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  • 2015 eMarketer Inc.

    Programmatic Video: The Dramatic

    Rise of Connected TV, Apps and Ad

    Spending

    Paul Verna

    Senior Analyst

    May 2015

    Made possible by

  • 2015 eMarketer Inc.

    Agenda:

    Definitions

    Programmatic video ad spending data

    Myth busting

    Challenges: inventory quality, fraud, brand safety,

    viewability, standardization

    M&A activity driven by the shift to programmatic

    Next up: over-the-top (OTT), connected TV, linear TV

  • 2015 eMarketer Inc.

    Definition of terms

    Programmatic advertising an automated,

    technology-driven method of buying, selling or fulfilling

    ad placements

    Real-time bidding (RTB) the buying and selling of digital

    ads through real-time auctions that happen in the time it

    takes a page to load

    Programmatic direct direct buys that use some level of

    automation

  • 2015 eMarketer Inc.

    Within

    programmatic,

    there are two

    main

    subcategories:

    RTB and

    programmatic

    direct

    Source: eMarketer, 2014

  • 2015 eMarketer Inc.

    Programmatic

    will be

    responsible

    for more than

    50% of US

    digital display

    ad spending

    for the first

    time this year

  • 2015 eMarketer Inc.

    Mobile will overtake desktop as the biggest

    programmatic display ad format

    Mobile vs.

    desktop ratio

    will be 56-44 in

    2015, up from

    44-56 last year

    By 2016,

    mobiles share

    will approach

    70%

  • 2015 eMarketer Inc.

    One researcher sees double-digit growth in US

    programmatic display through 2018

    By then,

    $27.7 billion will

    be transacted

    programmatically

    more than

    double the 2015

    figure

  • 2015 eMarketer Inc.

    US programmatic

    video ad spending

    will top $2 billion

    this year and

    approach

    $4 billion

    next year

    By 2016, programmatic

    will account for 40% of US

    digital video ad spending

  • 2015 eMarketer Inc.

    The share of US video advertising transacted

    programmatically should continue to rise

    $0

    $2

    $4

    $6

    $8

    $10

    $12

    $14

    $16

    2013 2014 2015 2016 2017 2018 2019

    US Digital Video Ad Spending, 2013-2019, and Programmatic Video Ad Spending, 2013-2016 (billions)

    Digital Video Programmatic Video

    Source: eMarketer, 2015

  • 2015 eMarketer Inc.

    Video makes up a small but growing portion of

    US programmatic display ad spending

    In 2015,

    just under 15%

    of programmatic

    display

    investment will

    be for video ads,

    but by 2016 this

    share will

    approach 19%

  • 2015 eMarketer Inc.

    Video and mobile RTB are the main drivers

    behind increases in programmatic ad spending

    Desktops share of the

    RTB market will drop as

    video and mobile ramp up

  • 2015 eMarketer Inc.

    Marketers see video and mobile as areas with

    the most opportunity for programmatic buying

    Video-rich areas

    such as TV and

    social are also

    on marketers

    radars

    Marketers are

    less keen on

    opportunities

    in display

  • 2015 eMarketer Inc.

    Most US marketers expect to boost

    programmatic ad budgets

    One-third

    will keep

    programmatic

    budgets the

    same, and a

    negligible 2%

    will decrease

    them

  • 2015 eMarketer Inc.

    TubeMogul saw big increases in programmatic

    direct video ad impressions

    Mobile

    impressions

    also rose

    dramatically

    YoY in Q1 2015

  • 2015 eMarketer Inc.

    There are gaps between buyers and sellers on

    how theyre allocating ad budgets and inventory

    Sellers are

    pushing mobile

    and video

    inventory, but

    buyers continue

    to allocate the

    biggest portion

    of their digital

    budgets to

    display

  • 2015 eMarketer Inc.

    Programmatic video will experience more

    growth than other ad formats in 2015

    These include

    mobile display

    and lower-funnel

    programmatic

    high impact

  • 2015 eMarketer Inc.

    Myth #1: Programmatic is for remnant inventory,

    while direct is for premium inventory

    Technically, programmatic and direct refer to ways of

    buying ads, not to the ads themselves

    In 2014, 51% of publishers made their premium video

    inventory available through programmatic channels *

    Joe Pych, CEO of NextMark: Premium is in the eye of

    the beholder.

    * Source: AdapTV 2014 State of the Video Industry report

  • 2015 eMarketer Inc.

    Myth #2: Programmatic is for direct response

    campaigns, not brand-oriented ones

    Econsultancy/Quantcast report:

    62% of marketers are running programmatic

    campaigns with branding objectives

    40% of programmatic spending goes toward branding

    campaigns

    Advantages of programmatic branding include

    increased efficiency, reduced costs, the ability to

    optimize in real time, and the opportunity to leverage

    first-party data

  • 2015 eMarketer Inc.

    Myth #2: Programmatic is for direct response

    campaigns, not brand-oriented ones

    Programmatic video is not just about

    direct response dollars. Brand

    marketers like Kraft and Kellogg's

    want to use their own first-party

    data to add value to their

    campaigns.

    Lauren Wiener, global head of sales and

    marketing at Tremor Video

  • 2015 eMarketer Inc.

    Myth #2: Programmatic is for direct response

    campaigns, not brand-oriented ones

    Programmatic has its roots in display,

    where its generally focused on

    performance and driving down prices.

    As its moved to video, we've had

    more brand-oriented media

    coming in, and with a different set of

    goals around it.

    Guy Yalif, VP of global marketing at

    BrightRoll

  • 2015 eMarketer Inc.

    Myth #3: Programmatic saves time by

    eliminating unnecessary steps

    We dont save time, because

    [programmatic] has unlocked so much

    more from the real-time metrics

    standpoint.

    Christine De Martini, director of global

    media and marketing at Electronic Arts

  • 2015 eMarketer Inc.

    Brands are quickly bringing programmatic video

    ad-buying processes in-house

    In mid-2014, few US

    brands had their own

    programmatic video

    technology, but 88% said

    they planned to obtain

    this capability within the

    next year

  • 2015 eMarketer Inc.

    Challenges: nonhuman traffic (NHT)

    Study by White Ops and the Association of National

    Advertisers (ANA) estimated that global advertisers will

    lose $6.3 billion to bots in 2015

    Bots accounted for 23% of video impressions, 17% of

    programmatic inventory and 11% of display impressions

    Over 67% of the bot traffic in the study came from

    residential IP addresses

  • 2015 eMarketer Inc.

    Challenges: viewability

    Viewability,

    fraud and

    verification

    rank high among

    concerns for

    video ad buyers

    and sellers

  • 2015 eMarketer Inc.

    Challenges: viewability

    Ad buyers and

    sellers are split

    over current

    standards for

    display ad

    viewability

  • 2015 eMarketer Inc.

    Challenges: loss of quality control

    84% of US

    media buyers in

    a Digiday survey

    said

    programmatic

    buying resulted

    in moderate or

    significant

    loss of quality

    control

  • 2015 eMarketer Inc.

    Challenges: placement transparency

    The same study

    found that

    placement

    transparency

    was also a

    barrier in

    moving dollars

    from direct to

    programmatic

    channels

  • 2015 eMarketer Inc.

    Challenges: most premium video inventory sold

    directly

    Despite gains in programmatic, publishers still sell most

    of their premium inventory through established channels

    The multibillion-dollar digital video ad industry was built

    on direct relationships between sellers and buyers

    It will take more than buzzwords to change this

    paradigm

  • 2015 eMarketer Inc.

    Challenges: standardization

    Scalability depends on standardization, which gets more

    difficult as ads migrate to new devices and screens

    Standardizing audience measurement is an even bigger

    challenge

    Signs of things to come: Nielsen/Roku, Cablevision/ESPN

  • 2015 eMarketer Inc.

    Programmatic video underlies recent acquisitions

  • 2015 eMarketer Inc.

    Programmatic video underlies recent acquisitions

  • 2015 eMarketer Inc.

    a competitive

    programmatic

    platform made

    AOL more

    attractive.

    Rajeev Goel, CEO

    of PubMatic

    It's easy to see the attraction:

    consumer and geolocation data

    from Verizon, coupled with

    programmatic capabilities

    and premium inventory from

    AOL and Huffington Post.

    Dominique Delport, global managing

    director at Havas Media Group

    Programmatic video underli