A new L2 intelligence report show cable prices rose a staggering 231 percent from 1998 to 2013, despite limited increases in underlying innovation.1 Like sharks sensing chum in the water, a host of well-funded companies entered the content fray, pioneered by YouTube in 2005. From 2006 through 2011, Netflix, Hulu, Apple, Roku, HBO, and Amazon all introduced on-demand, digital video substitutes for live TV broadcasts.
These platforms have been wildly successful in going “over- the-top” of traditional TV and cable networks. Audiences are watching more video (linear and non-linear) than ever. However, viewership on Viacom channels such as MTV and Nickelodeon was down 34 percent year-over-year in Q1 2015, suggesting that when consumers have access to “great,” “good” no longer works.2 The challenges faced by these millennial- targeted channels highlight an underlying demographic shift— consumers ages 17-34 are watching half the weekly hours of linear TV of their counterparts over the age of 50.3 Even live television has taken a hit. In 2015, ratings for the 87th Academy Awards were down 17 percent from the previous year, even though advertising rates increased 5.6 percent.4
Cord-cutters are young (72 percent of online TV viewers are under the age of 44) and wealthy (nearly half of those that plan to cut the cord have household incomes over $75,000) – an extremely attractive marketing demographic for brand advertisers.5,6 However, the majority of “over–the-top” TV entrants favor subscription models without advertising, providing limited opportunities for brands looking to get in front of these elusive eyeballs.
Enter social media. With an $80 billion TV advertising pie too big to ignore, there has been rampant innovation in online video advertising led by YouTube, Facebook, and their smaller social counterparts including Instagram, Twitter, Snapchat, and Meerkat. As reach, targeting capabilities, and advertising formats expand, online video is poised to take a significant hack at advertising’s sacred cow. Digital video spend was up 52 percent in 2014, with the lion’s share of budgets going to the “big guys.”7 Unlike social, mobile, and search, the brave new world of ad- supported video looks to be a duopoly rather than monopoly, pitting Google’s YouTube and Facebook video in the brand Thunderdome. This will likely foment significant product innovation and pricing pressure that will benefit advertisers.
While advertisers are ramping up their spend, by and large most brands have struggled to master the medium. Video views entail a higher level of viewer engagement than processing the transient impressions of other digital advertising mediums. Half of brands cite content quality as their biggest challenge to online video marketing, with 34 percent struggling due to a lack of in- house resources.8
L2 INTELLIGENT REPORT: VIDEO
To better understand what success means in the digital video landscape, this L2 Intelligence Report examines the online video efforts of 245 brands across eight different verticals—with a focus on Beauty & Hair Care brands.
- FCC, Bureau of Labor Statistics.
- “Viacom Takes $785 Million Charge on Cable Woes,” Keach Hagey, The Wall Street Journal, April 6, 2015.
- “The Total Audience Report: Q1 2015.” Nielsen, June 23, 2015
- Nielsen, iSpotTV
- “The Total Audience Report: Q1 2015.” Nielsen, June 23, 2015.
- “5th Annual Streaming Video Survey”, Morgan Stanley, March 2015.
- eMarketer, 2015.
- “Social Media Strategy Research Summary Report,” Ascend2,
Author: Paul Melcher
Paul Melcher is the founder of Kaptur and Managing Director of Melcher System, a consultancy for visual technology firms. He is an entrepreneur, advisor, and consultant with a rich background in visual tech, content licensing, business strategy, and technology with more than 20 years experience in developing world-renowned photo-based companies with already two successful exits.