Programmatic Video Prepares For Takeoff

by Molio CEO, Jeff Davis

Everything that can be programmatic will be programmatic is a prevailing attitude among advertisers today. This automated approach to advertising has reshaped the search and display industries, among others, and now a similar transformation is taking place in video — a space that offers arguably the most premium inventory in digital advertising, given video ads’ effectiveness and the skyrocketing consumption of video on desktop and mobile.

For all the hype surrounding it, programmatic has been hard to pin down. It has a seemingly endless supply of definitions and just as many promises for what it can help achieve. My preferred definition of programmatic is that it is a series of tactics — fully automated buying on a large scale, real-time auctions for ad inventory and data-driven targeting — to build a brand online at the most optimal cost.

While the buzz surrounding the impact of ad technology on video is justified, we are still in the early innings of this exciting game as agencies jump on board and the technology matures. eMarketer predicts that in 2016, U.S. programmatic video ads will account for 40 percent of digital video ad spending, indicating the majority of video ad units will continue to be sold via traditional direct sales channels in the near future.

As we progress toward a tipping point where marketers shift the lion’s share of their online video ad budget to programmatic and their programmatic strategies become more sophisticated, what’s in store? Here are a few things they will encounter in this evolving space:

Viewability – Ad viewability is one of the major concerns of marketers that programmatic is poised to help alleviate. According to Google, 46 percent of video ads are never seen. This can occur because of a deliberate choice by the consumer (e.g., switches to a different tab while pre-roll is playing) or, more likely, malicious intent by the publisher (e.g., puts video ads inside out-of-sight banners).

With programmatic video, buyers can factor viewability into their purchase. For instance, buyers can use controls to purchase the top 10 percent of mid-roll ad placements that are viewed for the longest time or post-roll units with more than 70 percent viewability. These precise targeting capabilities are particularly impactful in video, as the longer a video is viewed, the greater the consumer’s ad recall, brand awareness and purchase intent. It’s important to note that at this stage programmatic video does not promise 100 percent viewability, although a number of agencies claim to, but the advantage it presents is sizable.

Fraud – Even if your video is viewed, there is no guarantee that it was viewed by a human. Up to 50 percent of Web traffic is non-human, and due to its high CPMs, video is a primary target of fraudulent activity. Programmatic video obviously loses its inherent efficiency and effectiveness if those on the receiving end are not sentient.

While marketers have attempted to eliminate robo-views by opting to purchase inventory exclusively from reputable publishers, even the most premium of publishers are subject to fraud. Some have argued that the answer is to build verified human audiences into the advertising ecosystem. Fortunately, this is an issue that is being taken very seriously, and a new ad industry initiative should help root out criminal activity and improve brand safety.

Labor – While automation is at the core of programmatic, the human element also plays a larger role than many expect. For instance, programmatic video ads are transacted using software, but the users of this software are ad traders who oversee the process and apply targeting criteria. Algorithms process vast volumes of data, but it takes data scientists to make sense of the findings to optimize campaigns. Because data drives everything in programmatic, there is more time spent on real-time data analysis, and people are currently better suited to this work than machines.

As the video advertising arms race between YouTube and Facebook heats up, there is a pressing need to accelerate programmatic media buying to a new level. While video is dealing with the growing pains that accompany every channel that undergoes automation, the next few years will be thrilling to be part of as programmatic video begins to hit its stride.

   About the Author:

Jeff is the CEO of Molio and a former P&G executive. When not taking the digital advertising realm by storm, Jeff enjoys skiing with his family, golf, scuba diving and speaking publicly on the changing landscape of advertising. This article was originally featured on Entrepreneur.com, March 21, 2014.