Video advertising has come a long way since the black-and-white, jingle-filled TV commercials of the Mad Men era. Now, we’re used to seeing ads anytime, anywhere, even as we’re swiping through our social media feed on mobile devices.
But how did we get here?
In this article, we explore the milestones, trends, and platforms that made video advertising what it is today—a billion-dollar industry that helps brands meet their target audience where it matters most and make a strong impression.
- 1941: The First-Ever TV Commercial
- 1950s-60s: The Golden Age of TV Advertising
- 1980s: The Rise of Super Bowl Commercials
- 1994: Enter Online Advertising
- 2005: The Launch of YouTube
- 2007: The First Smartphone Brings Video to Mobile
- 2013-Present: The Boom of Social Media Video
- 2020: Video Advertising Today
Are you ready? Let’s go back to the 1940s.
In May 1941, the FCC (Federal Communications Commission) issued the first commercial licenses in the U.S., allowing TV networks to charge for commercial time.
On July 1st, the world’s first TV commercial aired on NBC-owned WNBT, right before a baseball game between the Brooklyn Dodgers and the Philadelphia Phillies.
The 10-second spot was an advertisement for New York-based Bulova Watch Co. and cost only $9—roughly $157 today. It featured the image of a Bulova clock superimposed over the map of the United States. “America runs on Bulova time,” a voiceover announced viewers.
Only around 4,000 people saw the commercial, as very few U.S. households, only on the East Coast, owned a TV at the time. Yet the Bulova spot completely revolutionized advertising, and other companies quickly followed suit.
However, it wasn’t until after World War II that TV commercials really took off. Between 1949 and 1951, TV spending increased from $12.3 million to $128 million.
By 1954, TV had become the leading medium for advertising, and by 1960 it had reached 90% household penetration.
Pent-up demand caused by wartime shortages and the Baby Boom between 1945 and 1964 created a new age of consumerism. As TV reached coast-to-coast transmission in 1951, commercials for everything, from essential consumer goods to automobiles, made their way into American households.
These commercials often depicted traditional family values, showing the idealized modern family—mother, father, son, and daughter—coming together. Animations, like the Ajax Pixies, and catchy jingles, the ones for Alka Seltzer and Oscar Meyer, were extremely popular during this period.
Up until the 60s, TV programs were advertiser-sponsored, which meant that brands had complete creative control over the shows they were producing and could even block competition from advertising during their broadcast.
Even the names of these programs promoted the sponsors. People were tuning in to watch the “Hallmark Hall of Fame,” “Texaco Star Theater,” “Colgate Comedy Hour,” and “Kraft Television Theater.”
However, as the cost of programming drastically increased, TV advertising switched over to participating sponsorships. Advertisers were now buying commercial slots from the inventory made available by the TV networks.
These commercial slots became more and more competitive and, as a result, more and more costly. The peak of this trend can be observed every year during the most-watched TV broadcasting event—the Super Bowl.
Many agree that it was the 80s that showed the world the full potential of Super Bowl commercials for the first time, particularly Apple’s 1984 Macintosh ad.
The commercial was inspired by George Orwell’s dystopian novel and directed by Ridley Scott, known for movies like “Alien” and “Blade Runner.” It showed a woman throwing a sledgehammer at a big screen displaying the image of “Big Brother” and destroying it.
While it cost $500,000 to make, ten times more than what Apple was used to spend at the time, the ad paid off.
According to Chiat/Day, the agency that created it, the commercial earned Apple roughly $45 million in free advertising from TV stations covering and playing it.
Video ads had officially become newsworthy.
Since then, the magnitude of the Super Bowl as an advertising event and the cost of Super Bowl commercials skyrocketed.
The first online banner ad was displayed starting October 1994 on HotWired, the first commercial web magazine, now known as Wired.com. AT&T paid HotWired $30,000 to display the banner on its website for three months.
Its copy was daring the site’s visitors to click the banner: “Have you ever clicked your mouse right here? You will.”
And it worked. The ad enjoyed a now-unbelievable click-through-rate of 44%.
This simple banner ad paved the way for the switch to online advertising. Marketers quickly realized that the internet could give them something that TV couldn’t—a better way to target their desired audience.
With the launch of Google AdWords in 2000, targeting internet users based on their search history and browsing preferences became possible. Moreover, in 2004 Facebook started collecting vast amounts of data from users, which gave advertisers unprecedented insight into consumers’ behavior and interests.
YouTube, the platform that brought video experience online, officially launched in December 2005. As we know today, it was a tremendous success.
By July 2006, YouTube had already reached 100 million views per day. Besides, 2006 was the year when the website introduced Participatory Video Ads. These were displayed in the upper right-hand corner of the homepage and started playing only when users clicked on them.
“We think there are better ways for people to engage with brands than forcing them to watch a commercial before seeing content,” said YouTube CEO Chad Hurley at the time.
But in October 2006, YouTube was acquired by Google for a whopping $1.65 billion, and other ad formats started being introduced to the platform.
In 2007, YouTube added In Video ads and Partner Programs, which allow creators to monetize eligible content. In November 2008, pre-roll ads started playing before some YouTube videos.
Today, YouTube offers several types of video advertising formats:
- Skippable in-stream ads, which are ads appearing before, during, or after videos, that users can skip after five seconds. If the user watches one of these ads for more than 30 seconds or interacts with it, the advertiser is charged by Google.
- Non-skippable in-stream ads, which are 15-second video ads, playing before the main video, that users cannot skip. These are accompanied by a countdown box.
- Discovery ads appear among video suggestions on the right side of the player or when users search for specific keywords on YouTube. In this case, the advertiser is charged every time a user clicks on their ad.
- Bumper ads are quick, 6-second ads that are unskippable and appear right before videos. These are sold on a CPM basis.
A great advantage for YouTube advertising is the fact that if you select the Google Display Network when you launch a video advertising campaign, your video ads are going to be shown on other websites that are part of the GDN.
Moreover, when done right, YouTube video content can help brands stand out just as much as paid advertising.
In 2006, George Wright, the marketing director of Blendtec—a company no one really knew about, with a small marketing budget—decided to show consumers just how powerful the company’s blender was by creating a series of YouTube videos called “Will It Blend?”
He filmed the company’s founder, Tom Dickson, using the blender to destroy marbles, soda cans, CDs, glowsticks, a rake, and, later on, even an iPhone. Viewers were hooked. They kept coming back to see what else the blender was going to turn into dust.
Internet fame was not the only thing this campaign brought Blendtec. Within the first two years of “Will It Blend?” sales for the blender increased by 700%.
Just like TV brought video advertisements into every home, the smartphone allowed marketers to reach consumers through video ads anytime, anywhere.
The first iPhone, released in 2007, is widely regarded as the first modern smartphone. Before its launch, browsing the internet on mobile devices, though possible, was tedious and costly. Full websites were not functional on older phones, and users could only access limited, mobile versions of specific pages.
The launch of the first smartphone changed that. While it was still far from what we’re used to today in terms of features, the iPhone offered a bigger screen, Apple’s Safari internet browser, a dedicated YouTube app, and better internet connectivity.
Now, we can’t even imagine a world without the possibility of using the internet on our phones. And video ads are an integral part of this experience, whether we’re using a mobile browser, a gaming app, or social media.
In fact, at the beginning of last year, nearly 50% of all video ads were viewed on a mobile device, up from 40% in 2018. And U.S. mobile video ad spending is expected to keep rising year-over-year, reaching nearly $25 billion in 2022.
But this newfound reach came with a twist.
As people took charge of what they were watching, how and when, attention spans for advertisements shrunk considerably. On Facebook, for example, mobile News Feed video ads are being watched for an average of 5.7 seconds.
It quickly became clear that the 30-second spot that was the norm in TV advertising could not survive online. Video marketers now had to create impressive, engaging, short-form content if they wanted to make an impression.
In 2013, video content was exploding online, and social media companies wanted a part of it. Around this time, several major companies launched video capabilities or their own video platforms.
Over the following years, some were successful and continued to grow into what we know and love today, while others failed, teaching us important lessons.
And the race is not over yet. New platforms, which are just getting started, are quickly taking over the world.
In 2013, Vine, a platform owned by Twitter, took the internet by storm with 6-second, extremely creative viral videos that captured audiences or made them burst into laughter.
Vines like “Yass Cat,” “Why You Always Lying,” “Duck Army,” and “Who Is She?” garnered millions of loops and are still remembered as some of the best videos out there.
However, Vine wasn’t as popular with marketers. The platform was against monetization and disruptive ads from the start and denied advertisers the option of paying for placement similar to promoted Tweets.
Instead, Vine agreed to act as a middleman between brands and content creators, without taking a cut of the stars’ deals. Logan Paul, for example, was getting paid as much as $200,000 for a single promotional Vine.
But Vine’s success was short-lived. The platform quickly faded away, and Twitter decided to shut it down in 2016. So, stars and advertisers alike moved over to Snapchat and Instagram.
In late 2012/early 2013, Snapchat introduced video capabilities, allowing users to send each other 10-second videos that deleted themselves after 24 hours.
With this addition, the platform rose to fame. As it kept growing, brands found more and more video advertising opportunities here:
- 2013—Stories. Like users, companies got to post threads of vertical snaps that tell a story and disappear after 24 hours.
- 2014—The Recent Updates section. Considered Snapchat’s first shot at advertising, it allowed sponsored ads to appear in the users’ feed, next to messages from friends.
- 2015—Discover. A new page accessible from the home screen that featured content from news, entertainment, lifestyle, and other industries.
- 2016—Video ads that appeared between friends’ stories when users started watching them.
Today, Snapchat boasts 14 billion daily video views, with 53% of users being between the ages of 18 and 24. Even though it’s not as popular as it used to be, the platform gives marketers a chance to connect with the younger demographic through engaging short-form videos.
Another significant milestone for social media in 2013 was the introduction of 15-second videos on Instagram. This new feature also came with 13 filters created, especially for videos. Since this launch, Instagram videos have become just as popular as photos.
In November 2013, Instagram started offering its first ads. Today, it allows for a large variety of video ads, similar to its parent company:
- Stories ads, which are ads that appear on Instagram’s Stories.
- In-feed video ads, which are 120-second-long video ads in square or landscape format that appear in users’ feeds, between content from the accounts they follow.
- Carousel ads, which users can swipe through to view up to ten images or videos.
- Collection ads are collages of one main image or video and three smaller ones that easily connect users to the brand’s site or product pages, without leaving the app.
- Ads in Explore, which are ads that appear in Instagram’s Explore tab.
In June this year, Instagram also started testing ads on IGTV, its standalone video application it launched in 2018. However, it looks like advertisers will have to wait a bit more for the full experience.
“IGTV ads will be testing for the remainder of 2020. We believe that emerging creators will see the most benefit from monetization in IGTV but will test with various accounts as we roll this out slowly to ensure we get the experience right. No specific plans to share on expansion at this time,” an Instagram spokesperson told Digiday.
In 2013, when Instagram, Snapchat, and Vine videos were booming, Facebook made the first big move towards becoming a more video-oriented platform by introducing the in-feed autoplay feature. Most users still keep it on, but the norm is for videos to be muted and captioned to avoid significant disruptions.
Now, Facebook is the second most-used platform for watching digital videos after YouTube. Besides ads similar to Instagram—Stories, In-Feed, Carousel, and Collections—Facebook also offers marketers:
- Slideshows—the possibility to turn images and text into a simple video ad.
- Playables—interactive previews of gaming apps, which start with a lead-in video.
- Instant Experiences—a full-screen video ad experience created specifically for mobile.
You can check out the full ad offer from Facebook here.
Launched in 2016, TikTok is the newest kid on the block. This app allows users to create and post short videos featuring lip-sync, music, dance, comedy moments, and much more.
- In-Feed Video—ads appearing in users’ news feeds, on the For You Page.
- Brand Takeover—ads that completely take over the users’ screen for a few seconds when they open the app.
- Hashtag Challenge—ads appearing on the Discovery page, encouraging users to participate in content creation challenges.
- Branded AR content—lenses, stickers, and other filters for users to feature in their videos.
- Custom Influencer Package—ads appearing as part of sponsored content created by a TikTok influencer.
Nowadays, video undeniably wins the battle for engaging online content. This can also be observed in the amount of money advertisers are willing to invest in video ads. It is projected that ad spending in the video advertising segment will reach $26.9 billion in 2020.
In one of our previous articles, we presented some fresh video advertising statistics, showing just how essential this element is to any successful marketing strategy today. Here are the essentials:
- YouTube is considered the most effective video marketing platform by 78.8% of marketers, followed by Facebook with 58.5%.
- At $10.35 billion, video ad spending on social media accounted for 28.7% of the total global video ad spending in 2019, and it’s expected to double in 2020.
- Globally, 28% of video marketers are planning to incorporate IGTV in their 2020 video marketing strategy.
- Tweets that have videos attached are getting 10x more engagement than those without a video. Also, Promoted Tweets with videos typically save more than 50% on cost-per-engagement (CPE).
- On average, people are 1.5 times more likely to watch videos on their mobile phones than on desktops.
Digital media has clearly taken over television. TV ad spending fell for the first time in 2017, and, after a peak in 2018, it’s been on a steady downward trend, as have been TV subscribers.
The future lies with OTT (over-the-top) advertising. Delivered on-demand, directly to users on internet-connected devices, such as smart TVs, personal computers, or smartphones, OTT content is expected to usher in a new, lucrative era of video advertising.