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The Challenge of Mobile Video: Big Returns for Small Screens

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For instance, a broadcast media executive notes in the eMarketer study that almost 90 percent of mobile streams from his company’s content are viewed on Wi-Fi rather than through cellular data.

While it’s true that newer 4G LTE networks are quite capable of similar quality to Wi-Fi connections, the cost of media consumption on a mobile device could enter in to the equation. Or it may just be that the device at hand, whether at home or on the road, is the one that captures the eyeballs.

The day we wrapped up this article—a week after the iPhone 6 and its “phablet” big brother, the iPhone 6 Plus, launched—one of the major 4G service providers in the United States opted not to throttle its unlimited customers.

“At a time of ever-increasing mobile broadband data usage, we not only take pride in the way we manage our network resources, but also take seriously our responsibility to deliver exceptional mobile service to every customer,” Verizon Wireless said in a statement in which it used the term “network optimization” to refer to its plans to throttle unlimited data customers at peak demand hours.

“We’ve decided not to move forward with the planned implementation of network optimization for 4G LTE customers on unlimited plans,” Verizon Wireless said. “Exceptional network service will always be our priority and we re-main committed to working closely with industry stakeholders to manage broadband issues.”

The industry stakeholder in this case is most likely the FCC, whose chairman sent a letter to Verizon Wireless after it announced its intent to enforce “network optimization” on customers whose contracts stated they were granted unlimited data consumption for a premium price.

All that brings us back around to the mobile media delivery explosion. If mobile content consumption is fair game on any device, which device will consumers choose?

During our second-screen application survey in mid-2014, we found that most respondents varied their decision based on the type of content, sometimes bypassing the most accessible screen.

In the eMarketer report, one executive told Verna that ads will continue to be delivered across as many platforms as viewers can access for two primary reasons: Not only have consumption habits changed, but users have also become more comfortable with using a variety of mobile devices.

There’s another aspect to this home or away question: contractual ability to move beyond the confines of a home to take your TV viewing anywhere. Another recent Verizon announcement highlights this point.

Verizon offers FiOS, a fiber-to-the-home triple-play service for television, internet, and telephone. Under Verizon’s carriage agreement with Viacom, FiOS customers were allowed to view Viacom content on a mobile device, using the FiOS app, provided the mobile device was on the same network as the FiOS internet/television service.

As of early October though, Verizon had inked a new carriage deal with Viacom, allowing FiOS app users to not only view the live and on-demand Viacom content in their homes but wherever they are in the United States.

“Disruption in the TV marketplace is happening,” says Ben Grad, Verizon’s director of content strategy and acquisition, noting that consumers have requested the ability to watch TV anywhere. “Verizon wants to reach agreements with content providers like Viacom that reflect that reality and give people what they want.”

What’s most interesting for the mobile video advertiser is the inclusion of this line in the Verizon press release: “Verizon FiOS will enable dynamic ad insertion in all Viacom TV Everywhere and VOD content.”

Sudden Breaks and Breakdowns

One final area I asked Smith and Watkins about was the potential rise of ad blocking, if server-side ad stitching is not implemented and we continue to rely on client-side ad insertion.

Watkins says that, while the trend is there in static ad blocking, it may not appear in the form of video-advertising ad blocking.

“Ad blocking is a big concern for the ad industry in general,” says Watkins. “Around half of male millennials in the U.S. have an ad blocker installed, and this suggests complete disengagement from advertising, which let’s face it, is the lifeblood of the internet.”

“If these savvy young users have rejected desktop advertising, the likelihood of them embracing it on mobile devices, which are far more personal, is slim,” Watkins says. “The pressure is on the advertising industry to start delivering advertising that’s relevant to modern consumers and their online experiences.”

As part of his answer, Smith moved the conversation beyond ad blocking and into one of the areas that vexes even broadcasters: how to handle ad breaks in live events, such as sporting events.

“I’m not sure we will see ‘ad blockers’ per se,” Smith says, “but rather experiences where users access content in a variety of ways where the content is ‘paid for,’ be it ad supported, subscription or otherwise. We don’t provide for ad blocking on television, so why would we do that here? That said, I think models will emerge where the viewer can access content and have it monetized in a few different ways.”

Think about it in the context of a major sports event, Smith says. “When server-side ad insertion is done properly, you’re placing discontinuity tags in the playlist and starting new segments,” he says, “[meaning that] duration doesn’t necessarily have to be passed, and the splice could happen without uniformity. Think March Madness with sudden breaks.”

This kind of scenario is a challenge even for traditional broadcasters, but mobile advertising for these types of high-profile live events will be set apart by the amount of engagement that mobile video advertisements can drive.

Looking Back to Look Forward

One mantra we heard from several executives is that content is much more screen-agnostic now than it was in the past, as recently as 2012.

To get a better sense of how things have changed, we delved into a few interviews from that time period. One point made then, as it is now, is that mobile video advertising has a much broader mission than just brand awareness.

“Traditional TV advertising is limited to pure branding, while interactive mobile video ads can deliver branding, consumer engagement and sales,” an executive from Rhythm NewMedia said in a Mobile Marketer interview.

Another good reminder came from a 2012 interview with Michael Burke, a co-founder of New York-based AppsSavvy.

“With mobile it is key that video is not interrupting the experience, but rather complementing it,” Burke said. “The call-to-action is [possible if] presented at the time that someone is in the mindset to complete such an activity.”

Burke emphasized that point again this past October: “The functions around tracking views, measuring interactions, and offering a variety of calls to action are all table stakes at this point,” Burke said. “As a mobile advertising business, if you’re not offering this at this point, you’re behind in the game.”

Burke went on to say that the key to success is ensuring the video is delivered at a time that people are going to be receptive to it. “In other words, it’s about offering video that compliments the experience rather than detracting from it and aligning the content with the audience and the context of the site in which it’s delivered.”

The next year will present a number of significant opportunities for mobile video advertising, from the new carriage agreements to advances in technologies surrounding the ease of distribution, such as “one URL, any device” technologies.

Yet the key to monetizing via mobile video ads is to do precisely what Burke advises: Engage the viewer, in the proper context, rather than shoving yet another advertisement at her in hopes of building brand awareness. Successful ad networks will find ways to measure this, offering savvy marketers a chance to further engage at a highly granular level, resulting in even higher CPMs.

This article appears in the January/February 2015 issue of Streaming Media magazine as "The Mobile Video Monetization Challenge."

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