The State of Video Advertising 2018
However, Bremond says, “2017 has been a difficult year, with many questions raised about the brand-safe nature of programmatic video inventory. Programmatic needs rules and should be about automation—not simply be automatic. Publishers should focus on premium video content, where there is a direct relationship between the buyer and seller, and transactions take place in a saleable, brand-safe environment.”
The UK remains Europe’s market leader in programmatic. By the end of 2017, advertisers were expected to spend £3.39 billion on programmatic trading, up 23.5 percent from 2016, according to eMarketer data. This represents 79 percent of all UK digital display ad spending, and that proportion will reach 84.5 percent by 2019, eMarketer estimates.
DAI Boost for Broadcasters
The rise of connected TVs, VOD, and mobile video has breathed new life into the broadcast industry’s ability to monetize its audience reach. Sky’s AdSmart product is a trailblazer, delivering a 75 percent return rate for the pay TV giant. Channel-switching during a targeted advert reportedly reduces by 48 percent, based on 2015 numbers provided by Sky.
A pact between Sky and Virgin Media in June to integrate AdSmart into Virgin STBs gave the two companies access to 30 million targeted viewers in the UK and Ireland, and sufficient combined scale to compete with social media networks. (Facebook has around 35 million UK users.)
BT Sport has expanded its dynamic ad insertion (DAI) during football and rugby coverage with Yospace. The new deal runs until the end of the 2018/2019 Champions League.
Yospace made similar deals in 2017 with Sky in Germany, TV4 in Sweden, and Scotland’s STV, where the broadcaster was the first anywhere to provide targetable DAI in live streaming on Amazon Fire TV (after being the first in the UK to use the technology across live simulcast programs).
For commercial broadcasters like STV, the need to address targeted ads is more pressing than for pay TV operators, where subscriptions comprise the bulk of revenue. In the UK, on the back of an 8 percent fall in advertising in the first 6 months of 2017, ITV said it would introduce targeted trading. It had yet to do so at year end, with fellow broadcasters Channel 4 (C4) and STV driving this charge.
C4 has seen use of its All 4 service increase more than 20 percent year-on-year, to more than 60 million monthly viewers, and digital revenues climb 24 percent to £102 million. It began 2018 by offering personalized advertising with All 4 across every channel, including mobile, tablet, games consoles, and smart TVs.
C4’s decision to run commercials across its VOD services is a pushback to Facebook and Google’s duopoly of digital ads and confirms that traditional advertising channels can and will adapt to leverage the successes of digital.
Both STV and C4 require viewers to register their consent. That’s important since broadcasters will need to meet strict privacy rules before the EU’s General Data Protection Regulation come into force in May.
The Digital Video Broadcasting (DVB) standards-making group is attempting to harmonize addressable technologies by building on hybrid broadcast broadband TV (HbbTV), interactive TV software, v2.0. As well as benefiting free-to-air broadcasters, the DVB argues that standardization would make it easier for pay TV operators to deploy targeted advertising. Advantages include streamlining back-office requirements across OTT, broadcast, and service provider platforms.
The current HbbTV specification, on which Freeview Play is based, can support insertion of advertising over IP into broadcast streams, but doing so accurately is a key technical challenge. Nonetheless, the DVB believes a standard can be delivered by early 2019 and could even go global.
TV Alliance Takes on Google and Facebook
WPP—the world’s largest ad company—has persistently argued that Google and Facebook should be seen as media organizations as much as they are tech organizations and claim the duo already eat up 90 percent of every new pound spent on digital advertising.
In a bid to counter the threat from the Silicon Valley giants, a group of broadcasters led by Germany’s ProSiebenSat.1, France’s TF1 Group, and Mediaset in Italy and Spain banded together midyear to launch the European Broadcaster Exchange (EBX). The UK’s Channel 4 joined them in November, each taking a 25 percent share.
The joint venture aims to establish a European video-on-demand exchange to cater to the growing demand for multi-territory video campaigns at scale, initially traded programmatically.
It will be headquartered in London and begin trading in 2018. The combined VOD services of the EBX members (including C4’s All 4) claims to reach over 160 million viewers a month.
EBX aims to forge deeper collaboration between the broadcaster partners, driving forward technological development in online advertising and helping them to compete more efficiently with global competitors like Google and Facebook.
“The demand for multi-territory digital ad campaigns in brand safe and transparent environments is increasing. The video ad market continues to grow exponentially across Europe,” Jonathan Lewis (right), head of digital and partnership innovation at Channel 4, told the Guardian.
“This joint venture [EBX] is our answer to the current digital video landscape,” said the CEO of Mediaset Group-owned Publitalia 80, Stefano Sala, in an interview with Digital TV Europe.
“Many international companies have a strong demand for high-quality and brand-safe advertising environments in the video sector,” added ProSiebenSat.1 Group COO, Christof Wahl in the same article. “Our joint venture will offer them the opportunity to book pan-European campaigns in the premium video environment of an economic area with a population of over 250 million in an automated, user-friendly manner. This will allow us to gain access to additional advertising budgets that we were previously unable to address on a national level.”
Mobile Video Advertising
Whichever way you turn, mobile ads are on the up. Mobile advertising is projected to reach nearly $128 billion globally in 2018, per Zenith’s Media Consumption Forecasts report.
Ad views on smartphones (23 percent) and OTT devices (29 percent) continue to steadily increase in Europe, while desktop’s share of views, at 28 percent for 2017, decreased, according to FreeWheel.
IAB Europe figures record global mobile advertising growth accelerating 60.5 percent to reach $83 billion between 2015 and 2016, but with Europe behind North America and APAC at 19 percent (or $16 billion) of that total.
Ooyala’s research showed mobile devices attracting 58 percent of video views for AVOD services in EMEA, with tablets having the highest consumption of any other region at 12 percent.
“One of the best hunting grounds for pay TV and broadcasters is going to be in mobile because of the huge increase in consumption of live TV through mobile apps,” says John Tigg, SVP, Enterprise Solutions EMEA, Videology.
“Mobile continues to be a major growth driver of programmatic in the UK, accounting for more than three-quarters (78 percent) of total programmatic digital display ad spending in 2017; that figure will reach 86.5 percent come 2019,” according to an eMarketer press release. “The numbers for desktop, meanwhile, are declining— both proportionally and in real terms. Just 22 percent of programmatic ad spending, or £743.8m [$993m], will go to desktop this year, and those numbers will fall to 13.5 percent and £609.5m [$813m] in 2019.”
Nonetheless, some marketers are apparently intimidated by mobile programmatic. According to a study by iotec, one-third of respondents find mobile programmatic just as confusing as on desktop, but 41 percent found it more complex on mobile. Half (50.4 percent) identified transparent pricing as their primary focus. Despite these concerns, more than 60 percent of marketers plan to increase their ad spends in mobile programmatic over the next year.
[This article appears in the Spring 2018 issue of Streaming Media European Edition.]
Ad revenues are up, but challenges with measurement and subscriber churn remain
Video advertising revenues are on the rise, along with AI, even as industry players argue over metrics. The current buzzwords are mobile, viewability, and programmatic.
The online video advertising market has been slow to take off, but with the growth in tablet usage and social media—not to mention real-time bidding and other innovations in advertising networks and formats—it's finally moving toward maturity.