In 2017, in line with the shift in consumer attention, many publishers invested heavily in online video advertising. The famously dubbed “pivot to video” saw Huffington Post, Vocativ, MTV News and Fox Sports lay off content writers in favour of video content producers.

Another driver of this change was the higher CPMs commanded by video ads compared to traditional static formats. According to eMarketer, the average cost per thousand impressions (CPM), or, is a little more than $20 for video ads worldwide.

Advertisers responded to the increase in availability of video ad placements that could be bought through programmatic platforms. By 2019, eMarketer estimates that 77% of all US digital video ad spend is expected to be transacted through programmatic channels - a substantial increase on the 39% share programmatic video had in 2015.

Despite the increase in supply and demand, the “pivot to video” was short-lived. Mashable sold at one-fifth its one-time valuation of $250 million to Ziff Davis, and both BuzzFeed and Vice missed their annual revenue targets.

What went wrong?

Despite the investments made in video content production, the level of inventory deemed as premium and desirable by advertisers remained stable, creating a market in which supply outweighs demand.

Furthermore, adopting a quality video-centric strategy requires significant investments in technology and manpower, a difficult task for publishers already struggling with revenue. This strategy failed as it became clear that the increase in ad revenue was not going to cover the upfront investment and many publishers pulled the plug.

Another barrier is the fact that the majority of video ad views take place outside publishers’ own platforms and occur primarily on Facebook and YouTube. For advertisers, the advantage of this is scale and centralisation. However, publishers lose control of their inventory, suffer from a lack of transparency into pricing models and are unable to maximise yield.

Advertisers also played a role in the suboptimal performance of video advertising by repurposing TV ads instead of creating innovative, engaging ads. As a result, performance did not meet expectations and budgets moved to other channels.

Getting back on track

In order to take advantage of the consumer shift to video, publishers need to take back control of their digital advertising offering. To deliver high quality video inventory, they need to focus on scaling their inventory to support video, developing relevant sections on their sites to grow the opportunities.

Independent, long-term partnerships or subscription pricing agreements provide publishers with tailored services and greater transparency. However, publishers need to choose their technology partners and solutions carefully. Each additional technology layer implemented has implications for page load times and latency, which all impact user experience and satisfaction.

Publishers, technology companies, creative agencies and advertisers need to work together to carefully match audiences and produce innovative ads - such as 360 video, rewarded video and interactive video - that engage consumers in a way that is measurable and much more impactful.

More effective advertising requires developing platform-specific content based on how viewers consume the content in that environment. Simply repurposing TV content in digital environments does not work and negatively impacts brand perceptions.

Addressing these elements will help ensure video continues to flourish for the benefit of the advertiser, publisher and the consumer.

 

By Emma Newman, UK Country Manager at PubMatic


GDPR Summit Series is a global series of GDPR events which will help marketers to prepare to meet the requirements of the GDPR ahead of May 2018 and beyond. Further information and conference details are available at http://www.gdprsummit.london/


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