“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Brian Mandelbaum, CEO at Clearstream.
On its surface, programmatic video presents advertisers with the perfect opportunity to reach consumers with the sight, sound and motion of television while leveraging the data insights and efficient price points facilitated by automated buying.
But while some marketers and digital agencies are already seizing this opportunity, the growth of programmatic video has lagged behind the use of programmatic technology in display and search.
Programmatic accounted for just 12% of US digital video ad spending in 2014, compared with 45% of display. Meanwhile, only half of the publishers surveyed by AOL open their premium video inventory up to any kind of programmatic buying.
So even though some will view 2014 as a landmark year for programmatic video because of the acquisitions of BrightRoll and LiveRail, there is still plenty of room for expansion in a market that is predicted to top $2.2 billion in 2015, an increase of more than 200%.
But fraud, measurement issues, leery publishers and an uninvolved TV industry are preventing programmatic video from reaching its full potential.
Too Much Fraud
Online advertising is beset by fraud across the board, with bots threatening to suck $6.3 billion out of the industry this year.
This problem is even more malignant in programmatic video than in display, since video fetches higher advertising rates, thereby giving bad actors more to gain from cheating the system.
In my experience, mislabeling and the fraudulent purchases of impressions plague the industry. Until marketers and agencies can have confidence that the video inventory they purchase will be served to the intended audiences, it’s unreasonable to expect them to invest their budgets in programmatic video.
And we’ll only be able to rid the industry of fraud when players across the advertising ecosystem, including marketers, publishers and platforms, make a concerted effort to keep things on the up and up.
Uncertain Viewability, Inconsistent Measurement.
A recent report from Integral Ad Science found that just 39% of video ads were considered viewable under the Media Ratings Council’s standard, which requires the ad to be more than 50% visible on a person’s screen for at least two seconds.
Even then, many advertisers want consumers to see the entirety of their video ads on the screen, and for more than two seconds. As a result, there is continued debate over what should constitute a visible ad and how to go about measuring viewability.
Other measurement aspects of programmatic video also are in need of standardization. For instance, what qualifies a video player as being “large?”
Weary Publishers
After seeing how real-time bidding drove down the price of display advertising, many premium publishers withheld their video inventory from ad exchanges, instead reserving them for clients to purchase directly as part of a larger package.
Only about a third of North American publishers make their highest-quality video impressions available on programmatic channels. And so far, advertisers have been willing to pay up front for these scare video ad slots.
However, there has been some movement in the form of publishers who have set up private exchanges. These invite-only marketplaces are only open to a small, select group of buyers, creating a happy medium where publishers can maintain price floors and buyers can have more confidence in the quality of the inventory they are purchasing.
A Hands-Off Television Industry
The holy grail of online video advertising is the ability for buyers to purchase targeted impressions in real time across both traditional television and digital video, allowing brands to reach the right consumers at exactly the right time, regardless of how they are consuming content at the moment.
Unfortunately, the $70 billion television advertising industry is still a long way from making this possible at any sort of scale.
Like web publishers, television networks worry about undercutting the prices they are able to charge for direct purchases, and they have even greater leverage than publishers due to the finite amount of television inventory that exists.
On the bright side, there have been some experiments of late. In December, ESPN announced it would sell a small portion of the ads on its SportsCenter show via a web-based auction. That same month, TubeMogul introduced a programmatic television platform that allows brands to make data-based, automated ad purchases, even if the inventory available is limited.
Meanwhile, the networks continue to face pressure from declining ratings and marketers that have become accustomed to using data to make precise, real-time buys on the web.
One can only hope television will begin listening to what their clients tell them and take strides toward making their inventory as effective for marketers as it can be.
Follow Clearstream (@Clearstream_TV) and AdExchanger (@adexchanger) on Twitter.
