EMarketer now estimates that Canadian advertisers will spend $255MM on digital video this year – 51.6% more than they did in 2013. The industry analysis firm credits increased video consumption among consumers, better audience targeting technology and richer creative experiences with attracting advertisers to the medium.
Though remarkably high, that growth estimate is considerably less than the 83.6% growth the market saw between 2012 and 2013. EMarketer’s report on the Canadian video marketplace says that it is reaching maturity, and we should expect growth to slow down significantly in coming years.
The report’s five-year outlook shows that next year the market will grow by a still-impressive 26.4%, but that by 2018, growth will have slowed to 6.0% annually. By that time, spend will have reached $489 million.
Canada has proven to be an attractive market for digital video advertising, since it’s outpaced the U.S. and most other countries in growth of online consumption, video viewership and smartphone penetration. Already Canadians spend 40.2% of their online time watching video, or about 4.5 hours per week. According to ComScore, online video reaches 74% of Canadians, compared to 63% in the U.S.
Demand for premium video content has been so strong that it’s driven many Canadians to acquire it illegally. EMarketer points to the trend in Canadians hacking their Netflix accounts to get access to U.S. geo-fenced TV shows.
Marketers have proven friendlier to online video than other digital formats because of its resemblance to familiar TV advertising, the report says. Digital video advertising is also seen as more measurable than other formats, and has been in-market longer than newer formats like native advertising.
But if EMarketer’s projections hold true, Canadian marketers’ demand for online video may be close to being tapped out. The company says we should not expect 2013’s “hyperspeed” growth to repeat itself.
The research company says publishers have largely caught up with advertisers’ demand for new ad placements. Publishers have invested heavily in new video platforms, like The Globe and Mail‘s Globe Now, which hosts news, sports and entertainment content from the Globe, CTV and CP. Rogers and Shaw also recently announced Shomi, a video platform that intends to compete with Netflix.
Future growth may also be slowed by technical barriers, such as fraud and poor viewability. Although Canadian video has higher average viewability than most other markets, more than half of video ads purchased online do not have an opportunity to be seen.
If EMarketer’s projections are right, it won’t be good news for digital video companies like TubeMogul, Videology and BrightRoll that have invested heavily in bringing digital video to Canada. Compared to other digital ad formats, video has attracted a much larger number of specialty providers, because of rapidly growing consumption and relatively high value to brand advertisers. Premium pre-roll video CPMs are among the highest on the internet.
Yet, EMarketer also gives some reasons to doubt that growth has already hit its peak. Digital video only makes up 6.9% of digital marketers budgets, much less than display and search. A survey from Brandspark showed that video and social were the top two channels that marketers planned to increase spend in this year, with 48% of marketers surveyed saying they planned to increase video spend, compared to 32% in search and 30% in display.