The Video Ad Market Could Be Unrecognizable In 6 Months

hagaitalOn TV And Video” is a new column exploring opportunities and challenges in programmatic TV and video.

Today’s column is written by Hagai Tal, CEO at Taptica.

Video is a powerhouse advertising tool because it can engage on multiple levels, and advertisers increasingly want to leverage video across channels.

After years of technological advancement in the targeting space, brands and agencies have become savvy about how audience insight can inform their campaigns. As a result, they are settling for nothing less for their video campaigns as well.

However, increased insight means advertisers have a more targeted, and therefore smaller, audience, and they want to pay for that audience and that audience only. The narrower audience also means advertisers compete for the smaller amount of premium ad inventory that can reach those audiences.

The supply of video content will far outstrip the demand, which will happen at increasing speed over the coming months. This phenomenon will significantly alter the digital video landscape by the end of the year.

A Fragmented Market

Digital video currently exists in several fragmented ecosystems. There are full-service video platforms, such as and LiveRail, display exchanges that enable video, including AppNexus and Rubicon, as well mobile services like Vine, Snapchat and Twitter. Device and video platform proliferation have driven this fragmentation as consumers access video content on TVs, laptops, tablets and phones, while one-off solutions were developed to meet the needs of each.

Naturally, this makes the data gathering and use process a complex matter of connecting to each platform. Additionally, there is no unique technology that gives advertisers a comprehensive view of impressions across every device so they can gauge the eyeballs and engagement results of a campaign. Some first-party data providers may even be disinclined to push for integration because the fragmentation works to their benefit by reducing or eliminating competition, enabling them to corner their respective data markets.

The Importance Of Data

These days, agencies and advertisers are beginning to recognize that the market is no longer media-based. Since audiences are viewing content across all channels, eyeballs are what’s important in media buying, not the specific channel. Data is needed to capture the right eyeballs. Brands simply can’t compete unless they are leveraging as much good data as possible to create key audience segments. Agencies are now using tools and insight derived from previous data analyses to be more sophisticated in defining segments and setting their own expectations for a campaign.

Small Inventory

However, as advertisers become savvier and hone in closer on their audiences, the demand for targeted, high-quality video that can be accessed across channels has grown. High quality means that, in a cluttered environment, an ad is compelling and grabs the user’s attention within a few brief seconds.

The main challenge here is that this demand comes nowhere close to the amount of video inventory that actually exists. Though it may seem, in the age of Snapchat, that anyone can create video content, the entry barrier to creating quality video is actually quite high. The expense involved in the creation and development is, unfortunately, only manageable by the big players, such as Google and Facebook.

Enter The Gorillas

All of this means that online video is fast becoming the realm of the data world’s 800-pound gorillas. Not only do they have the necessary capital to create high-quality, compelling video content, they also have the ability to migrate into the increasingly important mobile space and begin cornering the market ahead of smaller competitors. The big guys will begin gobbling up the bulk of quality traffic across all channels, leaving everyone else to squabble over the scraps.

The current imbalance has already begun to force competition and drive this shift. Soon, the effect will become an avalanche. I wouldn’t be surprised if major portals ramped up acquisitions of smaller players and one-off solutions providers in order to create comprehensive video offerings, including mobile. Smaller players will struggle to compete with the 360-degree solutions the major properties can offer, and unfortunately, some will not survive.

This consolidation will likely happen sooner than many expect. I think that within a year the video market will barely resemble its current state.

Channel proliferation and a growing digital market has enabled the era of the “little guy,” as independent agencies and single solutions providers emerged to solve specific needs of the evolving market.

However, it looks like we’re coming to the end of that era, because one thing is clear: Video is big business.

Follow Taptica (@Taptica) and AdExchanger (@adexchanger) on Twitter.

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