Video Is Consuming The Digital Ad Industry

darentrousdellsellsiderThe Sell Sider” is a column written for the sell side of the digital media community.

Today’s column is written by Daren Trousdell, CEO at OneUp Sports.

I recently had a discussion with a digital industry leader whose company aims to grow video’s scale and overall inventory levels to take advantage of rising demand. The part of the discussion I can’t stop thinking about is how rapidly the business is growing, which equates to a much larger opportunity than other digital advertising categories. Publishers will need to keep up by staying innovative and consistently finding ways to capture the elusive attention of consumers.

The numbers are quite staggering when you look at the industry as a whole: eMarketer predicts video will grow from $6 billion this year to $12 billion by 2018. More than two-thirds of marketers and agency executives expect to see their digital video ad budgets increase in the next 12 months. And it’s not just the biggest web-focused guys winning; mobile video consumption is at an all-time high and the land grab is on in many different categories and platforms.

This growth is happening because of the development in device capabilities, apps and 4G data plans. In addition, the user now has an unlimited array of on-demand content that has progressively become better in quality. A great example of this is live sports video offerings, which have brought incredible disruption to the legacy models.

The mobile media market is quickly maturing and finally getting the dollars and respect some have expected all along. I believe wearables, such as the Apple iWatch, are an extension of our phones’ capabilities, and the category is fueling growing interest from brands and agencies that are eager to find new ways to integrate and serve ads. This creates much more opportunity for the industry as the available screens have grown and therefore so have available inventories.

Mobile offers the advertiser the single best marketing moment to reach consumers because it is an instant, captivating engagement opportunity. Publishers slamming interstitials and pop-up video ads in front of their users need to tap all of mobile’s potential. To unlock all that mobile video has to offer, they will need to strategically integrate ad placements and make them part of the experience. This will likely take a refactoring of mobile properties to better serve the user. Ad formats that are tied to moments, not interruptions, will be the most successful. If executed well and not abused, this could become one of the most compelling uses of mobile.

In some cases, this could produce a real benefit, including higher video views and overall inventory growth. In other cases, there could be a negative effect if a publisher has relied heavily on display as design and user interface trends are pushing mobile developers to believe that less is more.

Besides the right placement and timing, to capitalize on mobile brand presence, publishers need to accomplish two things with content: Tap into the consumer experience to create unique content that is uploadable, shareable and dynamic and provide this content in a beautiful and interactive user interface.

The dollars are there. The industry CPMs for mobile video are solid. Depending on the content, I’ve seen CPMs in the $15 to $20 range, and it doesn’t look like it’s slowing down. The demand is only increasing, and the marketplace is rewarding those who can bring both the quality and volume to the table. There is, however, a darker side to this industry in viewability that will keep rearing its head, which is driving some pricing pressure between “lower-level” video ad networks and middle men. If the expected growth materializes this should weed out a large percentage of the offenders.

The future is so bright on video. Yes, there will be more laser-eye grumpy cats and YouTube stars driving the conversation, but it’s the real premium content creating the financial opportunities.

Follow Daren Trousdell (@dtrous), OneUp Sports (@oneupsports_) and AdExchanger (@adexchanger) on Twitter.

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