The State of Video Advertising 2018
Digital strengthened its position as a medium for advertising in Europe as advertisers continue to follow users online, but TV viewing is far from dead.
Reports Indicate Resilience
Data from the “AdEx Benchmark 2016” study compiled by IHS Markit for the Interactive Advertising Bureau (IAB) Europe, published in mid-2017, revealed a 2016 online ad market value of €41.9 billion.
It suggested that, having overtaken TV ad spending for the first time in 2015, online advertising was leading TV by more than €7 billion across Europe in 2016.
“Mobile and video are the powerhouses driving the European online advertising market as we enter a post-desktop banner advertising world,” said Daniel Knapp, senior director TMT at IHS Markit with the release of the annual “AdEx Benchmark” study.
Ask a different lobbying group and you'll receive a different answer. Thinkbox, funded by UK commercial broadcasters, fielded a study from the Global TV Group suggesting that TV accounts for 90 percent of the average viewer’s video time and that, among millennials, TV is also the largest proportion of their video time at around 73 percent.
Most pertinent to Thinkbox is a stat that says TV accounts for 93.8 percent of video ad viewing, with the average person in the UK watching more than 20 minutes of commercials a day.
Sample findings of the survey say that in Spain, the average amount of time spent watching on a TV set has increased over the past decade to 3 hours and 51 minutes, and that millennials’ TV viewing increases as they get older and have kids. In Italy, 16- to 24-year-olds watch 2 hours, 13 minutes a day, and 25- to 34-year-olds with children are watching 3 hours, 23 minutes.
“Over the past decade, TV has proven remarkably resilient in an era of immense disruption,” says Matt Hill (right), Thinkbox research and planning director. “Despite the emergence of new SVOD services and online video platforms, TV consumption has remained steadfast around the globe. Life stage also continues to be a significant driver of TV viewing.”
A November report from Ampere Analysis appeared to back this up. While it identified the most valuable and fastest-growing type of consumer as “Content Connoisseurs” who tend to be of a younger generation and want to curate their own set of services, an equally key group of so-called “TV Traditionalists” should not be ignored.
Preliminary figures from Dovetail, BARB’s alignment of online viewing with traditional panel-based TV viewing data in the UK, also supports the trend. Almost 70 percent of online viewing is among people age 35 or older, it found, with those over 55 viewing more than any other age groups. Even then, online views were marginally incremental to total TV viewing, which remained dominant across all age groups.
While its figures do not yet take into account smartphones (only PCs and tablets), which might significantly affect the profile, BARB concludes that these devices are certainly not a replacement for TV.
Media investment agency GroupM’s data also shows that, for now, TV remains king with advertisers when global data is aggregated. It stated that TV’s share of ad investment was largely stable at 42 percent in 2016, with a small decline to 41 percent predicted across 2017.
Whichever side of the fence you sat on, however, there is convergence at play, with the following issues identified as requiring special focus to grow the total advertising pie:
- Cross-media measurement
- Viewability and brand safety
- Integration with programmatic tools
This has been a massive issue for some time. Stakeholders on the buy-and-sell side want to be able to measure TV and digital more than any other media combination, according to the September 2017 “Digital Measurement Priorities Report” from IAB Europe.
“[T]he gap between ad models for linear TV and digital video is closing. The industry is getting closer to integration,” wrote Thomas Bremond, GM, international, advanced advertising, FreeWheel, in an article for Digital Marketing Magazine. “The greatest challenge remains measurement,” he said
The majority of those FreeWheel surveyed called for a new measurement solution, while 70 percent said they thought there would eventually only be three or four third-party measurement providers in the industry.
“There is clearly a need for a more unified approach that goes beyond viewability, to also look at ad performance and value,” Bremond added in an interview.
There are signs of change, with companies such as Médiamétrie calling for new measurement criteria. BARB’s Dovetail Fusion reports are to be published regularly from March 2018 (compiled by Kantar Media) and will deliver the UK industry’s first cross-platform measurement—although it is considered long overdue.
“Many media agencies have developed their own systems to estimate the combined reach of TV and BVOD,” said Hill in a November blog post. “But we’ve been in urgent need of an industry standard and I’m happy to say we now have one, and a very credible and revealing one it is too.”
Thinkbox debuted IPA TouchPoints in September, a planning tool aggregating data from a 5,000-strong media diary and questionnaire intended as a stop gap before Dovetail launches.
“The absence of close substitutes means that for now, those advertisers seeking this young adult TV audience can be willing to bear price inflation in proportion to its rising scarcity,” GroupM reported in “Interaction 2017,” its assessment of digital advertising worldwide.
VIEWABILITY AND BRAND SAFETY
Broadcasters made hay in 2017 with the notion that advertising online was a risky business outside of the safety net of a managed environment.
Everyone seems to agree that a move toward viewable rather than served impressions is important. In terms of contact quality, measuring the length of time an ad is viewed, particularly for video, is top.
“Improved standards certainly need to be agreed in the OTT space, but this plays to the broadcasters’ strengths and the reasons for their enthusiasm are clear: delivering a true premium QoS is their ace card— not just in terms of viewer experience, but for advertisers too,” says Tim Sewell (right), CEO, Yospace. “It’s the key differentiator between broadcasters and the likes of Facebook and YouTube, where 3 seconds is enough to count as an ad view.”
Unsurprisingly, Sewell points to dynamic server-side ad insertion (SSAI) as the as the most reliable and user-friendly method of delivering ad-supported online video, especially in the case of live channels.
“The leading providers of the technology are proving that SSAI works at scale, to audiences counted in millions, with the reliability that broadcasters demand,” asserts Sewell. “But achieving reliability is not quite as easy as you might think, especially when you consider that live events make up 70 percent of live online viewing in the UK, predominantly made up of sports coverage and ‘appointment’ TV—events in which very large audiences typically join the stream over a very short time period.”
IAB Europe is working on a cross-industry European Viewability Initiative that aims to improve the accuracy and consistency of measuring the viewability of delivered impressions. It thinks this will help to make digital advertising more directly comparable with TV where “opportunity for the consumer to view” or “opportunity to see” an advertisement is the accepted tenet for brand advertising.
“It is now more critical than ever to reinforce the quality of the digital advertising environment to ensure that advertisers have strong confidence, and underpin the delivery of free content,” said Townsend Feehan, CEO, IAB Europe, in a press release accompanying the September report. “Ensuring that viewable impressions are measured correctly and consistently across all markets in Europe is a key first step.”
GroupM downgraded its expectations on pure-play internet growth from 15 percent to 11 percent in 2017 after seeing some large advertisers pause investment on unmoderated user-generated platforms.
In a blog post, Lindsey Clay, Thinkbox CEO, defended TV as a trusted, high-quality environment for advertisers that is proven to work. “It has a huge variety of premium programming across every genre and can satisfy the demands of many thousands of advertisers simultaneously and for the long-term. Now more than ever these are crucial distinctions between it and a lot of other types of video.”
INTEGRATION WITH PROGRAMMATIC TOOLS
Programmatic (automated) advertising continued its strong growth and was an €8.1 billion market across Europe in 2016, jumping 42.7 percent from €5.7 billion in 2015. According to IAB Europe/IHS Markit, half (50.1 percent) of European display ad revenue was being traded this way.
Additionally, programmatic video grew by an exponential 155 percent and now accounts for more than 45 percent of total online video ad spend. Mobile continues to be the “most” programmatic format, with 65 percent of mobile ad spend traded programmatically in 2016.
Western Europe dominates this market with €7.5 billion programmatic revenues compared to €0.6 billion in the combined region of Central and Eastern Europe, although this figure represents a growth of 53 percent year on year.
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.