Who Rules In Online Video Advertising

  • Facebook and Yahoo have acquired top video ad-buying platforms or RTBs.
  • AOL has also shown significant improvement in reach lately.
  • Online video advertising is the fastest growing ad format, and the competition is growing for Google.

Earlier this year, we had written about Facebook’s Facebook (NASDAQ:FB) progress in the online video advertising space. Since then, there have been some interesting developments worth noting. While Google (NASDAQ:GOOG) still leads the pack, it appears that Facebook is catching up with YouTube. We look at the changing landscape of online video advertising on desktops in the US, the latest acquisitions by Facebook and Yahoo, and how other competitors like AOL and Amazon stack up in this increasingly competitive space. (See: Facebook stock analysis and Google stock analysis)

Online Video Advertising Growth

So, why is online video advertising such a hot space? eMarketer’s September 2013 report, Digital Video Advertising Around The World Roundup shows that video advertising was the fastest growing online advertising space in 2013. What’s more, this phenomenon is not restricted to any geography, with online video advertising growth leading all other formats by a significant margin, in all regions apart from the US. Even in the US, online video advertising is expected to occupy a much larger share of advertising budgets as we progress towards 2018. So, clearly, online video advertising is the fastest growing advertising format.

Video advertising growing fatest among advertising formatVideo Advertising to Gain larger share of ad spends

Another eMarketer US online video advertising report projects US online video advertising growth until 2017. Projections indicate that more and more of advertising spends will be routed through Real Time Bidding systems (RTBs) or programmatic ad buying platforms, which allow advertisers to bid for and buy ad spaces on publishers’ sites electronically.

US online video advertising growth and RTB growth projections

Growing Competition In Online Video Advertising

Not surprisingly, many major players in the online advertising space have sought to do two things:

  1. Set up ad-networks with publishers like Google has
  2. Set up programmatic ad buying platforms that connect advertisers and publishers

As we had highlighted in a recent coverage of Google’s Contributor by Google initiative, Facebook and Amazon (NASDAQ:AMZN) have been working on their own ad-networks to rival the Google ad network. Even with ad buying platforms, the case is quite similar. (See: Amazon stock analysis)

In August 2013, AOL acquired Adap.TV, a 7 year old programmatic ad buying platform with functionality to serve ads across devices, for $405 million. Nearly a year later, in June 2014, Google launched Google Partner Select, a program that would allow advertisers to buy video ad spaces on select sites in Google’s ad-network, through Google’s DoubleClick ad-exchange.

Within a month of Google’s launch, the Facebook LiveRail acquisition was announced, a deal that was reportedly worth $400-500 million. LiveRail is a programmatic ad buying platform which serves over 7 billion ads every month.

The latest to join the pack was Yahoo (NASDAQ:YHOO). On 12 November 2014, reports surfaced, suggesting that Yahoo is acquiring BrightRoll, an ad buying platform, for $640 million in cash. (See: Yahoo stock analysis)

The unique video viewer numbers from ComScore’s US desktop online video rankings over the last year, show that Google’s competitors have been growing faster than the search giant, and faster than the growth in total unique viewers as well. Further, one must note that the latest available numbers are prior to Yahoo’s planned acquisition of BrightRoll. It’s too early to predict how the online video advertising space will shape up, but for Google, competition is growing, and growing fast.

Unique Viewers (million) Jan-14 Apr-14 Jul-14 Sep-14 Oct-14 Growth Since Jan 2014
Total (million) 184 186 190 192 191 4%
Google sites 158 156 157 149 162 3%
Facebook 85 87 103 98 94 11%
Yahoo 45 52 49 59 57 27%
AOL 61 65 59 72 86 42%
Amazon Sites 39 32 - - -

Online Video Advertising Rankings

By virtue of their acquisitions of LiveRail and BrightRoll, between them, Facebook and Yahoo own the top 2 video ad properties in terms of reach in the US in September 2014. These come across as smart acqisitions which could put the two in a stong position to compete with Google.

ComScore online video rankings sep 2014

Even in terms of ads served, LiveRail and BrightRoll are very competitive. Until March 2014, publicly avalailable ComScore reports used to provide data on the number of ads served on video properties. After kicking off the rankings in 4th and 5th positions in Jan 2014, the two RTBs rose every month to occupy the 1st and 3rd spots by March 2014.

LiveRail BrightRoll AOL Google Sites
Jan-14 Video Ads (billion) 2.42 2.29 2.91 2.9
Position in top 10 4 5 2 3
Feb-14 Video Ads (Bn) 2.89 2.56 3.15 3.01
Position in top 10 3 4 1 2
Mar-14 Video Ads (Bn) 3.89 3.13 3.8 3.06
Position in top 10 1 3 2 4

There’s one major change in ComScore’s US desktop online video rankings by reach, for October 2014, when compared to the rankings a month earlier. For starters, in the September 2014 list of properties ranked by reach in the US, BrightRoll topped the chart and LiveRail ranked 2nd, while  AOL Inc (NYSE:AOL) occupied the 5th spot, with a 44% reach. (See: AOL stock analysis video)

Come October, guess who’s jumped to the top of that list? Surprise, surprise! AOL was at the top of the table in October 2014, with a huge jump in reach to boot, coming in at 53.8%, up from 44% in September. Even in terms of ads served, AOL was ahead of Google as on March 2014.

Video Properties by reach October 2014

As per ComScore rankings, Google still led the pack in terms of ‘Minutes Per Viewer’ or video content viewership, at 294 minutes, with the closest competitor, Facebook, clocking 80 minutes. That said, when it comes to ads served and ads per viewer, Google has some serious competition.

LiveRail BrightRoll AOL Google Sites
Total Ad Minutes (millions) 1598 1510 1744 308
Ads Per Viewer 25.5 18.7 28 27.5


All available data indicates that the likes of Yahoo, Facebook and AOL have pushed the competition up one notch with their acquisitions and recent performances. Google’s YouTube might account for 20% of US video ad revenues, but online video advertising is poised to become an even more interesting space, given that it’s the fastest growing and perhaps the most actively chased medium of online advertising.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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