The Present and Future of Online Video Advertising

Lynn Bizri, Oct 24 2016

Daily time spent watching videos will increase by 19.8% in 2016, while mobile video consumption is growing at roughly five times the rate of non-mobile devices, comprising more than half of online video consumption, according to a recent ZenithOptimedia report. As more and more people increasingly live out their lives online, digital video is serving as a key means for people to satisfy their information and entertainment needs and it is no wonder that advertising has followed suit. Since the 1940’s and the first TV commercial, video has shown its efficiency in the field of advertising and has been claiming its dominance in the ongoing digital era.

Today, advertisers are pumping more money into social video, which seems to stem from the rise in video on various platforms: YouTube & Facebook to name the obvious, as well as Snapchat, Periscope, and Instagram on mobile. Cisco claims that, by 2017, video will account for 69% of all consumer internet traffic. Online video has been changing the way audiences engage with content, ads, and brands, so it comes as no surprise that small businesses and enterprises alike are starting to take advantage. As more devices are placing cameras in the hands of consumers, videos are becoming a new way for people to communicate, as well as a way for businesses and brands to communicate to their audiences. 

While videos provide the perfect complement to online marketing, video advertising does not come without its challenges which range from measuring campaign performance and achieving sufficient reach to targeting, creativity, cost and monetization.

Keeping up with Fragmentation

Video advertising was once confined to a single box. Today, it is fragmented across multiple screens. Since the introduction of the Internet, there has been a dramatic shift in consumer viewing behavior resulting in a steady decline of time spent watching TV, and an increase in digital viewership. According to Accenture’s Digital Consumer Survey, globally the TV has lost 13% of its audience for long-form video content in the past year. Moreover, 87% of consumers are now using TV and a second screen (smartphone, tablet, eBook, or laptop) together. While digital video is helping to build reach that is complementary to traditional TV viewing, this shift in digital viewing has caused several forms of fragmentation that include content, screen, technology and data fragmentation.

Content fragmentation has fractured audiences’ attention across tens of thousands of websites and devices, creating a more complex media planning process with many more channels to consider. ‘It’s a whole lot complex now, because you’ve got one too many choices from a platform perspective. Video is no longer just being consumed on desktops so video is obviously being consumed a lot more on mobile phones, tablets, and so on so forth” said Waseem Afzal, Executive Director of Integrated Solutions at OMD. While content fragmentation provides numerous ways for brands to connect with consumers, this can be exciting but also daunting for both advertisers and publishers who must adopt and implement multi-screen video advertising strategies and adapt to the requirements and formats of different channels and devices.

Brands should plan cross-screen, but think of mobile first. Amongst all devices, consumption of video is shifting towards mobile devices as users upgrade to higher quality devices, screens grow and networks support larger data loads. According to the Interactive Advertising Bureau or IAB (an association for the advertising industry that develops industry standards, conducts research, and provides legal support for the online advertising industry), 48% of consumers use mobile and mobile apps to view video. ‘People are watching and enjoying a lot more video on many different platforms but particularly in mobile and we know that as much as 25% of mobile time will be video within the next couple of years’ said Ian Manning, Head of Agencies at Facebook MENA.

While mobile accounted for more than half of digital ad spending in 2015, there are still significant challenges in the promising universe of mobile video, ranging from monetization, standards and measurement to obstacles due to multiple formats and platforms. In terms of content and length, video ads must be tailored to the device they will be viewed on. According to IAB, marketers need to develop video ads with smaller screens in mind, with shorter ads for smaller screens and longer ads for larger screens (although no longer than 30 seconds). Manning agrees, adding that ‘A creative agency’s business models are really built around longer format…and they haven’t really shifted quickly enough to understand that they need to make more snackable content, shorter version content that consumers can engage in a short space of time’.

In addition to tailoring content to devices, marketers must also tailor content to their audiences through targeting. With more and more brands creating and distributing video ads, audiences have grown impatient and less receptive towards video ads, especially those that are irrelevant to them. While this applies to all mediums, the time frame for success is much shorter on mobile devices. Targeted advertising that fits consumers’ interests and browsing habits increases the chance that they will pay attention and watch a video ad in full. In addition, location-based marketing, which is gaining traction, provides marketers with the technology to deliver content to consumers based on where they are at any given moment.

The Pursuit of Monetization

Targeting and consumer engagement also play a big role in the monetization of video advertising. In order to generate money, video advertisements need to be relevant to both the audience viewing them as well as the content of the page on which they are located. This is even more applicable to in-stream video, where ads need to work with the length, style and subject of the video with which they are served. To ensure maximum relevance and viewability, publishers need to provide demand sources with as much demographic and contextual data about their audiences as possible, as well as details of the content around which the video ads will be served. In addition, video ad placement and functionalities such as auto-sound (which can be potentially irritating) need to be taken into consideration to avoid alienating audiences.  

Perhaps one of the biggest challenges faced by publishers is finding the balance between creating monetization opportunities (and more elaborate advertising solutions) while adding value to the consumer experience. One common problem with video advertising is pre-rolls that can be quite intrusive and are one of the major reasons people install ad blockers. However, ‘if you use that media in a way that promotes exclusive new branded content like you use a teaser inside your pre-roll these can actually trigger and drive traffic to your actual branded content’, said Victor Ho, Global Marketing Manager of Daily Motion. Advertisers can also make use of native video ads which are seamlessly integrated in the feed of the content rather than forced to the user.

The solution, according to Manning, is as simple as creating content that is relevant to viewers while giving them the choice of watching the ad or not. ‘It's quite easy to skip advertising…but if you make the advertising targeted to that individual, you use the data that you have available to ensure that you're targeting the right people…and coming up with the right type of creative messaging to target that information’. Giving the user the choice with how they want to engage in the ad (whether choosing to watch one of two videos, being able to scroll through a product line, or click out of it and go directly to a website) is yet another solution. Rob Derderian, Director of Sales for Video Vertical DMS added ‘Keeping an open mind and listening to what the user is looking to experience in addition to providing them with a lot of new things is a way for us as publishers and advertisers to provide more value to the consumer while also driving more value in terms of data and more engagement overall’.

Finding Solutions

Today, video-content owners have more opportunities to reach viewers more than ever, thanks to the popularity of online video viewing, which now accounts for more than one-half of all mobile traffic, according to Digiday. However, with today’s multiscreen and multi-device world, audiences have become fragmented across devices and even within those devices across social media platforms. While this brings greater options to consumers, who now spend 70 hours each week on digital media, it does generate some challenges for advertisers and publishers who must optimize their spending across different screens and plan video across all devices to achieve the best results possible.

Mobile screens, in specific, offer a fully-immersive experience and the ability to target users with a device that is unique to them as well as the opportunity for deeper brand engagement than television or online. While mobile is intended to provide publishers with increased access to audiences, fragmentation limits discovery, the quantity and quality of data available to better understand consumer preferences and video ad supply. In order to reap the benefits and take advantage of mobile ads’ faster loading times and more interactive ad units, publishers must optimize their mobile channels for greater discovery and monetization.

The good news is that advances in video-playback and ad-insertion technology today are making it possible to optimally format, deliver and monetize ads and content across multiple platforms and screens, providing several opportunities for brands that run cross-screen digital campaigns. To maximize content monetization, publishers should optimize their video delivery for all screen sizes/operating systems/device types, insert ads in short or long-from content that target users by location and interests, build and own great content, and analyze ad performance in real time on every platform.

There is no doubt that video advertising has a gleaming future: audiences are growing, technology is improving, and increasing numbers of advertisers are investing in the medium. As video becomes a strategic priority for companies of every size, scale and focus, and as consumer preferences evolve and new technologies make online video increasingly effective for brands, there is no better time for publishers and advertisers to get ahead of the curve and embrace online video content than now. 

Related Articles:
ArabNet Beirut 2015 Talk: 'Video is Branding'
The Business of Online Video-Beyond the One Hit Viral Video

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