Wall Street’s getting excited about the future of online video ads

Wall Street’s getting increasingly enthusiastic about the future of online video advertising, now that Facebook’s finally launched its new auto-play commercials, while Twitter, Google and other major players are all beefing up their video services.

One tech stocks analyst, Evercore Group’s Ken Sena, raised his price targets for a handful of leading Internet companies this week after concluding that video ads are going to be a big money-maker.  In a new report (link not available), Sena says Google, Facebook and Twitter are the best-positioned to grab a chunk of what he expects to be an $8.1 billion market in the United States by 2016.  But he says AOL, Amazon and even Yahoo should be able to cash in, too.

Video advertising has long been viewed as a powerful tool on traditional television. But Sena points out that the major online companies have more sophisticated ad-selling software that can leverage a much richer trove of user data, to promote consumer brands through highly targeted video messages.

In contrast with traditional TV marketing, Sena writes, the online marketer isn’t targeting “individuals like you; the marketer is targeting you.”

Other analysts have been talking about the potential of online video for a while. The eMarketer firm has projected U.S. spending on digital video ads will hit $8.3 billion in 2016, or double the $4.15 billion spent in 2013. That helps explain why Facebook launched its video ads toward the end of last year, while the company’s Instagram service has been vying with Twitter’s Vine and others that offer video-sharing services.

Google’s YouTube platform dominates the social video market, of course, while grabbing more than 20 percent of online video ad spending in the U.S., according to eMarketer.  Sena notes that Google is expanding its approach to video by offering an ever wider range of programming on YouTube, and also by delivering video entertainment through the Google Play store.

Still, he suggests Twitter could grab 5 percent of the U.S. market in the next three years.  Meanwhile, he notes that Amazon is quietly building influence in online video advertising because much of the ad tech industry – the companies that buy space and distribute online ads – operates on cloud infrastructure rented from Amazon Web Services.

(Image of TV set by mi6eto used under Creative Commons license)

 

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