Facebook dominates video ad spend with 25% share, eMarketer finds

Brief:

Spending on online video ads will grow 30% from a year earlier to $27.82 billion and make up 25% of U.S. digital advertising in 2018, per researcher eMarketer’s latest ad spending forecast. Facebook will command 24.5% of all video ad spending this year at $6.81 billion (including Instagram) and be the top social media platform with an estimated 87% share of U.S. social media video ad spending.
Snapchat’s U.S. video revenues will grow 19% to $397.3 million this year, eMarketer estimated. While video is on track to represent 60% of its U.S. ad business through 2020, its share of social video spending will be 5.1% this year, per the forecast.
Twitter will get 55% of its total U.S. ad revenues from video this year, eMarketer said. This year, video ad revenues will grow more than 12% to $633.3 million, giving Twitter an 8.1% share of U.S. social video ad spending, and a 2.3% share of total video spending.

Insight:

With so much money at stake in video ads, competition among video platforms for marketers' dollars is likely to be fierce over the next few years, with the winners coming down to whose content resonates most with consumers and who offers brands the best bells and whistles.

EMarketer’s latest spending forecast shows that Facebook dominates online video advertising, much in the same way it has a commanding position in overall digital ad spending. While Facebook has invested heavily in video programming for its Watch platform, the forecast also underscores the importance of Instagram to Facebook's advertising sales, particularly as ad load reaches saturation levels in Facebook's News Feed. Instagram, which launched its own video offering IGTV recently, currently accounts for about 15% of Facebook's ad revenue, according to estimates from a research analyst at KeyBanc Capital Markets cited by Recode. Over the next couple of years, the analyst estimates Instagram's contribution to expand to 30% and, perhaps more importantly, is expected to drive 70% of new revenue by 2020.

EMarketer doesn’t consider Google's YouTube a social network, but the video-sharing platform is popular among advertisers and many social influencers who guide the purchase decisions of millions of consumers. EMarketer estimates that YouTube’s U.S. video ad revenue will grow 17% to $3.36 billion this year from 2017, which is still significant. YouTube now gets 73% of its U.S. ad revenues from video, the researcher said.

Snapchat has made inroads into video advertising, but still has a small slice of the overall market. The image-messaging platform may need to raise more money from investors next year if it continues to burn through cash, Michael Nathanson, senior research analyst at Moffett Nathanson, said in a report on Monday. Parent company Snap has been losing as much as $300 million a quarter since it went public in March 2017, and its cash coffers may be empty by next summer. "The clock is certainly ticking for Snap to turn its business around," Nathanson said in the note cited by CBS News.