Video advertising can be a tricky thing to pull off. Unlike banners ads, videos force users to interact with them in some way, mostly because they also contain some sort of sound, like music and dialogue on top of the video.
What this does is make it much harder to ignore them and, therefore, can make them more intrusive. This is especially true on mobile, where an ad can take up an entire screen and stop whatever the person is doing in their tracks. Advertisers, of course, know this is true and that it's not a good business model. If people dislike the ads, or they aren't relevant, then they're not effective and rather annoying.
But now advertisers are able to tackle these problems through a way of buying space for their video ads, known as programmatic ad buying, which gives them more control over how, and what, they are purchasing.
Adap.tv, the company that was purchased by AOL for $405 million in August, has put out its semi-annual "State of Video Industry" report for the US market, which underscores why advertisers are flocking to companies that offer this type of service.
The study found that 60% of both brands and agencies plan to apply programmatic buying to their cross-screen planning and buying, including both mobile and linear TV, in the next year.
First, I should explain what programmatic video buying is: it allows advertisers to use software to buy and sell digital media, giving them much more control.
"They can approach the buy from audience, or contextual, point of view," Brett Wilson, CEO of programmatic video advertising platform TubeMogul, explained to me. "It allows them to pick and choose a set of sites of contextual correlation."
For example, he said, if an advertiser wants to reach males 18-34, they can pick a site that they figure will appeal to that demographic, such as sports websites. But they can also have more control over where it appears; if they only have stores in California, or in the South East, they can eliminate other areas. Or they can choose to not advertise on sites that have content about alcohol. They can also control how many times a specific person sees the ads, and set their own budget and goals.
Through these tools they can see how many unique impressions they can expect, and quickly change around the setting to see tradeoffs how to best reach the audience.
Programmatic buying has challenged the old model, in which advertisers would go to vendors, tell them the goals they would like to achieve, and have the vendors put together a plan for them, which they had no control over, nor did they really know what was in it before buying it.
By going to programmatic route, Wilson said that advertisers can save 40% to 50% of what they would have spent.
Given the choice between these two ways of doing things, it's very easy to see why advertisers would prefer the programmatic model, and it has been quickly catching on.
"In just the past two years, brand patronage of programmatic video channels such as exchanges and DSPs has roughly doubled, as direct to publisher purchases have declined by 15 percent," the study found. "However, with the rise of private marketplaces, additional opportunities are becoming more prominent for buyers looking to source directly from publishers through automated processes."
This has coincided with a major increase in video spending across the board.
Buyers increased their spending for the fourth year in a row, with more than 90% of agencies reporting some level of increased video ad spending. The average increase was 28%. Meanwhile, brand advertisers also had a big increase, spending 65% more than they did in 2012.
"Right now, 10 to 15% of out campaigns are mobile. Ayear ago it was only 1 to 2%," Wilson told me. "It is exploding. I think it will be 50% of our business in a couple of years."
Mobile video spending
Spending is especially going up on mobile, where seven out of 10 agency buyers said they’re buying mobile video today. Compare that to 2010, when only 30% were buying video ads on the iPad, and only 45% were buying them on smartphones.
For brands, 43% are now buying mobile video. Three years ago, only a quarter would even buy them on smartphones, and only 17% on the iPad.
Clearly, advertisers are seeing the benefits of putting their videos ads on mobile.
But, as much as programmatic buying is helping advertisers feel more comfortable about buying up video advertising, we should not pretend that everything is sunshine and roses. There are still some big problems out there that have not been addressed, especially on mobile
One of those is how the audience is measured. A full 40% of brands said that they did not have confidence in measurement methodologies, while 34% of brands said the same thing.
"Buyers complaining of the inadequacy of standards are about equally divided on why they find them lacking. Slightly more agencies say they lack confidence in audience measurement methodologies generally. Brands are more likely to cite cross-screen audience measurement," according to the report.
"The deeper in they go, the more brands want to go beyond age and gender in characterizing the audience they reach with online video, and yearn for the industry to coalesce behind a consistent measurement methodology."
This is the same thing that Simon Khalaf, CEO of Flurry, told me when I spoke to him about the space.
"Nielsen was the currency for television advertising. For desktop, there was very little currency adopted, and for mobile they are still working on a way to measure video advertising," he said.
Ultimately, though, to Khalaf, the fact that video on mobile and on a television are so different is the real problem that has yet to be solved. According to him, "there is a conflict between the ad unit and the medium."
"The length of a TV commercial is 15 or 30 seconds. A sitcom is 22 minutes, versus 8 minutes of commercials. The average length of time someone stays on tablet is in 5 to 6 minutes, and on a smart phones it is 2.2 minutes. That is one tenth of that of tv, so, in reality, ad units should be 1.5 seconds," he said.
While video is one of the fastest growing ad units, but it still has a long way to go, he said.
"I believe that the killer ad unit has not been discovered yet," Khalaf told me. "Video is growing and growing fast, with more than 100% growth year to year already. But there is a still a lot of room for improvement to discover native mobile ad units."
(Image source: http://blog.inner-active.com)