Video will remain the fastest growing segment of digital advertising.

Cedato presents the key trends set to impact this massive industry in the coming year.

Next year video ad spend is forecasted to increase globally by over 20% (Zenith Optimedia). Although TV ad spend remains dominant, video is showing the fastest compounded annual growth rate out of all digital categories (including social), at least until 2020. To keep you up-to-date and ahead of the competition, we’re presenting five key video advertising trends set to impact the industry.

Video header bidding will gain far more traction

This year we’ve seen header bidding broadly adopted by publishers. Header bidding is completely disrupting the programmatic landscape with the promise of increasing coverage, yield and fill-rates.

As video views are growing at a 32% rate-over-year (IAB), publishers are increasingly aware of the need to monetize video more effectively. The problem is that standard header bidding doesn’t work well with video. Due to the way video is transacted, standard header bidding causes waterfall-like latency and redundant ad calls which seriously compromise viewing experience.

Video header bidding needs a complete conceptual transformation and should be purposely built for video to overcome these inherent caveats. We’re seeing an increase in demand for workable Video Header Bidding solutions by publishers and platforms as well as a disruptive change in the programmatic eco-system, similar to the transformation on the Display side.

To run video advertising effectively and ensure compatibility and transparency, video ad formats (VPAID) need authentication on the client-side. Effective Video Header Bidding implementations will reduce latency by conducting the heavy lifting on the server side before any bidding takes place, and then leave the “last mile” of yield optimization to the latency-sensitive client-side.
Nevertheless, at the end of the day, header bidding is all about extended coverage and lift in results. As market solutions improve, we’ll see more publishers and platforms embrace this ground breaking technology.

 Programmatic video will grow even faster, but there’s a twist

For several years programmatic advertising has been gaining wide-scale industry acceptance. This year over 56% of video ad spend is expected to be transacted programmatically, a whopping 85% surge in volume compared to last year (IAB). Programmatic video trading revenue is forecasted to near $11B by 2018. In the US alone most video ad revenue will be automated by 2018. (eMarketer). We anticipate a rise in programmatic ad spend, particularly in mobile video next year.
Already, real time trading technologies make it possible for publishers to deliver inventory similar to traditional direct agreements, but with far more efficiency and more competitive rates.
As header bidding becomes more prevalent in video, the programmatic landscape will flatten and become more accessible. Simultaneously it will drum up more competition and complications, especially concerning multi-channel and multi-screen viewability and relevance.
Publishers and marketers will need to carefully choose their platforms and partners to fully optimize their campaigns, increase their edge and minimize irrelevant placements.

Native video to grow and broaden its programmatic footprint

One major shift the industry latched onto this year is native advertising, better known as ‘Outstream’. A Nielsen case study illustrates that native video ads generate a higher brand lift than pre-roll video ads with the same creative message across five brand campaigns. Business Insider predicted that native would generate 74% of US display revenue by 2021.

Native video’s soft promotional content is used to drive more audiences and mitigate ad blocking. These advantages, as well as the shift to programmatic native video, are largely responsible for driving growth. As new native video ads become available programmatically, publishers will be able to offer more seamless engaging brand experiences that drive performance and revenue.
However, the harsh reality is that Outstream is far more challenging to process programmatically than standard linear video ads that show before video content. A native video ad appears as part of a flowing content consumption experience, such as scrolling through an article or browsing through a social feed. If a video ad fails to load instantaneously, users will simply ‘scroll away’ and the opportunity will be lost. This puts real time programmatic yield optimization under a more challenging set of constraints. It is the main reason why the vast majority of Outstream is traded through direct campaigns, which limits its current scale.
As more advanced programmatic video solutions, such as Video Header Bidding, become more available, we anticipate that Outstream’s inherent viewability and premium value will fuel rapid demand.
As an emerging ad format, the right technology partner is critical for cutting costs and delivering uncompromising performance, while sustaining a competitive business model. We recommend locating programmatic experts with a robust and transparent solution that delivers native video without being tied to channel-specific solutions.

Cross-channel video is expanding and extending campaigns

The rise in video consumption across mobile and TV in new formats such as 360, vertical video, live video and augmented reality is creating a need for technologies that can handle the leap. Cross-channel video is expanding across multiple screens and extending campaigns. Not surprisingly, smartphones are the device of choice. Already this year, over 51% of all online video views occurred on mobile, up from 15% in 2015 (Ooyala study). In the US the number of users watching video on mobile will grow to more than 175.4 million in 2019 (Statistica report).
A big bright spot for advertisers is that the percentage of simultaneous users consuming related content will increase (eMarketer).

Cross-channel video campaigns with users across websites, social networks, mobile devices and connected TVs will try to deliver content more fluidly along different touch points of a consumer’s journey. New opportunities will arise with the promise of immersive storytelling delivered through Virtual Reality. The VR install base is still small, but growing. According to eMarketer VR viewers will grow from 6.5 million this year to 24.4 million in 2020.

Successful cross-channel video campaigns will increasingly target them across their entire path-to-purchase. The increased exposure, together with engaging, targeted content, will position brands in a more competitive landscape.

Video ad technologies with superior cross-screen and integration functionality will be favored for new contextual experiences.

Disruptive SaaS business model to shift ad tech industry

Ad technology to date has mostly been based on a media percentage revenue share model. Following the digital media evolution, technology, fragmentation and the rise in ad fraud, a percentage-based fee is starting to lose its relevance. Revenue share is particularly damaging in video technology. In programmatic video, transparency and ad fraud issues are even more severe, as conveyed in the comScore 2016 report. Transparency is complicated by the number of intermediaries, the breakup of video ad technologies across separate silos, and the adaptation demands from an ever growing range of devices and operating systems.

Aligned both on the supply and demand side, a SaaS model will offer a simple consistent monthly fee that can provide a media agnostic service with complete transparency. Looking ahead, ad technology players will increasingly consider a SaaS model. As a result customers will be able to better control their inventory and campaigns and save significant costs.