THE MEGA CAP REVOLUTIONThe was originally published to news.cmlviz.com.
We reported last week that advertising buying firm juggernaut Magna Global that is responsible for around $37 billion in marketing investments on behalf of clients like Johnson & Johnson and Coca-Cola just announced that it has moved $200 million in ad spends away from TV ads and to Google's YouTube for online video ads.
As we noted, this revealed a massive new windfall for the two giants of online video advertising, Facebook (NASDAQ:FB) and Google (NASDAQ:GOOGL). But, the news wasn't about a $200 million deal, it was about a $200 billion transformation. It turns out that Amazon (NASDAQ:AMZN) agrees -- and now it wants that market too.
Facebook, Alphabet and Twitter (NASDAQ:TWTR) all noted that online video was becoming the preferred outlet for advertisers across their various properties. While Facebook (NASDAQ:FB) claims it receives 10 billion video views a day, Google announced this on its latest earnings call:
Though much smaller, Twitter reported that 82 percent of its users watch video content on the platform and 90 percent of those came from mobile. Further, since August 12th, 2015, Twitter's live online video app Periscope has nearly tripled.
But that's not the news and this isn't only about online video.
Here are the most visited online video sites from our friends at Statista:
But this is just one piece of the puzzle. Here is the revenue forecast for online video, and friends, it's about to get a lot larger:
Just remember that forecast for 2016 -- $9.14 billion -- for a second.
Today, Amazon announced that it is starting a direct competitor to Google's YouTube with Amazon Video Direct. Here's a quick description before we get into the real story:
Amazon already unbundled its streaming video on demand (SVOD) service from Amazon Prime as a stand-alone product to compete with Netflix (NASDAQ:NFLX). But Amazon didn't enter this new online video advertising market to compete over a $9.14 billion revenue split. This is what CML saw a week ago, and clearly what Amazon sees now:
There are 133 million households in the United States alone with a cable TV subscription and 75% of those people watch TV everyday (Source: AYTM). Check out how much is spent on standard Television advertisements:
In stark contrast to online video advertising, which is pegged at market size of less than $10 billion, TV advertising is pegged at around $200 billion -- or 20-fold larger. We can throw that 106% growth and $9.14 billion estimate for online video advertising in 2016 out the window. It's now plainly clear:
Online video advertising is going to be one of the largest advertising media in the world and there are just a few tech companies that will take all of it.
When we wrote that bolded statement a week ago, we did not include Amazon in that list. Now, we must.
This is the beginning of a total disruption with a handful of tech companies ready to grab hundreds of billions of dollars and that handful now includes Amazon. If you were bullish on Facebook and Google before, this may be the most bullish news yet -- except for that pesky colossal cap called Amazon -- which wants even more than this market.
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AMAZON WANTS MORE
Perhaps more frightening to Google, Facebook and Twitter than the online video announcement is what we wrote about two weeks ago. We learned from Bloomberg that Amazon (NASDAQ:AMZN) is now getting into web advertising, using its Prime Now service as the platform.
Google, Facebook and Twitter can make any argument they like about the relevancy of their ad platforms, but a video advertisement that sits next to the "buy button" is incomparable. And by the way, it looks like Amazon is making waves in the advanced driver assistance systems (ADAS) world was well -- yes, Amazon is getting into the guts behind driverless cars.
WHY THIS MATTERS
This is what institutional research reads like -- it spans all thematic trends -- it goes further than the headlines into the trends that will shape the next decade. Google and Amazon are just two of CML Pro's precious few 'Top Picks.' But, to find the 'next Google' or 'next Amazon,' we have to get ahead of the curve. This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have.
Each company in our 'Top Picks' is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:
The Internet of Things (IoT) market will be measured in trillions of dollars as of next year. CML Pro has named the top two companies that will benefit. Here's cyber security:
There's just no stopping the growth in the need for cyber security and we are right at the beginning. CML Pro has named the single best cyber security stock to benefit from this theme.
These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.
Thanks for reading, friends.
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