The numbers used to analyse the video ad market can be cut in many different ways.
According to the IAB, video ad spend on desktop totaled AU$112.9 million, or 6% of general display ad spend, in the June quarter of 2015. The peak body also listed mobile video spend, a figure of less than US$328.5 million for the quarter, a portion of which is video.
Yet we know more than this is being spent on digital video. The IAB’s report doesn’t capture ads sold in over-the-top (OTT) TV content, programming which can be delivered via desktops as well as a range of other connected devices. Data published on Stasista, shows revenue generated from these sources in Asia Pacific was US$1.61 billion in 2010, and will grow to $US4.35 billion in 2020. With Apple’s tvOS now an open platform for advertisers to design experiences and other ad-funded OTT expected to take off, spend in this area is expected to surge in 2016.
Amidst all the forecasts, two things remain clear. Firstly, despite changes to the way video is consumed, the importance of video to brand advertisers will continue to drive growth in overall video ad spend. And secondly, as spend shifts to advertising delivered in digital streams, media companies’ monetization strategies must evolve to capture what will remain the largest source of ad dollars, even if it’s no longer delivered via broadcast TV.
What follows are the trends we expect to shape the video ad sales market in 2016.
Premium publishers will start to sell programmatically more and more, but in tightly defined ways. Programmatic video, still incorrectly associated with the erosion of CPMs suffered in the display market, encompasses more than it once did. Beyond its most basic form, it now represents a holistic inventory management platform that bundle ad servers, programmatic pipes, data and other automation factors in a range of deal types giving the buyer and seller ultimate flexibility and transparency. You can use “programmatic”, without using the open exchange. Publishers will come to realize this and dive in head first, but at the private and curated marketplace level to tightly control deals. In a small market like Australia, alliances like Pangea are expected to emerge.
Viewability concerns will heighten, causing advertisers to tighten the screws on the viewability rate they’re willing to pay for, while balancing budget and reach considerations. Currently expectations among our buyers vary from 40% to 100% of impressions bought per campaign meeting the MRC standard. A benchmark of around 70% of impressions meeting the standard is realistic, according to the IAB, with anything higher considered impractical, due simply to the nature in which digital content is consumed. The needle will push up and also cause a fresh round of innovation in the market. We expect it to turbo-charge the shift to mobile video, which has lagged behind the rate at which media consumption has shifted. For pre-roll inventory, the basic laws of supply and demand will see publishers adjust their pricing schedules. And to cater to this increased demand, publishers can create or participate in curated marketplaces of high-performing inventory.
Cross device execution will come online. With more data about the user, the market will be able to track across devices more accurately. To date, the lack of standard, third-party measurement across mobile supply has stunted the mobile ad industry’s growth. We expect mobile video spend, which has already shown strong growth this year, to shift into overdrive now the market can accurately measure viewability and monitor fraud. comScore introduced vCE for mobile in June, giving the market access to the same metrics available on desktop and an unduplicated, comprehensive view of digital campaign performance.
Data overlay will become standard. As we begin to see the rise in independent trading desks and the implementation of DMPs, data will shift from a 'nice to have' to a necessity for trading of inventory. The data available to both buyers and sellers will become a fundamental component of the way ad space is bought and sold. As a result of this, it would be no surprise to see an emergence of data-pooling or data-partnerships. In an attempt to compete with the large data hubs (i.e. Google and FB), smaller publishers and data vendors will band together to create a pool of data to be shared within a closed environment.
CTV will become the new mobile. Programmatic monetisation of connected TV is set to explode in 2016, with programmatic platforms now able to integrate across most major CTV delivery points. Greater supply is also expected to come online as the ecosystem matures, with the opening up of Apple’s tvOS a significant factor in pushing the device category forward. CTV can unlock incredible potential for new models of cross-device advertising that deliver high-impact, measurable video campaigns for brands. The demand is there, and supply will surge to cater for it.
By Daniel Rowlands, director of supply - APAC, at SpotX