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The State of Online Video Advertising 2015

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Advertising agencies that specialize in online video enjoyed a pretty solid 2014. Not only were sales up, but the most talked-about advertising videos all started online. The medium gives creatives the freedom to push their ideas farther than TV ever did. So what’s ahead for 2015? More of the same, we’re pleased to say. In the online video space, agencies need to produce work that people want to see, that they’ll watch over and over again, and share with friends. That high standard is driving agencies to create outstanding work—sometimes with Hollywood-sized budgets, sometimes on a shoestring.

The Year That Was

In 2014, it seemed like every other blog post or article was about “programmatic” advertising. By the end of the year, half the advertisers still didn’t know what “programmatic” meant and the other half were sick to death of hearing about it. AOL, which now owns AdapTV, seemed to beat the drum the hardest, and even held its second Programmatic Upfront in September. Programmatic lets buyers meet their demo targeting demands in an automated way, but there are still concerns that it doesn’t offer premium inventory. The agencies pushing programmatic have a long way to go, both in educating buyers and convincing them that they’re getting quality slots.

Advertisers couldn’t get enough of live events in 2014. From concerts to sports, live events were booming online, and advertisers wanted to be a part of it in order to guarantee placement in front of an engaged and passionate fan base and to make sure their ads were viewed. Live music and sports events promise lots of premium placements. The FIFA World Cup was an advertising bonanza, both for branded videos created to capture the enthusiasm of the games and for ads inserted into the games’ live streams.

The 2014 World Cup was an advertising bonanza, both for branded videos and for traditional ads inserted into the games’ live streams. (Photo: AFP/Odd Andersen) 

For many, the endgame in online video advertising is reaching parity with TV advertising, so that ad buyers see all screens as the same and spread their campaigns across online and TV channels equally. But online ads should cost more, they add, since they deliver demographic targeting that TV will never be able to touch. These idealists saw a little progress in 2014, but the online video ad world is still very much a kid brother to TV. Before online gets the same kind of ad spending as TV, it will need to get the same kind of viewership.

Measurement will also need to advance before online media sees parity with TV. Much of the discussion in 2014 was about how to measure online viewers. Online video supporters point to the advanced demographics that online offers and wonder why anyone would advertise anywhere else. But the realist sees that TV has unbeatable reach, and that the way to lure TV dollars isn’t to dazzle TV advertisers with online tools, but to speak their language. If gross rating points (GRP) are what the TV buyers need to see, then online will learn to speak that language.

Mobile viewing is still a small share of total video viewing, but by the end of the year tablet and smartphone views counted for about 30 percent of all video starts, and that raises eyebrows. Mobile is attractive to advertisers because, unlike with TV or even desktops, it’s all but assured that only one viewer will be in front of the screen and will be undistracted. That lets advertisers better target ads. In another year, mobile views will make up about half of all video starts, and then mobile could become the preferred mode of online video advertising.

At the YouTube Brandcast in April, YouTube introduced Google Preferred, a program that offered advertisers the cream of YouTube inventory. The idea is that YouTube reserves ad slots on the top 5 percent of its shows in multiple verticals, and advertisers can buy into this highly selective inventory. When it was introduced, it drew a few chuckles from the audience. After all, even 5 percent is a vast amount, considering how many views YouTube gets. And why are some slots judged as more desirable? Nonetheless, YouTube announced in October that Google Preferred slots had sold out.

One hot topic, especially at the end of 2014, was ad viewability. The Media Rating Council (MRC), working with the Interactive Advertising Bureau (IAB), introduced the first viewability standards in June. Video ads are considered viewable if 50 percent of their pixels are on screen for 2 continuous seconds. The standard seems low, but the MRC says it isn’t about making sure an ad was seen, but ensuring it has the potential to be seen. Look for 2015 to be a year of transition for viewabilty, when ad platforms gear up to track the new standard accurately.

In April, YouTube introduced Google Preferred, which gives advertisers access to ad slots on the top 5% of shows in multiple verticals. By October, all Google Preferred inventory had sold out. 

While some of the most popular online videos of 2014 were longform TV commercials, many others were branded entertainment. Major brands were open to offering the slimmest of branding on their spots, in return of the possibility of a viral hit. The most-viewed branded video of the year starred Shakira and was put out during the World Cup. The video was sponsored by Activia, but many viewers probably didn’t realize that. Activia branding was minimal, and came only at the beginning and end.

Major brands were in a testing phase and were willing to experiment in 2014, but in 2015 they’ll likely want to see results. The next time Shakira shakes it for Activia, she might have to actually hold a carton. Similarly, the most talked about branded spot of the year was “First Kiss,” a sweet black-and-white spot that showed what happened when 20 strangers were paired into couples and asked to kiss on camera. Viewers went nuts for the video, but how many noticed it was created by Wren, a women’s clothing brand from Los Angeles? We saw in 2014 that branded videos can be highly entertaining. In 2015, we’ll find out if they can actually sell products.

Online Video Advertising in 2015

How will the online video ad world change in 2015? We needed to call in an expert for the answer, and there’s only one person for the job: David Hallerman, principal analyst for eMarketer. He’s spoken to the experts, he’s crunched the numbers, and here’s what he had to say. On the nearly ubiquitous topic of programmatic selling, Hallerman has some advice for the confused: Just remember that another word for “programmatic” is “automatic.” It’s computer-automated ad buying: Input your criteria and automatically get the desired ad slots. It’s automatic, but only to a point.

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