The State of Video Monetisation 2019
If it wasn't already clear, 2018 demonstrated that the lines between traditional and digital are blurring, driving the growth of cross-channel video strategies and with mobile taking an increasingly significant share.
Digital advertising in Europe grew by 10% to €25.7 billion ($29.3 billion) in the first half of 2018, on track to surpass €50 billion by the end of the year, according to the AdEx Benchmark Study, a collaborative report published by the Interactive Advertising Bureau (IAB) and IHS Markit (registration required). The prior year's study recorded 2017's market value as €48 billion
The study revealed that mobile is set to take a 50% share of the total ad spend in 2018 with Eastern Europe leading the charge. Belarus, Serbia, and Russia were the fastest-growing European countries for mobile ad spend during 2017, according to full-year IAB Europe research, up 33.9%, 23.7%, and 21.9% respectively.
Native advertising spend (such as sponsored content and in-feed ads that blend into the format of the site rather than traditional banner ads) is expected to top $85.5 billion across Europe by 2020, also per the IAB.
Indeed, the growth of digital advertising as a whole has doubled in size over the past five years according to IAB Europe, a rise it attributes in part to take-up of programmatic formats.
Automation allows ads to be targeted at a very granular level at lower cost than traditional advertising. By focusing more on programmatic advertising, advertisers are trying to break free from traditional media buying methods in a hope to get hold of the attention of millennials and Gen Z (13- to 17-year-olds) who are bombarded with endless content every second.
"As programmatic advertising becomes increasingly popular and pervasive, it will become more complex to engage the desired target effectively and, in time, execute successful campaigns," advised Nielsen. "To successfully break through the clutter, advertisers must focus on two crucial objectives: effectively reach Gen Z in their environment and provide compelling addressable content."
Programmatic Scales for Live
Appointment viewing used to be broadcast's domain, but even this is being eaten into by digital, and with it another chunk in broadcast's sales armour.
Yet there's a problem of scale, argue ad tech vendors like YoSpace whose CEO, Tim Sewell explains, "In live OTT, all viewers go to an ad break at the same time, putting huge strain on an ad server which will have to manage a bombardment of ad requests. Delivering addressable advertising at scale is the next big challenge for broadcasters and rights-holders."
YoSpace addresses this with Prefetch a technology which is able to detect an upcoming ad break before it happens. Ad calls are made early to an ad server, such as SpotX, which then have more time to instruct the programmatic marketplace and generate the highest possible CPM and fill-rate for the rights-holder, Sewell explained.
Among users of Prefetch is BT Sport. "Live inventory is a growing sector of our business and as audiences continue to consume content across multiple platforms like OTT, monetizing live video becomes even more important," SpotX CEO Mike Shehan noted in a YoSpace blog.
Building Back Trust
Given all this growth it would appear that digital has shrugged off the frailties of the last couple of years, when question marks were placed against the efficacy of social media channels in particular.
However, ad-tech has still not emerged from its identity crisis. The UK's DPP (Digital Production Partnership) released a report in September on the future of video advertising which concluded that a series of new, collaborative relationships need building if the historically close relationship between advertisers and content makers is to be successfully reshaped.
"Advertising models still have a very strong reliance upon linear TV at the same time that advertising, video content and consumer behaviour are all shifting online," explains DPP managing director, Mark Harrison [go2sm.com/dpp]. "The question is: Will a whole new advertising model around online video be formed, or will we see a brand new commercial model emerge?"
Following, Proctor and Gamble's decision in 2017 to pull £72 million ($91 million) of digital ad spend (with little impact on its overall sales) from social, the start of 2018 saw Unilever unleash its own critique of Google and Facebook.
Its chief marcoms officer Keith Weed called on the giant social channels particular to clean up the "swamp," although Unilever stopped short of removing ads from YouTube. He argued that simply threatening to withhold advertising dollars from digital platforms while expecting them to solve their own content challenges wasn't the proper course for the industry.
Unilever is, however, experimenting with how blockchain might achieve complete transparency on digital ad transactions.
In October, SpotX and five other ad tech vendors (including Sovrn, OpenX and Pubmatic) promoted programmatic advertising as a means to underpin a "trustworthy marketplace." Its mission includes a fully auditable supply chain and clear auction rules and is backed by the industry (IAB/ Association of Advertising Agencies) accountability program the Trustworthy Accountability Group.
"Programmatic advertising has provided a scalable way for advertisers to leverage the massive amounts of data available today to serve consumers the right content at the right place at the right time," claimed SpotX's Shehan.
Measurement Not Solved
It is not dubious content so much as the lack of digital measurement standards and the potential fraud that comes along with it which is the chief concern for Unilever and all major advertisers.
As Weed told the IAB, "One viewability measure makes sense from a perspective of clarity and simplicity, but advertisers don't currently agree on what this should be."
Advertisers, of course, have to deal with myriad devices, platforms, shows, live, catch-up, and VOD, in order to find the right audiences. ITV Hub, the VOD service for broadcaster ITV, for example, is available on 27 platforms. In turn, many of those platforms will give advertisers better opportunities to target specific audiences.
With dwindling linear viewing and rocketing online video ad spends, broadcasters have teamed up to form joint initiatives spanning OTT services, content pacts, and advertising.
From the beginning of the online video revolution, personalized advertising has been one of our loftiest and hardest-to-achieve goals. Are we there yet?
British broadcasters have made separate moves to advance ad-tech in a further defence against online competition but questions of scale, cost and measurement remain.
The power and reach of digital video advertising is on the rise, but solving challenges with cross-media measurement and quality metrics top the agenda for the coming year.
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.