IAB Netherlands Online Video Handbook 2016

16Online Video Handbook 2016

Online Video Handboek 2016

1 ONLINE ADVERTISING1.1 The history of online video ads

1.2 What is online video?

1.3 Online video advertising formats

2 REACH AND PRICING MODELS2.1 Media spend

2.2 Reach

2.3 KPIs & Pricing models

3 TRACKING AND CONTROL3.1 Event tracking

3.2 Viewability

3.3 Brand safety

4 TECH 4.1 Standards

4.2 File types

4.3 Players

4.4 Client side & server side

5 SUPPLY & DEMAND5.1 Demand strategies

5.2 Supply strategies

6 THE FUTURE: A DIVIDE BETWEEN TELE-VISION AND ONLINE?

IND

EX.

Online Video Handboek 2016 pagina 3

SPONSORS.

On behalf of the IAB Taskforce Online Video

Michele Appello Chairwoman

Martijn Garretsen viCe president

The handbook taskforcewas lead by:

Mirjam Berkheij spotx

Members of the IAB Taskforce Online Video:

Blue BillywigComscoreDe PersgroepExponentialGroupMHavas MediaImprove DigitalMarkandMiniRTL NederlandSanomaSBS BroadcastingSmartclipSpotXSTERStreamAdsThe Online CompanyVideologyWebleadsWeboramaVivakiZigt

DesignStudio Luidspreker

COLO

PHO

N.

Online Video Handbook 2016

Video is the most impactful way to deliver a message with emotion, making video advertising extremely suitable for marketing purposes. Online video is

hot. Incredibly hot. IAB Nederland aims to accelerate digital growth. For this reason, we are happy with - and proud of this handbook. This manual provides detailed descriptions and advice while removing trade thresholds in order to

facilitate co-operation between businesses. This is of great importance as video is experiencing rapid growth. Since 2008, we have seen a double-digit increase in video spend in the Netherlands. The advertiser's demand for video streams is so

high that the supply side can hardly deliver. New formats and ways to serve video are a direct result of this increase in demand. In this manual the Taskforce Online Video presents a clear overview of all forms of video advertising and ways to profit

from this trend. A nice handbook to guide marketers and other stakeholders through the dynamic universe of online video.

Jeroen VerkroostDirector IAB Nederland

page 5

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1.1 ##.

1 ONLINE ADVERTISING.

We are all familiar with the concept online video advertising. In fact, we are being

confronted with video advertising on a daily basis. Everyone uses their own definitions to

best describe the concept. To draw a clear framework for this handbook, we will first focus

on the origins of video advertising, what we mean by video advertising, and its possibilities.


The history of online video advertising is a relatively short one. Online innovations follow each other in rapid succession. It can be

challenging sometimes to stay ahead of it all.

In the early days of the internet, content largely

consisted of text only. The advancement of

internet connectivity enabled the addition of

images, followed by video not long after. With the

arrival of ADSL and glass fiber internet the amount

of video content increased even more.

Before long, publishers were looking into ways to

earn back their investments and run a profitable

website using video content. Inspired by

successful TV formats, the pre-roll format came to

be.

On a technical level, SDKs (Software Development

Kits) were initially used for specific ad networks or

websites. Each business used their own

technique.

Online video advertising became increasingly

popular and was picked up by more and more

advertisers. All these different techniques also

introduced new problems. As every system

tracked results in a different way, advertisers were

not only struggling to measure the amount of

reach but especially the results of their cam-

paigns.

To solve this issue, the VAST specification was

introduced to the video advertising marketplace in

2008. The aim of this VAST specification was to

standardize the deployment and event tracking of

video advertisements. The adoption of the

specification took some time and various

iterations have been carried out to improve the

VAST specification. VAST has since been widely

adopted throughout the industry and has become

the accepted standard, with VAST 2.0 the most

supported version.

The VAST standard enables the serving of video

ads. Contrary to TV, online provides you with the

opportunity to click for more information. In order

to fully exploit this potential, a format was

developed which encourages to user to interact

with the video.

1.1 THE HISTORY OF ONLINE VIDEO ADS.

“Contrary to TV, onli-ne provides you with

the opportunity to click for more infor-

mation.”


“The amount of video ads, served across all formats,

increases on a yearly basis”

In order to standardize this development, the VPAID

specification was regularly updated.

Current and past developments with regards to

watching television and other online media content

on various devices pose a continuous challenge to

the specification. Support for Ad Pods was added to

the VAST 3.0 update, while VAST 4.0 was enriched

with support for television. Furthermore, VPAID 2.0

was developed to support mobile devices.

The handbook’s tech chapter will elaborate on

these specifications. We will also shed light on the

future and the challenges that will continue to

prompt innovations in online video advertising.

1.2 WHAT IS ONLINE VIDEO?

The various ways in which people consu-me video (amongst other content) prompted the arrival of different forms of video advertising. Sometimes in addition to media content (in-stream), but also untied to any content (out-stream).

Video ads can be served in a number of ways.

Mostly this happens via the market standard VAST,

but especially out-stream formats are often served

according to Rich Media display standards.

To draw a clear framework for this handbook, we

focus on online video ads that present themselves

to their audience using the VAST specifications.

The definition then, is as follows;

“A video ad is a commercial

that can be played on any

device before, during or after

media content (in-steam) or

alongside other content

(out-stream) – provided it is

served according

to the VAST standard. ”

Online Video Handbook 2016 pagina 9


1.3 ONLINE VIDEO ADVERTISING

FORMATS.

The definition of online video introduces two types of video advertising that function using VAST: in-stream and out-stream.

These two ways of advertising can be divided in multiple formats, as shown in the diagram below:

IN-STREAM

In-stream video advertising is a commercial that

appears before, during or after the media content.

Essential for in-stream advertising is that the

video is never posted as a stand-alone ad but

adds to the media content, be it a game or a video

fragment.

LINEAR

The most common formats in the in-stream cate-

gory are the linear formats.

• PRE-ROLL a video ad (typically 15 to 30 se-

conds in length) that plays before the streaming

content.

• MID-ROLL a video ad or ad unit that plays

during the streaming content. The content is

paused before – and resumed after watching

the video ad.

• POST-ROLL a video ad that plays after the

streaming content.

Example Preroll

Online video formats

Post-roll OverlayMid-roll SocialbuttonsPre-roll

InterstitialIn articleNon - linearLinear

OutstreamInstream

Source: kijk.nl

A variation to the standard linear ad is the

interactive pre-/mid-post-roll. The consumer is

encouraged to interact with the ad. The duration of

the ad may be extended depending on type of

interaction selected by the consumer.

Once engaged, the consumer does not leave the

player’s frame. This type of ad is served confor-

ming to VPAID specifcations. You can read more

about this in the ‘Tech’ chapter.

NON-LINEAR

A non-linear video ad is played alongside the

content so that consumers view the video and the

ad simultaneously. Common non-linear ads are

overlays, video skins and product placements.

Overlays are placed on top of the video content,

video skins are placed around the player, and

product placements are placed inside the content.

A non-linear ad can be served as text, animated

banner of button. They may also be displayed as a

video overlay.

OUT-STREAM

Out-stream is a video ad format that is not

integrated into the media content. It is usually

displayed by loading the player separately, which

disappears after playing the video ad.1

A couple of examples of out-stream ads:

• In article / in-page / in-read a video ad that is

displayed as part of the editorial content.

• Interstitial a format that is frequently served

in-app on smartphones and tablets. On desktop

this format is also known as a lightbox, a video

overlay, a splash page, a prestitial or a fullpage.

In the advertising market place a variety of names

and descriptions are used for the same format.

Sometimes, a seemingly “new format” turns out to

be an existing format, just with another name.

Online Video Handbook 2016 pagina 11

1 Currently, the IAB has not specified out-stream in a standard format.

example interactive Preroll

example non-linear ad

example Interstitial

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2 REACH AND PRICINGMODELS.

After establishing online video advertising, we will now move on to measuring success. As the

advertiser’s media spend keeps growing, the available ad slots for video ads keep increasing

and video ads have more KPIs to aim for compared to display. Measuring success

proves to be especially important for online video advertising. Numbers are the driving

force for both advertiser and publisher.

Traditional TVTime spend in front of traditional television

- Decreased with 1.1 % for the ages 18+ in Q1 2015 - Q1 2016

Mobile VideoAnnual 25% increase in reach

64% increase in Q1 2015 - Q1 2016*

Bro

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page 13Online Video Handbook 2016

2.1 MEDIA SPEND.

We can identify various developments that explain the increase in media spend. The way consumers spend their time has shifted from watching television to streaming more and more online video content on laptops, smartphones and tablets. TV-screens are also subject to increased streaming.

As users change the way they consume video

content, new ways of targeting people and buying

media are introduced. For example, the divide

between an AV-planner and a digital planner is

narrowing and target audiences on television and

online video allign. Naturally, these developments

influence media budgets as well.

“People stream more and more

video content on laptops, smartpho-

nes and tablets.”

* Source: Nielsen Total Audience Report Q1 2016

Online Video Handbook 2016 page 14

ADVERTISING SPEND GROWTH.Every year, we see the demand for video advertising gro-wing across the globe. In the Netherlands, 2015 was the

year where this increase became clearly visible:

Q1

€11M

Onl

ine

Vide

o A

dver

tisi

ng

Y/Y Advertising Spend Growth

17% 22% 48% 36% 39% 32% 23% 29% 25% 27% 35%

€13M

€14M

€20M

€15M

€17M €17M

€26M

€19M

€21M€24M

Q1 Q1Q2 Q2 Q2Q3 Q3 Q3Q4 Q4

2013 2014 2015


2.3 KPIS ANDPRICING MODELS.

2.2 REACH.

Currently, agencies use different types of mea-

suring software to establish reach. However, all

these programs use different ways to measure

reach. This makes it difficult for the publisher to

estimate his reach and difficult for the advertiser

to efficiently buy media.

An additional problem is the combination of online

and television. We are currently experiencing a

shift from television to watching media content

on alternative devices. As a result, the indus-

try is pressured to move television budgets to

online. Independent monitoring of online reach

in combination with television is required to help

marketers embrace this shift. They need to know

on which medium their campaign will be the most

effective.

A number of initiatives have already been taken

by the market to facilitate this. The television au-

dience measurement service Stichting Kijkonder-

zoek (SKO) is working on this for the Dutch market

specifically. More information on this topic can be

found at: https://kijkonderzoek.nl/new-strategy.

Other initiatives are launched internationally as

well, such as Making Measurement Make Sense

(3MS). More information can be found on:

http://measurementnow.net.

CTR (Click Through Rate)

The number of clicks that your ad receives divided

by the total amount of impressions. This KPI was

first used in display advertising. More than in other

countries, this is still an important KPI for video in

the Netherlands.

VTR (View Through Rate)

The number of completed views (100%) of a video

ad over the total amount of impressions. This KPI

is specific to video advertising and is becoming

increasingly important.

Engagement Rate

A KPI specifically for interactive video ads: the

percentage of consumers who have interacted

with the ad compared to the total amount of

impressions.

The many facets of the online advertising market place have undergone a standardization process. Reach however is still facing

this standardization process.

This chapter will outline various Key Performance

Indicators (KPIs) and pricing models that are using for

online video advertising. KPIs are used to determine a

campaign’s success. One or more KPI’s can be selected

depending on the campaign’s main objectives.


Depending on the KPIs, a pricing model is

selected. The pricing models that are currently

used in the market are:

CPM (COST PER MILLE)

The cost for 1,000 impressions.

This is the most commonly used pricing model for

video advertising.

CPCV (COST PER COMPLETED VIEW)

The cost for a completed video ad (100%).

CPV (COST PER VIEW)

De advertiser only pays when a consumer has

pressed the play button in order to start the video

ad. This KPI is not relevant for auto play video ads,

only for ads where consumers have to press play

to start the video.

CPE (COST PER ENGAGEMENT)

Advertisers only pay when users actively engage

with ads. This pricing model is specifically used

for interactive video ads.

The current merging of the television – and online

advertising worlds raises the question on how

specific KPIs and pricing models should be

combined.

The Gross Rating Point (GRP) pricing model is

used for television: one GRP represents exposure

to one percent of the target audience. Put

differently, one GRP equals one percent exposure

density in the target audience. GRPs are

calculated by multiplying the netto reach with the

average exposure frequency.

The GRP pricing model cannot be directly

combined with or compared to the pricing model

for online video.

When it comes to online video content, the pricing

model is based on the measurements that can be

detected and managed by both the advertiser and

the publisher.

The final cost is defined by an external, indepen-

dent party not involved in the online ecosystem.

As a result, the costs are not directly accessible to

all parties. At this moment there is no standard

that merges both models.

3 TRACKING AND CONTROL.

In the early days of the online video advertising market, and before the arrival of the VAST-spe-cification, it became apparent that there was

no one way to measure a campaign’s results. It was a challenge for marketers to compare

results across different publishers. Since the arrival of the specifications the way to measu-re impressions has been documented proper-ly, yet the demand for more control remains. Questions such as “Is my ad visible?” and “Is

my ad deployed on a desirable network?” remain. For both display and video advertising, the demand for standardization of viewability

and brand safety is growing significantly.

3.1 EVENT TRACKING.

The most important tracking events in the

specification are:

• Impression: the first frame of the ad started

automatically

• Start: the first frame of the ad started after user

interaction

• First quartile: 25% of the video ad was played

• Second quartile: 50% of the video ad was

played

• Third quartile: 75% of the video ad was played

• Complete: 100% of the video ad was played

• Click: the video ad was clicked

These are not all the available events in the VAST

specification. Next to the events that track the

progress of the ad there are other events that

track the interactions with the ad.

For more detailed information:

http://www.iab.com/guidelines/digital-vi-

deo-ad-serving-template-vast-4-0/

The VAST specification specifies that specific actions or events oc-cur at predetermined moments during video ads. This has strongly contributed to creating consistency across the advertising market-

place.


http://www.iab.com/guidelines/digital-video-ad-serving-template-vast-4-0/



The viewability metric is used to indicate whether a loaded video ad has had the

opportunity to be seen by the consumer. The IAB US currently has a standard

advice on viewability, however this advice has not been widely accepted like in display advertising. The Dutch IAB

supports these following standards:

Viewability is measured by various certified

technology providers that provide insight into these

metrics to the publisher and / or the advertiser.

Various organisations have cooperated to

guarantee the implementation of a measuring

standard, resulting in the Making Measurement

Make Sense (3MS-) initiative. For more specific

information on viewability and this initiative:http://

measurementnow.net

3.2 VIEWABILITY. 3.3 BRAND SAFETY.

Concerning quality, it is also important to take brand safety into account. Brand safety considers various aspects surrounding the ad, in order to guarantee the advertiser that the ad is shown on a

desirable network.

Some aspects are measured directly on the web-

site, others are indexed in a database:

• BOT TRAFFIC checks whether an ad request

has really come from a user’s browser or from

a machine.

• MASKED URLS Checks whether a declared URL

is really the URL where the video ad is delivered.

• BLACKLISTING Sites are indexed based on ex-

plicit content or the absence of video content.

The initiative to measure is often taken by the

technologies that are used by the publisher (SSP /

ad server) or the advertiser (DSP). These parties will

use their own technology or 3rd party technologies

to create a brand safe environment for the

advertiser, or to alert publishers about activities

concerning brand safety that they were unaware of.

These aspects will become more important as

programmatic video advertising gains popularity,

because the buying process will be entirely

automated with limited to no human intervention.

In the future, more and more advertisers will use

whitelists in order to find their target audience on

the right network. Publishers will need to adapt to

these changes in order to safeguard their revenue.

"A video ad is only viewable when 50% of

the ad’s pixels are visible for 2

continuous seconds"

4 TECH.When discussing online video you cannot ignore the technical aspects. Tech plays a

crucial part in online video advertising and lays the foundation for future innovations.

The world of video advertising would have looked very different indeed were it not for tech

standardizations.

You need various technical components to deploy video ads. See the diagram below.

In this chapter we will discuss the VAST, VPAID and Open RTB specifications, media files and players.


PUBLISHER PLAYER PLUG IN

MEDIA FILEADVER-

TISERAD SERVER

/SSP

SPECIFICATION BASED COMMU-

NICATION


The technology to deploy video ads is based on standards. The purpose of these specifications is to facilitate communica-tion: in order to facilitate sales they need

to ensure that all necessary technical elements to deploy video communicate

with one another following standard procedures.

VAST SPECIFICATION

VAST (Video Ad Serving Template) is a standard

communication specification for serving video

ads. It enables every video ad to be played in any

VAST-compliant video player. Before VAST, video

ads had to be adjusted per player, a costly and

time-intensive procedure which complicated large

scale buying. This protocol ensures that every

procedure is standardized and that the tracking

events are fired on set and correct moments. The

VAST specification is written in XML. This is a

coding language which specifies the function of

the piece of code by using the tag <> symbols. For

example: <Mediafile> </Mediafile> specifies “the

link to the video content is located between these

two pieces of code”. XML is a descriptive markup

language. For more technical information:

http://www.iab.com/guidelines/digital-vi-

deo-ad-serving-template-vast-4-0/

VPAID

VPAID (Video Player Ad Interface Definition) is an

addition to the VAST-specification. VPAID uses the

VAST specification and can be regarded as a

complicated media file that communicates with

the player and plug-in. If you want to use VPAID,

you need to check if the player you are using is

VPAID-compliant. As not every publisher uses a

VPAID-compliant player the use of VPAID may

affect your reach.

VPAID is often based on a flash file (.swf). A flash

file consists of action script, allowing additional

functionality over a standard MP4 file. VPAID is

being used in two different ways in the advertising

market:

• It offers the possibility to serve interactive video

ads or an ad with social sharing functions.

• The .swf file contains the mechanism for the

bidding process.

Next to these two options, VPAID also offers

advertisers the possibility to read information

from the consumer’s browser. This way, adverti-

sers can measure viewability and brand safety.

4.1 STANDARDS.




VPAID 2.0

The VPAID specification is primarily based on

flash, or the .swf. As a result, it cannot be used on

mobile devices. In order to allow the same

possibilities on a non-flash compliant device, the

VPAID JavaScript specification was written. This

specification, supported by VAST 2.0, is based on

JavaScript instead of flash but has the same

functionalities.

It is important to mention that this format, just like

VPAID, is only supported by a VPAID JavaScript

compliant player.

For more technical information:

http://www.iab.com/guidelines/digital-video-play-

er-ad-interface-definition-vpaid-2-0/

OPENRTB SPECIFICATION

The purpose of the OpenRTB specification is the

technical facilitation of the programmatic buying

and selling of online video ads. The OpenRTB

specification is used during the programmatic

trading of ads where there is a server2server

connection between the Supply Side Platform

(SSP) and the Demand Side Platform (DSP). This

server2server connection needs to be made

through an integration of the two platforms. After

this integration, ads can start trading using this

specification.

The specification’s purpose is to pass on

information about the available video ad slot and

the advertiser’s bidding offer. This bidding

language, based on the coding language JSON,

contains a VAST-XML that communicates with the

player before and after the transaction.

The specification consists of two elements:

• BID REQUEST – the bid request is sent out by

the SSP server and contains all necessary infor-

mation for the DSP server to make a bid.

• BID RESPONSE – the bid response is sent

out by the DSP when triggered, and contains

the bidding offer and the VAST XML or ad for

deployment.

This specification is used for both display and

video.

For more technical information:

http://www.iab.com/guidelines/real-time-bidding-

rtb-project/

“The specification’s

purpose is to pass on

information about the

available video ad slot

and the advertiser’s

bidding offer. "

http://www.iab.com/guidelines/digital-video-player-ad-interface-definition-vpaid-2-0/

http://www.iab.com/guidelines/digital-video-player-ad-interface-definition-vpaid-2-0/

4.2 FILE TYPES.File types are the files containing the creatives used in the video

advertising market. The video player and the network where the video is served are determining factors for which file types are suitable.

QUALITY OF THE FILESThe chosen file type may affect the video’s quality.

There are two more VAST elements influencing the

quality of the video ad:

• FILE SIZE the size of the video file (the amount

of bytes) influences the quality of the image.

However, the browser may struggle serving the

video when the file is very heavy. It is important

to find the right balance: you need a file size

that guarantees premium quality without affec-

ting the loading speed. Keep in mind that your

video ad may be served on a mobile device.

• BITRATE the bitrate indicates how many bits

are played per second. A higher quality delivers

a more stable image. The same rule applies: a

higher bit rate demands higher capacity from

your player and your browser. Balance is key.

It is common for ad servers, DSPs, SSPs and

publishers to specify the maximum bit rate and file

size. It is possible and in fact quite common to

include multiple quality options in the VAST XML.

The source is of the highest possible quality. The

player will automatically select the best quality for

the circumstances and the device.



.

.SWF

.FLV

.JS

.MP4

.WMV

.MOV

.WEBM

Linked to VPAID video, enriched with display elements

Linked to VPAID video, enriched with display elements

Standard format within VAST





Desktop flash environment with a VPAID compliant Flash Player

Desktop flash environment with a VAST compliant Flash Player

Possible in all environments with a VPAID JavaScript compliant HTML5-player

Possible in all environments and all VAST complaint players



Possible in all environments and a VAST compliant WEBM player

File type Characteris-tics

Platform- &player suitability


IND

EX.


PLAYER & PLUG IN

A VAST compliant player consists of two elements:

• the actual player

• the plugin that makes the video player VAST

compliant

The plugin is responsible for the interpretation of the

VAST XML and the communication between the

player and the VAST trackers. Its purpose is to

ensure that the trackers are fired at the right

moment. Some players offer a combination of a play-

er and a plugin. However, these may be combined

separately as well. Some SSPs or ad servers

facilitate the plugin for the most common players.

Player/plugin combinations:

• Player with VAST plugin are one

• Player with VAST plugin from a specific SSP or

ad server

• Player with VAST plugin independent of a

specific SSP or ad server

TYPES OF PLAYERS

As outlined in the file type chapter, it is important

to know the characteristics of your player. There

are four types of player:

• VPAID compliant Flash player

• VAST compliant Flash player

• VPAID compliant HTML5 player

• VAST compliant HTML5 player

Flash players are still used these days because

many ads contain file types that require Flash.

However, this is rapidly changing as a result of the

increase of mobile devices (and the absence of

Flash on these devices). Additionally, both

Chrome and Firefox are trying to block flash

content from their browsers, encouraging

networks to change from Flash players to

HTML5 players.

Many players offer a hybrid solution. Depending on

the device and the ad’s send back file type, the

player decides to load either a HTML5 of Flash

player. This way, both desktop and mobile are

supported while still safeguarding fast loading

times. The most well-known players for in-stream

in Europe are JW Player, Brightcove, Kaltura,

Ooyala and Blue Billywig.

SOFTWARE DEVELOPMENT KITS

Some software components offer loose software

(SDK) components for the player, plugin and ad

server / SSP in one package. SDKs contain all

necessary components to serve video ads. These

kits are only functional in combination with the

chosen ad server or technology. Originally, before

the arrival of the VAST specification, these kits

were used to deploy video ads. However, they now

comprise and support the VAST specification.

These days, software development kits are often

used in in-app environments. Many SDKs are

limiting in the use of an ad server or video ad

provider Because the implementation of an SDK

requires an app-update, it is important to make

the right decision.

4.3 PLAYERS.

The purpose of the player is playing the video content. Next to playing the content, the player may also show video ads. When there is no content, or when the content is not a

video, then the sole function of the player is playing the ad.

“Some players of-fer a combination

of a playerand a plugin.”

4.4 CLIENT SIDE &SERVER SIDE.

The concepts “client side” and “server side” may be the most technical concepts when talking about serving video ads, but

they are very relevant. Both concepts describe ways of communicating. The difference lies in the elements of the

communication.

CLIENT SIDE

Communication takes place between a server and

the consumer’s browser (the client). The

consumer’s browser is responsible for sending the

information from the server to the player that has

to play the ad. It furthermore assembles any

missing information from the browser header.

Communication time depends on the speed of the

consumer’s device.

SERVER SIDE

Communication takes place between two servers.

The server is responsible for sending information.

Servers typically have a higher processing

capacity than the consumer’s browser; they were

developed to be quick. When more technical

serving processes take place between server to

server, the faster the process will take place.

Serving video ads can be split up in four process-

es. These processes may be carried out either

client side or server side.

It would be conducive in terms of speed if all these

processes would take place on the server side,

but the browser (client side) holds the advantage

of being able to receive a lot of information (for

instance cookie information). For this reason,

many processes still take place on the client side.

Various initiatives (for example in VAST 4.0) are

launched to bring more processes to the server

side. The rise of ad blockers and addressable TV is

a big incentive for this initiative.

An ad is requested (Ad call) Client side, for both mobile and desktop

Client side, for both mobile and desktop

Client side, for both mobile and desktop

More and more often server side. However in the case of 3rd party VAST URLs or VAST URLs that are bounced during the bidding process, it is important that this process takes place on the client side. The client side can detect and replace VAST URLs that are not delivered by the Ad server / SSP. Program-matic buying and selling takes place on the server side.

The ad server or Supply Side Platform (SSP) checks which ad should be deployed (bidding process)

Ad serving

Ad tracking (impressions and quartiles)

Process Client side or Server side


5 SUPPLY &DEMAND.

The way online video ads are bought and sold has undergone a small evolution the past few years, with the arrival of programmatic leading

the change. This chapter discusses various supply and demand strategies. We have

decided not to focus on the current discussions around GRPs or the way in which

the buying paradigm is shifting.


We currently know three ways of buying media, depending on the cost and the preferences of the advertiser and the

media agency.

DIRECT BUYING

We speak of direct buying when a media agency or

advertisers directly contacts the publisher in order

to buy a specific set of inventory or audience. This

type of deal has a predetermined start- and ending

date and a set amount of impressions for a fixed

price. If, for whatever reason, the publisher does

not meet the guaranteed amount of impressions,

they usually offer some form of compensation to

maintain the original agreement.

BUYING VIA A COMMERCIAL NETWORK

Sometimes media agencies or advertisers decide

to buy their media inventory via a commercial

network containing more than one publisher that

can reach the advertiser’s target audience. The

rules of direct buying apply here as well.

PROGRAMMATIC BUYING

Programmatic buying comprises the real time

bidding for inventory. The last few years the

market has seen a strong incline in the number of

ads served through real time bidding.

A Demand Side Platform (DSP) is required for

programmatic buying. This platform enables

bidding on the advertiser’s side.

The advertiser can buy video ads in the DSP, based

on his or her preferences and the potential bidding

price. This is possible in either of the following two

ways, which are also used in display advertising:

• OPEN EXCHANGE inventory can be bought by

any publisher or any audience available on the

Supply Side Platform. The publisher usually sets

a floor price, the starting price for buying inven-

tory below which no bids are accepted.

• PRIVATE EXCHANGE an agreement is made

between the publisher and the advertiser or the

media agency. This deal is handled automati-

cally by the DSP. The deal is linked to a unique

deal-ID and defined in both systems to ensure

technical recognition of the agreement. The

floor price in the private exchange usually

differs from the publisher’s fee in the open

exchange.

5.1 DEMAND STRATEGIES.

“This type of deal has

a predetermined start-

and ending date and a

set amount of impressi-

ons for a fixed price.”


##

1.1 ##.SECOND HIGHEST BID

The programmatic bidding process is based on

the ‘Vickery Auction’. A Vickery auction is a type of

sealed-bid auction where bidders submit written

bids without knowing the bid of the other people

participating in the auction.

It is common in programmatic buying that the

‘second highest bid’ is paid, rather than a set

price. This is to avoid algorithms from calculating

the cheapest buying price, yet at the same time

enables the estimation of the publisher’s

inventory value.

So how does this work? The advertiser placing the

highest bid does not pay the price of his bid, but

the price of the second highest bid, plus 1 cent. In

case of no other bidders, or when the second

highest bid is lower than the publisher’s set floor

price, the floor price counts as the second highest

bid.

In this example KPN wins the bidding. They will

pay the second highest bidding price (placed by

L'Oréal), as their bid is higher than the floor price.

PUBLISHERINVENTORYFLOOR PRICE

€15

L’OREAL€20

KPN€25

IKEA€17

COLGATE€10


WINNER!

PRICE: €20,01

In this example KPN wins again, but as the second highest bid (placed by Ikea) is lower than the set floor price, the price paid by KPN is the floor price.

More information:http://www.iabeurope.eu/research-thought-lea-

dership/iab-europe-road-to-programmatic-whi-

te-paper/

PUBLISHERINVENTORYFLOOR PRICE

€15

COLGATE€10

L’OREAL€12

KPN€25

IKEA€13

5.2 SUPPLY STRATEGIES.

There are various ways in which publishers can offer their available video

inventory to the market. For instance, the publisher can decide to sign a direct deal with an advertiser, or they may offer their inventory via a Supply Side Platform (SSP)

for programmatic buying. Either of the following two systems may be used to

offer video ads: the ad server and the SSP.

PREMIUM AD SERVER

The publisher uses an ad server to serve his direct

deals with the advertiser or the media agency.

Apart from these closed direct deals, the publisher

may also choose to sell the rest of his inventory

via a commercial network. These network have a

lower yield than direct deals and they do not offer

a minimum guaranteed offtake, so it is possible

that the publisher is left with unsold video

inventory.

PREMIUM AD SERVER LINKED TO SUPPLY SIDE

PLATFORM

Publishers display their direct deals via their

premium ad server. Any leftover inventory will be

made available in the SSP so that it can be sold to

advertisers via the auction. This way publishers

are guaranteed to meet the goals of their direct

deals (depending of course on the targeting

preferences).

In this scenario, publisher rule out that certain

consumers are more valuable for an advertiser

than others. It is possible that an ad is served to a

consumer via a direct deal that could have had a

higher yield via the programmatic auction.

The result is that publishers may not get the

highest yield out of their available inventory.


WINNER!

PRICE: €15,01

http://www.iabeurope.eu/research-thought-leadership/iab-europe-road-to-programmatic-white-paper/




SUPPLY SIDE PLATFORM LINKED TO PREMIUM

AD SERVER

In this scenario the video ad is initially send to the

SSP. The publisher has defined only private

exchange places in the SSP, with a higher floor

price than their direct, non-programmatic

campaigns.

This elevated price is justified by the fact that, by

using data, the bidder can select the consumer

that meets his target audience criteria the best.

When no one in this private exchange shows

interest, the inventory is offered via the premium

ad server. When the inventory is not sold via the

premium ad server either, the publisher may

decide to offer the inventory in the SSP’s open

exchange.

It is important to have a clear strategy when

selling inventory this way. Selling too much

inventory via the SSP may affect the deployment

of impressions of your direct deal campaigns.

SUPPLY SIDE PLATFORM

(HOLISTIC AD SERVING)

The entire video ad inventory is offered in the SSP.

Both direct deals and programmatic deals are

facilitated via the SSP. The direct deals take part in

the bidding as well. To respect the agreements of

the direct deal, it is possible to guarantee full

deployment by prioritizing and using the right

settings.

Using this holistic way of selling inventory, the

publisher has the opportunity to yield the highest

price per video ad, given their direct deals are on

schedule.

6 THE FUTURE: A DIVIDE BETWEEN

TELEVISION AND ONLINE?

Consumers use more and more platforms to watch media and video content. This becomes

apparent when comparing media behaviour then and now.


Where in the past advertisers only needed

television to reach their audience, this is no longer

sufficient. Thanks to online tech innovations, more

and more platforms support television and online

content. What is more, the consumer increasingly

takes the lead in deciding when and what to

watch. To reach the same target audiences, the

advertiser will have to familiarize himself with the

different possibilities and restrictions posed by

the various platforms and devices. It is becoming

easier to closely pinpoint your target audience via

online platforms. The question remains how

advertisers, publishers and online tech providers

should anticipate on these new developments.

DATA FROM THE MARKET

The shift in consumer behaviour and the digitaliza-

tion of content is in full swing. Both developments

offer a wide range of opportunities and challenges

for the video advertising market place.

BROAD-CAST TV

BROADCAST TV

CABLE TV

BROADCAST TV

CABLE TV

VOD

TIMESHIFTING

MULTIMEDIA DEVICE

MOBILE

INTERNET

SMART TV

BROADCAST TV

VIDEO ON DEMAND (VOD)

TIMESHIFTING

CABLE TV

Inception of TV Present day

Sour

ce: S

potX

A P

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TV

Gui

de fo

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5



“Both in the market and in De Persgroep we notice a dramatic increase in online video consumption. Consumers embrace video content and advertisers

respond en masse. The attention factor is very important. Better video content tends to have a

bigger effect.

This is noticeable in the world of branded content as well. The quality of the content is directly related to the attention given to your product. This is why De

Persgroep will expand its video production capacity. "Willem-Albert Bol, Persgroep

“ Opportunity: TMG will launch two OTT platforms early 2017, enabling us to anticipate on the changing needs of consumers to

watch news and sports. We will incorporate live streaming and on demand.

Challenge: the segmentation of media consumption remains a trend and this definitely applies to video consumption as well. Organic growth of reach and impressions is essential.

Video advertising is not yet a commodity in the programmatic advertising market place, so the monetization is less effective and the cost of sale is higher than with display advertising. "

Melanie Raupp, TMG


“In the next few years, video will be the most important growth factor in deciding online advertising budgets. Euro-pean budgets showed a sharp increase of more than 35%. Video is especially popular among Millennials, it is the most

effective way to reach an increasingly mobile audience and it is the first step to move budgets from TV to online.

Video is an important growth factor for the turnover of publishers, and will play a prominent part in their advertising

portfolio. In order to maximize the turnover potential, publishers will need to holistically monetize their video

inventory. Their video inventory will become transparent and available for any deal type. "

Janneke Niessen, Improve Digital

“Online video offers a wide range of opportunities: specific reach, impact, interaction, reaching (young) target audiences on high quality platforms. Clutter and access to videos of high

quality pose the main threats. When high quality content is available, some operators show no less than 5 or 6 pre-rolls.

This way, the advantages of online video over television become smaller.

The consumer is no longer tied to a device or distribution format to consume AV-media but the market cannot yet

provide detailed insights. Research into the reach of online video is not yet finalized. We only have access to limited evaluations on reach, contact frequency and cross-device

and combined TV reach."Menno Westinga, Zigt


“When executed properly, video advertising offers great possibilities to build an emotional connection

with your target audience." Gerald Moussault, Cadreon

“By 2017, video will account for 69% of all consumer internet traffic (Cisco). This poses a challenge to the existing constructions of all institutionalized media agencies, but it is also an opportunity for growth.

The production of video content is not necessarily a costly endeavor. Even smartphones now have the

capacity to shoot content with the potential to go viral. Combine this with the dramatic growth of the video

advertising market and it becomes obvious that investing in video will open doors to new, profitable sources of income.”

Kevin Fox, Blue Billywig


“Concerning online video advertising, our biggest opportunity is also our biggest challenge: the development of cross-

screen trading. We live in a world where consumers move from screen to screen (holistic) – mobile, online, TV. The

development of cross-screen trading offers advertisers the opportunity to plan, track, buy and optimize online ads on

any screen. They must focus on finding the right audience, at the right moment, using the right format.

Changes will need to be made in order to address the needs of this cross-screen world. Campaigns will be monitored by one team, guided by one single platform, and no longer

by multiple teams in silos." Josh Torok, Tubemogul

“As video becomes less and less lineair, not to mention served in different formats on different devices, it is essential

for creative parties to provide tailor-made solutions for online video advertising. Using TVCs in online video ads

is a missed opportunity.

Factors and features such as device, content platform, inter-active pre-rolls, immersive 360 video experiences, likeable video snacks and feature video content should already be considered during the planning phase. Video advertising

should be seen as separate content and will only be taken seriously when it fits seamlessly in the online media experi-

ence. This poses challenges and opportunities for creative parties and brands. ”

Nomkwazi Hooplot, Weborama


“More than ever, advertisers are encouraged to produce good, relevant and fun pre-rolls. One that meets the profile of the consumer, but also adds to his daily activities and even

the weather.

This makes pre-rolls relevant, resulting in more views, a wider reach and you need less pre-rolls to achieve the same goals. The icing

on the cake? Pre-rolls are received more positively as well." Immanuël Kranendonk, Ster

“While static ads are struggling, video is booming on mobile devices. Programmatic video enables advertisers to tune their mes-sage accordingly to specific users, specific

moments and specific devices. Elwin Gastelaars - SpotX

"Advertisers are quickly learning their way around video advertising. They demand more qualitative reach, insights in media

and more professional content, preferably broadcasters inventory. With the right tools,

media agencies and publishers can meet their demands."

Tom van Halteren - Videology


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IAB Netherlands Online Video Handbook 2016

Marketing

Transcript of IAB Netherlands Online Video Handbook 2016