Digital video to keep growing, outperforming display ads, eMarketer says

video marketing

Digital video viewership is in line to continue growing at least through 2021 while digital video will continue to outperform display ads online.

According to eMarketer, total numbers of U.S. digital video viewers will increase from 221.8 million in 2017 to 239.2 million in 2021 while the penetration rate among internet users will increase from 81.2% to 83.5%.

These increases will translate to a compound annual growth rate of 2.6% from 2015 to 2020. Meanwhile, pay-TV viewers will be traveling on an opposite trajectory, decreasing by a CAGR of 1.1% during the same time period.

“As these curves follow their opposite trajectories, they are likely to meet around the 190 million mark—most likely early next decade,” eMarketer wrote.

RELATED: ‘Simultaneous viewing’ may be taking toll on TV ratings, report suggests

The correlating peaks and valleys of digital video and pay-TV coincides with eMarketer research for late 2016 that suggests that simultaneous viewing of online video and TV is eating into traditional ratings.

“Americans’ TV time is becoming increasingly distracted at a time when cord-cutting is already accelerating. This year, the number of cord-cutters will grow 15.7%, causing the number of pay TV viewers to drop 0.6% from last year. That means this year, the US will lose 1.3 million pay TV viewers,” eMarketer wrote.

As digital video viewership increases in the years ahead, marketers can expect digital video ads to continue to be more lucrative than other display ads. As eMarketer points out, U.S. digital video ad spending could grow 12% this year and 9% in 2018, according to J.P. Morgan, and that it is the only category of display ad spending (rich media, banner ads, and sponsorship) that is growing.

In fact, eMarketer said that only mobile ad spending is growing faster than video.

With digital video ad spending growth comes an uptick in programmatic ad buying. eMarketer predicts U.S. programmatic video ad spending will “increase substantially” in 2017.