ADOTAS – Ad dollars are flowing downstream from television to online digital video and brands are clearly embracing the trend. Forrester reported that video ad spend surpassed $3.6 billion in the U.S. alone last year, with 68% of online adults across the country having watched some form of online video in the past month. According to eMarketer, the gap between TV ads and online digital is shrinking, while both are poised to grow in the coming years. In the U.S. the firm predicts TV ads will hit $68 billion in 2014 and online video ads industry certainly wants of piece of the action.
“Over the past few years, we’ve seen online video advertising grow into a multibillion-dollar industry, with marketers and publishers increasingly stressing the parallel between TV and online video ads,” writes researcher James McDavid in the new report. “Forrester believes that the next step in the evolution of online video is to break out of this mold and build on the fundamental strength it possesses by being a digital interactive environment for brands to operate in.”
In order to address the ad industry’s shifting attention towards online video, the IAB kicked off its third-annual Digital NewFronts conference today, a nine-day conference in New York aimed at highlighting digital video opportunities for marketers, brands and agencies. Presenters at this year’s NewFronts encompass digital heavyweights like BuzzFeed, Condé Nast Entertainment, Crackle at Sony Pictures Television, Digitas LBi, the Dow Jones Company/Wall Street Journal, Glam Media/Project M, Maker Studios, National Geographic, The New York Times, POPSUGAR, Scripps Networks, Time Inc., Time Warner Cable, VEVO and Vice Media.
“NewFronts is really important to the industry – the digital space is growing quickly as a result of budgets shifting from TV to Digital, which is why it makes sense for brands and agencies to address both in the same timeframe,” said Gabi Peles, SVP client services & media at online video personalization company Eyeview. “When the NewFronts were initially instituted alongside the traditional Upfronts, it was a great first step. Every year, the event grows and includes more prominent parties so it’s interesting to watch the evolution. For brands and agencies, it allows them to think about their entire marketing spend from a holistic perspective and understand the trends in the ever-dynamic digital advertising space as they plan their budgets. At Eyeview, we are involved to ensure that we have the right relationships in place to make sure our clients reach their consumers where and how they want to. It also helps us to stay on top of the latest shifts in the ecosystem to ensure we are constantly at the forefront of providing effective video.”
Eyeview aims to turn online video advertising into a more personalized experience for each consumer by blending personalization with programmatic ad buying – which will indeed be a hot topic at this year;s event. They work with brands to optimize audience data and incorporate custom creatives and programmatic audience buying in real time, in order to serve relevant and effective broadcast quality video ads to each viewer.
Sounds simple enough, although some still believe that programmatic offerings for video will drive down the cost of ads, making the model less profitable for publishers in the long run. Traditionally, programmatic trading has previously focused on display inventory but programmatic video companies like LiveRail and RadiumOne have helped the market mature to embrace this method of delivery.
According to Angela Haggerty of The Drum, “Many brands remain skeptical about whether video, which is regarded as a premium form of advertising, can be trusted in an open ad exchange environment. Some argue that it should be reserved for private marketplaces that have the scale to guarantee enough audience reach. The private marketplace would host trading within controlled, quality advertising environments suitable for premium video ads, which would then enable publishers to charge higher rates.”
Peles of Eyeview disagrees. “We see exactly the opposite: RTB will allow advertisers to justify higher prices over time for premium inventory because it will be accompanied by data which will prove the value of premium to them,” he said. “RTB creates a much more efficient and transparent system. RTB will also allow publishers to gain scale in selling their unsold inventory, which will help them more effectively monetize their inventory.
“The future of advertising is personalized, relevant content served to consumers across multiple devices,” Peles continued. “Right now we’re seeing a lot of consumer fatigue for traditional advertising, which seldom hits them with the right message at the right time. The truth is, our modern lives are far too busy to deal with content that we don’t care about in a real way – even if that content is coming from a brand we know and respect. The only way advertising will continue to be relevant in the future is if it can adapt to modern preferences and rise above ever-increasing competition for consumer attention.”