Two of the hottest trends of 2013 – video advertising and data-driven programmatic trading – are combining to boost the market for multimedia advertising in the next few years.
According to analysts at IHS, programmatic video advertising will be worth a combined €627 million (£530 million) across the UK, France, Spain, Germany and Italy by 2017. By then, one third of all video ads in those countries will be traded programmatically.
However, things will be very different for video, compared to the way that programmatic advertising and real-time bidding have changed static digital display.
Here are the top line figures from IHS’s report, commissioned by programmatic video platform SpotXchange:
— Programmatic video ad buying across the “big five” European markets will grow at a compound average growth rate of 77 percent between 2012 and 2017.
— By 2017, programmatic ad buying will account for a third of online video advertising across the five countries, up from 4.6 percent today.
— In the UK, programmatic video ad revenues will grow from €20.5 million to €224.5 million by 2017, accounting for 38.9 percent of all online video.
The growth rate of programmatic video advertising looks set to mirror the rapid rise of programmatic when it comes to traditional display. But while RTB has been enthusiastically used to monetise unsold inventory,video is different because it’s scarce.
As the Guardian’s head of monetisation development Duncan Hammond said at the launch of the event, the Guardian could sell its video inventory five times over, such is the advertiser demand.
SpotXchange’s European managing director Andrew Moore tells TheMediaBriefing that with video, the focus has been on increasing yields rather than volume:
“The thing about selling directly is typically you have historical rates and it’s very hard to renegotiate that. But, you can use programmatic to [create competition for] all of your demand and the economics of video, particularly at the premium end, means demand outweighs supply. With programmatic you can start testing the ceiling price.”
The basic dynamics of the online video market – scarcity of inventory as apposed to oversupply – mean there is less pressure to add value to through audience segmentation.
And in many ways that’s a good thing. According to the IHS report, advertisers are keen to see more standardised audience metrics more simlar to those already used in TV advertising, such as BARB.
According to IHS advertising director Daniel Knapp, standardised third-party audience metrics, such as Nielsen’s OCR service, are necessary to push the development of programmatic video advertising:
“In the UK we are more open and will take any measurement. The UK it is very much about finding the practical solution. But in Germany it is about perfect data or no data at all,” he says.
But the big question remains: does programmatic undermine a publisher’s uniqueness and brand power?
“What is completely lacking is solid research on the relationship between the brand of the publisher and video content. Content and context,” says Knapp. “Publishers hope (there is a link) but it’s not really clear. Nevertheless I think publishers should invest in video because video can be much better monetised.”
So what’s going to happen to all that supposedly valuable first party data publishers have been collecting?
According to Moore, that data will still be used to create bespoke deals, most likely arranged by direct sales teams but traded programmatically, but not for the large scale video ad campaigns
“The market is sying we don’t need all those little pockets of data. It’s very valuable in its own right but it’s not scalable. Nielsen OCR and others are offering standardised third party data,” he says.
“It will be brand dependent. For a FMCG advertiser… Those guys aren’t interested in the Guardian’s detailed data on its audience. But on the flip side say Audi, they will say there’s this segment of Guardian readers we really want to target.”