Up close and personal with programmatic video

Content Takeover Display Advertising

Today more and more brands are relying on programmatic video ad buying. Dairy product brand Dannon plans to allocate between 15 to 20 percent of its video buying spend towards this type of programmatic in 2016. Other large companies such as Mondelēz International, Allstate and Progressive have all built in-house teams to handle video ads programmatically on their own.

This is because programmatic video streamlines a company’s media buying operations and lets impressions be bought in an automated way. These impressions are individually evaluated, meaning an advertiser will get a more efficient use out of the money that they spend, ultimately driving conversion.

Sounds great, right? Who wouldn’t opt for this type of video buying? But this approach also has its drawbacks.

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Two major challenges in programmatic video

Conversations with tech vendors and advertisers reveal two pain points in the programmatic video space today: viewability, and the lack of education among agencies.

The viewability issue is due in part to a lack of premium video inventory, as a large part of the overall online inventory is pre-roll video ads on second and third-tier websites.

“Users have developed super fast reflexes to escape these [pre-roll] ads because they do not like being forced to watch them,” says Pierre Chappaz, executive chairman at Teads.tv.

Bots are a threat to programmatic video also. Since video is the most expensive form of online inventory, it has become the most lucrative target for bot networks.

“It is no surprise that over the last couple of years online video has been plagued with a higher percentage of bot traffic than traditional display. Fraud monitoring techniques using machine learning are therefore even more important in video than in traditional display,” says Jag Duggal, vice president, product management at Quantcast.

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    This programmatic video ad about how to roast a chicken is embedded in an article. 

Viewability aside, it seems that demand-side platforms (DSPs) don’t customize their services for agencies, or explain how they can solve advertisers’ specific requirements. This leaves a rather uninformed customer base who do not know what they are buying and whether the money that they are spending is working in the right way.

“For agencies as a whole, we need to be completely educated on how to make programmatic work. Lots of DSPs offer a dashboard to show what’s going on, but advertisers need to be knowledgeable to know what they should be looking at and what is the right analysis to make the right changes,” says Angela Mertz, media director of digital marketing agency The EGC Group.

The future of programmatic video

Though the above pain points are worth noting, it isn’t all grey skies for programmatic video ad buying. Quite the opposite in fact. U.S. programmatic digital video ad spend is predicted to represent 28 percent of total digital video ad spend, and the number will reach 40 percent by the end of next year, according to eMarketer.

“The rapid raise of native video ad formats – that are particularly suited for smartphones – will open a massive mobile inventory, while up to now most of the video inventory has been on desktop,” says Teads.tv’s Chappaz .

Looking forward, Quantcast’s Duggal predicts that programmatic video is likely to head to two directions:

1. Back to the futureProgrammatic video will have well-established advertising rules, just like its ole step-sister, TV. For example, ads are designed to create emotional appeal and have the capability of demographic targeting. They can also be measured by Gross Rating Points and validated by third-party arbiters such as Nielsen.

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“Agencies have run countless studies that illustrate the long-term effectiveness of this advertising approach. It may seem old-fashioned but it works better than many more recent formulas especially ones based on misleading metrics like click-through rate. This approach will make a great deal of sense to advertisers who are grounded in television ad buying, as the worlds of video and television advertising converge,” says Duggal.

2. Brave new worldProgrammatic video advertisers will be able to utilize a whole array of richer targeting options as opposed to just demographics. This is based on the fact that they have data at scale. For example, instead of targeting 20 to 30 year-old women, a brand like Gap can target middle-income moms who have search behavior that indicates an interest in fashion.

“These rich datasets exist today. Their usage has been held back by a lack of scale. That problem can be solved with accurate modeling. The effectiveness of combining the richness of targeting and the richness of the video format can be impressive,” notes Duggal.

For advertisers, an ideal programmatic video solution also includes a switch from cost-per-thousand impressions (CPM) to cost-per-view (CPV). Because with video, not so many viewers click through an ad and form an action the way they do with display ads.

“Most of the time, the value of video ads is not an impression. I want to be charged when my video ads are fully viewed. That’s the biggest difference between programmatic display and programmatic video,” The EGC Group’s Mertz says.

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