaming media-enabled promotion and advertising to grow exponentially during the next four years, according to the Yankee Group.

Streaming media-enabled advertising, which by the Yankee Group’s definition encompasses online product information and infomercials made available by companies that users can retrieve on-demand, will also give birth to a potentially lucrative environment for media companies able to connect consumers and product manufacturers during key points in the online buying process. Boosted by the higher fees created by on-demand marketing opportunities, spending on all streaming media-enabled advertising will grow to $3.1 billion by 2005 from $44 million in 2000, the Yankee Group estimates.

“Broadband Web users looking to research major purchases will be able to tap into a broad array of videos providing information on cars, computers, vacations and other big-ticket items,” said Yankee Group analyst Steve Vonder Haar. “This is multimedia content that helps people get things done. It represents how the Web is best suited for delivering video with a purpose rather than video for couch potatoes.”

According to the “Streaming Ad Insertion & Commerce Report” by DFC Intelligence, streamed advertising supporting audio and video programming online is forecast to generate $138 million in 2001. However, without widespread penetration of broadband, advertising is expected to be in less than 10 percent of the streams served. But just because the market for streaming advertising is nascent right now, that doesn’t mean it will always be that way.

“Cable TV advertising was worth only $50 million in 1980. Today it is worth over $13 billion,” said Paul Palumbo, the author of the DFC Intelligence report. “There continues to be substantial growth in streaming usage for both audio and video programming, and these are loyal users. Because advertising in streaming media can be a very effective way to reach a highly targeted and qualified audience, we see strong long-term growth potential for this market, particularly for cross-platform brands.”

The DFC report predicts that over the next few years, there will be a major change in the online advertising market. Rich media advertising is forecasted to surpass other forms of online advertising within five years.

Other conclusions from DFC report include:

  • About 63 percent of Internet audio broadcasters have actually deployed, or have the capability to deploy, in-stream advertising.
  • About 24 percent of video-centric destinations and sites have deployed ad-insertion capability.
  • There are a total of 1.8 billion audio avail opportunities per month, with CPMs ranging from $5-$60.
  • There are an average of 165 to 185 million video avail opportunities per month, with CPMs ranging from $30-$120. Nevertheless, in-stream video ads are forecast to only represent about 30 percent of total streaming advertising this year.

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