Users aren't seeing as many ads thanks to ad-blocking technology. Furthermore, people have been shifting to mobile as their primary media consumption device in the last three years, while ad spend lagged. The industry is reactive rather than proactive. As a result, U.S. digital ad revenue has become Google and Facebook, followed by everyone else. But immersive video through virtual and augmented reality could change all that.

1. P R O V I D I N G I N - D E P T H I N S I G H T ,
D A T A , A N D A N A L Y S I S O F
E V E R Y T H I N G D I G I T A L .
YOU MISSED
MOBILE —
DON’T MISS
IMMERSIVE VIDEO
DY LA N M O R TE NSE N,
SE NIO R R E SE A R C H A NA LY ST

2. WE NEED TO TALK

3. $27.5
$14.2
$3.4
$9.9
$32.8
$17.4
$5.7
$9.7
US Digital Ad Revenue Google Facebook Everyone Else
1H 2015 1H 2016+19%
+23%
+68%
-2%
THE DIGITAL AD SPACE IS MURKY
US D IG ITA L A D R E VE NUE , BILLIO NS ( $ )
Source: IAB, Facebook, Google, Digital Content Next

4. CONSUMERS AREN’T SEEING YOUR ADS
US D ISP LAY A D R E VE NUE LO SS FR O M A D BLO C K E R S, BILLIO NS ( $ )
Source: Optimal.com US Ad Blocking Forecast, May 2016
$3.9
$5.7
$7.6
$9.8
$12.1
2016 2017 2018 2019 2020

5. 64%
54%
39%
36%
33%
Ads are annoying/intrusive
Ads disrupt what I'm doing
Ads create security concerns
Reduced bandwidth use
Inappropriate content
AND THEY AREN’T ENJOYING
THE ONES THEY DO SEE
TO P FIVE R E A SO NS C O NSUM E R S BLO C K A D S
Source: HubSpot Research, July 2016

6. WE’RE SEEING A PATTERN

7. PEOPLE SHIFTED TO MOBILE
US M O BILE C O NSUM E R TIM E SP E ND,
% SHA R E O F TO TA L TIM E SP E NT WITH M E D IA
Source: BI Intelligence Estimates, based on data from PwC, IAB, and eMarketer
20%
25%
35%
2014 2015 2016
Time Spend

8. 20%
25%
35%
7%
11%
17%
2014 2015 2016
Time Spend Ad Spend
BUT AD SPEND LAGGED
US M O BILE A D SP E ND VS. TIM E SP E ND,
% SHA R E O F TO TA L SP E NT O N M O BILE
How to read: Consumers spent 20% of their media time on mobile devices, but only 7% of ad spend went to mobile in 2014.
Source: BI Intelligence Estimates, based on datafromPwC, IAB, and eMarketer

9. AND PEOPLE SHIFTED TO MOBILE VIDEO
US M O BILE VID E O C O NSUM E R TIM E SP E ND,
% O F TO TA L TIM E SP E NT O N O NLINE VID E O
34%
46%
51%
2014 2015 2016
Time Spend
Source: Ooyala Global Video Index

10. 34%
46%
51%
24% 23%
42%
2014 2015 2016
Time Spend Ad Spend
BUT AD SPEND LAGGED
US M O BILE VID E O A D SP E ND VS. TIM E SP E ND,
% O F TO TA L SP E NT O N O NLINE VID E O
How to read: Consumers spent 34% of video time on mobile, but only 24% of online video ad spend went to mobile in 2014.
Source: BI Intelligence Estimates, based on datafromPwC, IAB, and Ooyala

11. THE INDUSTRY IS REACTIVE

12. $27.5
$14.2
$3.4
$9.9
$32.8
$17.4
$5.7
$9.7
US Digital Ad Revenue Google Facebook Everyone Else
1H 2015 1H 2016
+19%
+23%
+68%
-2%
REMEMBER THESE GUYS?
US D IG ITA L A D R E VE NUE , BILLIO NS ( $ )
Source: IAB, Facebook, Google, Digital Content Next

13. 360-Degree Video Augmented Reality (AR) Virtual Reality (VR)
IMMERSIVE VIDEO

14. Consumer Accessibility
Immersion Level
360-Degree Video
Augmented Reality
Virtual Reality

15. Consumer Accessibility
Immersion Level
360-Degree Video
Augmented Reality
Virtual Reality

16. Source: YouTube/FullMag
360-DEGREE VIDEO

17. Source: YouTube/Hong Kong Airlines
TRAVEL

18. Source: Kiosked, June 2016
9X
longer viewing time than
traditional display ad.
HONG KONG AIRLINES SAW…

19. Source: Kiosked, June 2016
35X
more effective than traditional
display, with a 4.51%
click-through rate.
AND WAS…

20. Source: Hilton Hotels and Resorts
TOURISM

21. Source: The New York Times
MEDIA

22. Source: The New York Times
more than 600,000
initial downloads of its app,
making it the company’s most
successful app launch to date.
THE NEW YORK TIMES SAW…

23. 16.8
13.8
11.4
8.6
8.1
7.8
7.4
6.3
5.4
4.6
3.3
3.0
GMC Acadia
Game of Thrones
Deadpool
Zoolander
The Conjuring
McDonald's and Angry Birds
Star Wars: The Force Awakens
Liberty Mutual
BMW
Honda Civic
Marie Claire
Oreo
BRANDS ARE EARNING MILLIONS OF VIEWS
3 6 0 -D E G R E E VID E O VIE WS O N Y O UTUBE A ND FA C E BO O K ,
IN M ILLIO NS
Source: Advrtas, November 2016

24. Consumer Accessibility
Immersion Level
360-Degree Video
Augmented Reality
Virtual Reality

25. AUGMENTED REALITY (AR)

26. Source: Sephora
RETAIL

27. Source: DAC Group, 2016
1.6 million downloads
within the first eight weeks of its
launch.
SEPHORA SAW…

28. Source: Complex
FOOD AND BEVERAGE

29. Source: Blippar
SNICKERS CAPITALIZED ON THIS THROUGH AR

30. Source: CBS Interactive, 2016
67%
of executives not currently using
AR are considering adopting it.
AUGMENTED REALITY IS IN DEMAND

31. Consumer Accessibility
Immersion Level
360-Degree Video
Augmented Reality
Virtual Reality

32. Source: Hawaii VR
VIRTUAL REALITY (VR)

33. Source: Lionsgate/Otherworld Interactive
ENTERTAINMENT

34. Source: Vertebrae, 2016
LIONSGATE SAW…
57%
a 57% voluntary replay rate
of VR users who came across its
Blair Witch VR ad.

35. VIRTUAL REALITY DRIVES MORE…

36. …ENGAGEMENT
+27%
...elicits 27%
higher
emotional
engagement.
Source: Neilsen, YuMe, November 2016
+34%
...and 34% longer
engagement
periods.

37. …AND VIEWS
VIE W-THR O UG H R ATE S, BY D E VIC E TY P E
Source: Immersv, August 2016
0.4%1.0%29.8%

38. YES, THERE’S DEFINITELY A LOT OF HYPE

39. $86
$238
$787 $703
$2,606
23 41 60 137 152
2012 2013 2014 2015 2016
Amount Invested Number of Deals
BUT INVESTORS ARE POURING MONEY INTO IT
G LO BA L INVE STM E NT IN VR A ND A R C O M PA NIE S, M ILLIO NS ( $ )
Source: CB Insights, July 2016
+271%

40. Source: Reuters, 2016
MAJOR COMPANIES ARE BETTING ON IT
In their Q1 2016 earnings,
38 companies highlighted
VR as part of their business
plan. That’s a 375% jump
year-over-year.

41. CONTENT IS SKYROCKETING
The global VR content market is
expected to grow at a CAGR of
128% from 2016 to 2020.
Source: IDC, Google, Facebook
By 2020, over 20% of
commercial media on Facebook
will be in a 360-degree format.

42. $1,333
$928
$524
$365
$67 $47
2016 2017 2018 2019 2020 2021
Stand-alone
PC and game-
console-powered
Smartphone-
powered
PRICES ARE DROPPING
Source: BI Intelligence Estimates, based on current headset prices
A VE R A G E SE LLING P R IC E FO R E C A ST FO R
M A JO R A R /VR HE A D SE T C ATE G O R IE S
$ Change
-405
-159
-20

43. AND WHILE VR PENETRATION IS STILL LOW,
THERE’S LONG-TERM OPPORTUNITY
US VR D E VIC E P E NE TR ATIO N,
% O F C O NSUM E R S WHO HA VE A VR HE A D SE T
Source: Strategy Analytics, July 2016
6%
16%
27%
33%
40%
2016 2017 2018 2019 2020

44. 84%
8%
3%
3%
2%
I haven't had the
opportunity to
I don't see a
use for it
I think it would
make me sick
Other
I wouldn't like it
BECAUSE CONSUMERS HAVEN’T HAD THE
CHANCE TO TRY IT YET
HA VE Y O U E VE R TR IE D A VR
D E VIC E ?
WHY NO T?
NO
55%
YES
45%
n=920
Source: BI Intelligence Exclusive Data, October 2016

45. Source: Greenlight Insights, 2016
BUT THEY’RE INTERESTED IN IT
74% of consumers
expressed interest in travel,
tourism, or adventure VR content.

46. Source: Nielsen Media Labs, 2016
AND ARE CONSIDERING PURCHASING IT
One in four consumers
aged 18 to 54 are considering
purchasing a VR device in the
next year.

47. 0.7
8.2
12.0
17.3
24.4
33.0
42.6
55.1
2015 2016 2017 2018 2019 2020 2021 2022
WHICH WILL DRIVE SHIPMENTS
G LO BA L VR HE A D SE T SHIP M E NTS FO R E C A ST, M ILLIO NS
Source: BI Intelligence Estimates

48. THE INDUSTRY IS REACTIVE

49. WE’RE SEEING A PATTERN

50. WE’RE SEEING A NEW PATTERN

51. SO NOW IS THE TIME