Programmatic video is growing faster than predicted

From disruptor to mega trend, programmatic video has come a long way. At first it was the new shiny toy with all the right push buttons to activate a budding video market. Then it burgeoned into the go-to transaction process for video advertising.Towards the second half of 2017, programmatic video is moving full steam ahead and gathering speed at every turn. Already in 2016, more than half of all US video ad dollars traded via automation according to eMarketer. eMarketer goes on to predict:

 By 2018 nearly 75% of all video ad dollars will transact programmatically.

In the US where digital video viewers are estimated to grow from 221.8M in 2017, to 239.2M by 2021, video ad spend is expected to grow 12% compared to last year (eMarketer).

Given the surge in automated transaction, these figures shed some light on why a rising percentage of US video ad dollars are being transacted programmatically and why it is becoming one of the most important growth drivers of programmatic ad revenue in 2017.

2. The rising power of audience data in an era where data is the new oil

Programmatic video will increasingly render a strong magnetic pull because it is a gateway to audience data unavailable through traditional direct deals.

The scarce supply of video inventory, especially premium inventory has confined many transactions to private direct channels. This traditional transaction method has been hurting both the publisher, who potentially could be selling underpriced inventory, and the advertiser who cannot estimate the real value before the transaction.

The programmatic promise of audience measurement makes it possible for marketers to seamlessly execute cross-channel campaigns capable of finding the right audience at the right time. On the other hand access to audience data, rather than ad space is a rather large carrot publishers can dangle in front of marketers, who share an insatiable appetite for video.

3. Top video and online TV formats driving programmatic growth

Instream / outstream video formats:

Premium video inventory is still in short supply, limiting publisher revenue as well as brand engagement. Instream and outstream units are creating new revenue streams by monetizing video that wasn’t there before for higher CPMs. The less intrusive nature of these two new formats has been contributing to an increase in their value compared to the pre-roll format, and in particular the notorious non-skippable pre-roll.

A Forrester survey (eMarketer) querying agencies about the types of video ads that in future would be more important to their clients reported that 77% of agencies and 70% of advertisers cited out-stream ad units.  This could explain why 30% of publishers, (AOL) believe outstream will be the format to drive most video ad revenue growth this year.

The surge of Programmatic TV:

According to the IAB cross-platform video buying including TV is trending up. Although it’s early days, players in the broadcasting value chain are starting to invest in this new segment. Programmatic video will lay the groundwork for programmatic TV. Technology developments are expected to pave the way to a new ecosystem. Distinctions between broadcast, narrowcast and unicast will merge enabling all formats to transact within the same workflows.

More connected TV inventory will eventually enter programmatic channels and broaden the scope of the programmatic video omnichannel. At the moment however, the absence of joint standard metrics for assessing data across a multitude of connected platforms is marring its potential.

4. Birth of the ‘Optimized Video Player’ designed for programmatic trade

Programmatic transactions in video are far more complex than display and error rates are comparatively high. Yield optimization techniques demand more labor intensive processes to make sure that video ads are not just played to the right segment at the right time, but are monetized at maximum value.

Being an audio visual medium, technical barriers brought on by frame, volume control, custom CSS and responsiveness are just some issues complicating streaming and scalability. But wait, it gets worse:

Recurrent VPAID errors heavily impact fill and yield, not to mention the user experience.  

To overcome complex delivery issues and errors, while squeezing the most revenue from each impression there is a need for a more advanced player. The modern video player integrates an optimization layer capable of overcoming the streaming challenges as well as the server side and client side barriers compromising programmatic transactions.

5. Video header bidding gathers momentum

Advanced client & server side video header bidding technology opens ups demand and increases transparency while eliminating VPAID errors.

This year header bidding has been broadly adopted by publishers. Header bidding has been disrupting the programmatic landscape with the promise of increasing yield and fill-rates.

Unfortunately standard video header bidding, which usually occurs either on the server or client side, fails to prevent waterfall-like latency, as well as redundant ad calls and errors generated by prolonged VPAID windows and VPAID chaining.

New, advanced video header bidding, purposely built for video, is overcoming earlier latency challenges and VPAID errors by operating concurrently on the client and server side.

By working on both sides, hybrid video header bidding wants to override the main shortcomings of client only or server only video header bidding. In turn it looks to introduce advanced yield optimization without falling into VPAID traps and compromising the viewer experience.