Digital Video Marketing Is A $135 Billion Industry In The U.S. Alone, Study Finds
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The rise of video isn’t slowing down. From producing videos to distributing and promoting them, the U.S. digital video marketing industry is expected to reach $135 billion this year, according to a new study by mobile video platform Magisto.
The 2017 estimate — which includes the cost of video capturing, creation, hosting, distribution, analytics and staffing — is sizeable and would make video marketing nearly as large of a market as digital and television advertising combined. By contrast, advertisers are expected to spend $83 billion on digital ads and $71 billion on TV commercials (a total of $154 billion) in the U.S. this year. On average, each American businesses will spend $20,000 on video marketing this year, the study predicts. Magisto, which is based in Menlo Park, Calif. and makes a web-based video editing tool, published its study on Wednesday based on voluntary, anonymous responses from 545 marketing decision makers at small, medium and large U.S. businesses, surveyed this summer.
The pace of video creation is also accelerating as companies seek to better cater to millennials — the first digitally native generation — and to teens. More than half of businesses in the study said they create video content at least once a week, and 26% said they create video content daily. Video marketing also appears to make up a growing portion of businesses’ marketing budgets. 60% of businesses said they spend more than a quarter of their marketing budget on video, and 64% of those surveyed said they create video content internally.
“Our research allowed us to examine and size the entire video ecosystem, including production, tools, people and media,” Magisto said in its report. “Our research points to the digital video spend nearly equaling the combined spend of digital and TV advertising in the U.S.”
The massive size of the online video market can largely be attributed to the growing focus on video across media channels (such asFacebook FB +0.06%, YouTube , Instagram, Musical.ly, Twitter TWTR -0.89%and Snapchat) as well as to a shift among consumers, who increasingly prefer to receive information through the medium.
“Twenty years ago, television and the web was the video mechanism, and now, all of the platforms are primarily image- and video-based,” said Jim Louderback, the CEO of VidCon. “The younger you are, the more likely you are to want to consume information in video form. If you’re under the age of 35, video is the way you want to be communicated with, it’s the way you want to learn and understand.”
At a time when more and more digital information (and white noise) is directed at smartphone owners, especially on social media sites, the immersiveness of video can give brands a more vivid, immediate way to appeal to the consumer’s emotions and desire for entertainment than other mobile formats.
“Since video combines the emotional impact of story with the efficacy of digital advertising, it is a perfect way for businesses to authentically engage with today’s consumers,” Oren Boiman, CEO of Magisto, said in a statement. “The enormous influence of social media and the bottom up culture of millennials have led to a new marketing condition where the consumer is in control, word-of-mouth is a medium unto itself and authenticity is paramount to engaging customers.”
For advertising, YouTube remains the most important video platform, followed by Facebook, propelled by their reach and the scope of tools they offer marketers. Louderback said he expects Amazon-owned video-game streaming site Twitch will be an increasingly important video platform over time. The shift to mobile video — which makes up about 80 to 90% of content viewed across digital media channels; the rise in episodic, longer-form video; and the growth of influencer marketing are key trends brands and creators should watch. Live video and virtual reality should also become more mainstream over time, Louderback added.
“We see all of these platforms trying to become television,” Louderback said.
Magisto’s Wednesday report is the first in a three-part series the company plans to release this year. The company expects its second report to focus on where and how advertisers are spending the $135 billion. The third part of the series will focus on consumers’ reactions to business video.
So far, companies appear to think video is worth the cost. Businesses are 150% more concerned about the speed of video creation than the price, according to Magisto.
“Done correctly, video has the scale of television, the precision of digital marketing and the power of authentic story,” the company said in its report.