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The State of Video Advertising 2014

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So say a VOD episode of The Big Bang Theory has an ad from XYZ Co., and the company wants to know how the ad performed. XYZ gets the number of impressions, say 100 million for simplicity, and the number of online video viewers, which is 189 million or so according to comScore. Divide the first by the second and then multiply it by 100, i.e., (100/189)*100, which then gives an internet GRP (iGRP) of 52.9.

The major providers of iGRP-like metrics are comScore (with its validated Campaign Essentials Multi-Platform vCE MP) and Nielsen (with its Cross-Platform Campaign Rating -- XCR). Both of these are expansions of their offerings and include TV and online ad tracking.

While competition is generally good, the problem here is that without an industry agreed-upon standard, the number of impressions for an online video ad varies greatly in order to obtain a particular iGRP. BrightRoll did a great job of illustrating this in its “What You Need to Know About Online GRP” whitepaper. Its example showed that using each metric meant a difference of about 1.8 million ad impressions to reach an iGRP of 100 targeting women aged 25–54.

In order to start drawing in a lot more TV ad dollars for online video ads, these discrepancies will need to be sorted out. Since comScore and Nielsen draw their numbers from different sources and with different methods, it will not be an easy road to an acceptable, balanced industry standard. Nielsen already essentially owns TV ad metrics, so it might come out on top. But with so much Big Data available, it almost seems archaic to simply rely on a single source when something that combines the two or averages them might be far better for the industry as a whole. This is a discussion that the entire industry will need to be a part of in order to make sure that there can be consistent tracking across all platforms and devices. 2014 could be the year when the clients start demanding a single number across the industry if they want their video advertising dollars.

Beyond TV Ad Dollar Shifting

Just making television-like metrics and more TV content available isn’t the only major factor in the expansion of video adverting. The media itself evokes emotion that, in turn, is able to motivate consumers into action. But a major difference between TV and online is that TV is a “lean back,” or passive, experience while online is still able to be a “lean forward,” or active experience. In fact, it should be interactive, and to that end there is a vast variety of video ad formats that work toward engaging the viewer in hopes that they will take some measurable action. The IAB is working on ratifying several new rising star video ad formats.

However, when one looks at the other rising star ad formats for display and mobile, you see that they also use video content, though they are aimed at placement areas outside of the video player. There are five final ad formats in the running right now, and making it through the gauntlet of IAB testing and tweaking means that they will be added to the IAB Standard Ad Unit Portfolio, “the definitive standards for the digital advertising industry.” They are, as are all the rising star ad formats, aimed at getting more interaction out of digital advertising. One of the most interesting this year is time sync, which changes sidebar content based on what is showing in the video -- for example, T-shirts from a retailer with pricing, size, and color options. With mobile ad revenue rising rapidly, it comes as no surprise that it has some of the most innovative rising star ad formats this year, which not only use video ad content but in fact rely on it.

Mobile Gaming Means Video Advertising Opportunity

Mobile video gets its own “state of” article elsewhere in this Sourcebook, but one cannot talk about digital video advertising without talking about mobile apps and games. Tablet sales are outstripping PC sales, and Gartner, Inc. expects worldwide tablet shipments to hit 53.4 percent growth this year. FreeWheel reports that while PC sales have remained relatively steady, tablet sales are up 365 percent from 2012, while mobile phone sales are up 235 percent (Table 3). Smartphone screen size has grown to the point where it is now a viable and oft-used option for consuming video content, and that means more and more video ads. When users are in an app, they are more of a captive audience on both tablets and smartphones. This seems to equate to better completion rates for video ads in-app. Spil Games just put out some research talking about mobile and social gamers being more receptive to ads, provided that there’s an incentive, usually in the form of an in-game currency or item. They also cite some research that states a lot of those with mobile games installed or who play social games are more affluent and therefore have more disposable income. Receptive to ads with money to burn? It sounds like an advertiser’s dream come true!

Tablet and mobile phone sales are dramatically outpacing PC sales, according to FreeWheel, and advertisers are placing more of their buys on in-app and in-game campaigns. 

As the online video advertising industry continues to expand and mature, there might be other factors that become driving forces. Creativity in video advertising is becoming more vital, especially with branded content where the brand wants to be seen but does not want to engage in overt advertising. There’s also going to be the question of how TV advertisers will reach Millennials and the following generations who might grow up without ever having pay TV in their homes. If they’re watching TV content online, they might never see those ads you pay so much to put in front of that exact audience. Cable companies have worked to implement authentication for TV Everywhere offerings, forcing a check of whether the viewer has a pay TV subscription before allowing the content to be viewed, but that could work to just further alienate entire generations who do not see the value in spending $50–$100 a month on pay TV when they can watch ad-supported or subscription-based VOD online. Native advertising, where the advertisement looks like it is part of a content feed or newsfeed, is big right now, but the Federal Trade Commission just warned the industry that it may have overstepped the bounds of legality already. So it could end up that strict regulations on that form of potentially deceptive advertising crop up in 2014.

Even if that happens, though, it’s clear that video advertising in all its forms will continue to be the bright spot in an otherwise dim digital advertising picture.

This article appears in the 2014 Streaming Media Sourcebook.

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