HD Advertising is Now the Standard on Television. HD is now the predominant format for TV advertising. In Q2 of this year, 58% of all TV ads were delivered to TV media in high definition. In Q2 of 2012, HD advertising first started to overtake SD with a majority of ads on network TV delivered in high definition. Over the past two years, HD has also become the standard across local TV media.

This substantial shift by advertisers to high definition confirms an industry-wide focus on video quality and recognition of HD’s increased brand recall and brand perception benefits. This edition of the report focuses on the HD distribution and adoption within key industry segments:

• Political marketers lead all other segments in use of HD advertising.

• Direct response marketers lag behind in adoption of HD for their TV commercials.

• HD ad creative is now becoming the standard for online campaigns as the ad industry converges TV and digital video advertising.

• Canadian advertisers and media outlets are even more HD-centric than their US counterparts.The purpose of this report is to provide advertisers, ad agencies and media outlets with specific details, benchmarks and insights that may help to inform their video advertising practices.

25%

70%

75%

80%

34%

77%

35%

41%

52%

58%

78%78%78%78%

2013 Q2

2013 Q2

2013 Q3

2013 Q3

2013 Q4

2013 Q4

2014 Q1

2014 Q1

2014 Q2

2014 Q2

58%

78%

HD Distribution Index for Q2, 2014

HD Media Index for Q2, 2014

Extreme Reach Research Group

VIDEO ADVERTISING TRENDS REPORT

Q3 2014

As Q3 comes to an end, HD Advertising Distribution continues to outpace SD, peaking at 63% as of late September 2014.

78% of TV media accept and air commercials in HD.

58% of TV commercials distributed to TV media in Q2 were HD.

Political Advertisers Choose HD

Direct Response Advertisers Deliver HD Ads Less Frequently

Political Advertisers Are HD LeadersPolitical advertisers make up the most prolific advertising group on television during an election cycle. They maintain one of the highest HD distribution rates of all advertising categories, delivering 77% of ads in Q2 in high definition.

Opportunities for Political AdvertisersIf your opponents’ ads are still running in SD, you can stand out and realize significant advantages by implementing an HD everywhere ad program. Conversely, if you’re considering distributing some ads in SD, be aware that your opponent will most likely choose HD and so will non-political advertisers. Choose HD whenever and wherever possible.

Direct Response Advertisers Trail Behind in HDWhile most ads are now delivered in HD, some advertisers still haven’t made the switch to HD from SD. Direct Response advertisers in particular continually maintain the lowest HD adoption rate of all measured verticals. Regardless of why Direct Response advertisers prefer SD campaigns, there are clear opportunities for forward-thinking entrepreneurs to rise above the noise with HD, realizing substantial improvements in ad effectiveness and purchase intent.

Opportunities for Direct Response AdvertisersBetter Results with HD: HD ads have shown a significant lift in intent to purchase and ad recall while simultaneously reducing the number of viewers who change the channel. Better Execution with HD: If you only distribute SD commercials, they may look acceptable in SD broadcasts, but when broadcast in HD, their comparatively poor resolution may compromise their effectiveness.

Q2

Q2

Q3

Q3

Q4

Q4

Q1

Q1

Q2

Q2

2013

2013

2014

2014

Political marketers embraced HD early and still maintain a significant lead over the industry average.

Direct Response advertisers typically fall well short of the average HD distribution rate. Despite a surge in the last quarter, the Direct Response industry has averaged a 27% HD distribution rate across the past five quarters.

Political HD Distribution %

Direct Response HD Distribution %

HD Distribution Index %

HD Distribution Index %

77%

29%

80%

60%

25%

0%

34%

34%

77%

23%

35%

35%

79%

17%

75%

22%

77%

45%

41%

41%

52%

52%

58%

58%

Video Advertising Trends Report Q3 2014

Canada Still Leads the US in HD Advertising

HD Video Influencing Digital Campaigns and Player Size

HD advertising trends differ significantly between the U.S. and Canada. Nearly all Canadian TV media have adopted HD and Canadian advertisers run more ads in HD than U.S. advertisers. This analysis illustrates a correlation between the rate of HD adoption by media outlets and HD usage by advertisers.

In Q4 of 2011, Canadian TV media outlets took the lead with 65% adopting HD. Since then, Canada has

As more TV advertisers reach viewers via digital media, video that plays in a 16 x 9 aspect ratio is becoming the default standard online as well. It’s now a common practice to present the same commercial across all screens using the same pristine HD master file.

Among Extreme Reach Digital clients, more than 80% of video campaigns utilize the 16x9 aspect ratio initiated by HD commercial content.

Video Advertising Trends Report Q3 2014

More Canadian TV Media Support HD Canadian TV Advertisers are More HD-Centric

Q2 Q2Q3 Q3Q4 Q4Q1 Q1Q2 Q2

2013 20132014 2014

Canada HD Media Index % Canada HD Distribution Index %US HD Media Index % US HD Distribution Index %

91%

62%

100% 100%

30% 30%

76%

33%

95%

65%76%

34%

95%

72%

95%

75%

96%

76%

77%

40%

77%

52%

77%

58%

Data Highlight: Canada has also outpaced the U.S. in terms of HD ad distribution, but the gap is narrowing.

Data Highlight: Canada has steadily outpaced the U.S. in terms of media outlet adoption of HD since 2011.

outpaced the U.S. in terms of media outlet adoption of HD. As the supply rose, so did the demand.

Much like their TV media outlets, Canadian TV advertisers took an early lead in 2011, distributing 15% of all ads in HD. Since then, Canada has steadily outpaced the U.S. in terms of HD distribution.

>90% >80%of video ads that run online

also run on TVare 16x9, stemming from

the HD creative master

Methodology

About Extreme Reach

Extreme Reach automatically collects a variety of data through the everyday advertising activities of the company’s advertising clients and media affiliates. This report analyzes a portion of that data to reveal detailed trends and insights related to HD advertising. For this study, the Extreme Reach Research Group analyzed and referenced data from

Extreme Reach is the leading provider of cross-media video advertising solutions that span TV, online and mobile. The company is also a leading provider of integrated tools for managing critical talent and rights issues. Thousands of brands and agencies, including nearly all of the Ad Age 100, look to Extreme Reach to activate, measure and optimize video advertising campaigns. The Extreme Reach video convergence platform unifies the workflow and metrics of television and digital video advertising.

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Video Advertising Trends Report Q3 2014

a sample of 5,600 television advertisers, 1,880 video post-production studios and content providers, nearly every commercial television and cable broadcast outlet in the United States and Canada, including all major broadcast networks, and 2,021 digital media outlets and aggregators.

The company’s cross-media video ad delivery network is the world’s largest, digitally connecting to more than 10,000 video media outlets. Extreme Reach manages and delivers 85 percent of all North American TV advertising and provides the most comprehensive digital campaign measurement capabilities in the industry. Extreme Reach is headquartered in Needham, Mass., with offices in 15 cities across North America.