"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Frank Sinton, founder and CEO at Beachfront Media.
Video advertising has seen astronomical growth in the last two years. The average per-brand spend has jumped 67% over the past two years alone, from $5.6 million in 2015 to $9.4 million in 2017, according to the IAB’s recent NewFronts study.
At the same time, 61% of respondents also said they’d be increasing digital video advertising in the next 12 months. The space is clearly poised to continue its rapid growth.
But what’s causing this quick progression? Sure, advertising technology is part of it, but there’s plenty more fueling this push, including changing consumer sentiment and shifting ad spend.
Consumer Demand On Video
The web is careening toward a video-centric environment, and by 2020, 75% of all mobile traffic is expected to be video. Even back in 2015, consumers were expressing that they wanted brands to use video more to reach them. Snapchat’s built an entire platform on sticky brand videos and viewer retention rates on advertising.
With the increase in demand and, as a result, video ad appearances, the quality demand also grows. Brands will need to be more cognizant of both quality and quantity of video inventory, understanding that this digital content is now being more heavily scrutinized with a larger audience. Much like viewership dictates which shows remain on television, consumer satisfaction with branded video can make or break an advertising strategy – and the company behind it.
Video header bidding has just a slice of the market right now, but it’s set to grow right along with the larger video advertising space. One of video header bidding’s largest benefits is the quality of inventory it’s able to quickly prioritize. Since consumers tend to engage with video advertising, rather than being disrupted by it, the selling proposition of the ad formats become easier. The market is conditioned to not only view video ads, but even enjoy them with the right creative.
This quality isn’t just a demand on creative, however, but one on the underlying video header bidding technology, which can reduce latency. Video ad experiences live and die with the speed at which it’s delivered to viewers. Consumers will give just fractions of seconds for a video to render, so a solution that largely eliminates a potential wait provides more value for advertisers and viewers alike.
Digital Video Eats Into Linear TV Ad Budgets
Digital video budgets aren’t just increasing for brands – they’re likely increasing at the sacrifice of traditional linear television advertising. Recent studies have shown year-over-year TV viewership drops among nearly every age group. While the audiences have reduced slowly over time, the overall drop should alarm brands with traditional TV-only strategies. Pre-recorded and live streaming programming is adding more households by the second, creating more eyeballs for advertising vs. TV.
Advertising around this digital video content also provides additional insights into segmentation and niche markets. Want to reach a digital gaming audience? Twitch and other communities are geared directly toward them. Sports? Many publications churn out digital video content just for that audience. Same goes for any age group, gender or nationality. Digital publishers are creating segmented video content, which allows for smarter video ad investment decisions.
None of this is to say that TV’s dead or that digital advertising is now marketers’ only option. But growing consumer demand for digital video, video header bidding and increased bandwidth speeds are pushing brands further in that direction.