PARTNERSHIP SERIES How to Get the Most Out of Online Video Advertising The internet has changed TV forever. What was once a one-to-many broadcast is now a one-to-one personalized experience. Not only that, consumers expect to be able to watch their favorite teams, shows, concerts, and more on any device, no matter where they are or when they’re tuning in. This creates complexity for both publishers and advertisers, but also tremendous opportunities. So how do you reach consumers with your brand message in this new world of digital TV? And how do you match up the right content with the right ads with the right audience to increase engagement and drive up your CPMs? This whitepaper aims to make sense of the changing online video and advertising landscape, and provide tips for how to use technology and data to drive meaningful results. TV IS EVOLVING As the adoption of smartphone and tablets skyrockets, the demand for video on these devices also accelerates. In fact, mobile and tablet video plays have more than doubled year-over-year for the past two years.1 No longer constrained to anchored devices, consumers are watching video everywhere — on a smartphone, tablet, set-top box, game console, or smart TV. With this explosion of video on multiple devices, online video advertising is also experiencing rapid growth. Online video ad spend in the United States reached $2.9 billion in 2012 with a projected compound annual growth rate (CAGR) of 26% by 2017.2 This growth in online video advertising spend has also spawned a growth in the technology supporting this industry. Programmatic advertising — the use of software, algorithms, and rules to automate the delivery of video advertising — continues to gain 1 2 Source: Ooyala Q3 2013 Global Video Index Source: eMarketer, Aug 2013 U.S. Digital Video Ad Spending, 2011–2017 $9.06 Digital video ad spending (billions) $8.04 % change $6.99 $5.75 40.8% 46.5% $2.93 $4.14 38.9% 41.4% 21.4% $2.00 2011 2012 2013 2014 2015 15.1% 12.8% 2016 2017 adoption. In particular, the adoption of real-time bidding (RTB) is expected to grow rapidly. RTB spend in the US reached $402 million in 2012 and is projected to grow at a 57% CAGR through the end of 2014.3 3 Source: eMarketer, Aug 2013 How to Get the Most Out of Online Video Advertising 1 DEVICES MATTER CONTENT MATTERS By the end of 2013, 6% of the global population owned a tablet, while 22% owned a smartphone. To give perspective, the smartphone penetration number represents an increase of nearly 1.3 billion smartphones in the past four years. The length and type of video also matters. Among the different types of content available on varying devices, live video and long-form video lead in the explosion of multi-platform video. The growth in mobile and tablet adoption has corresponded with a significant growth in mobile and tablet viewing. In fact, the share of mobile and tablet video views has grown by 133% in the past two years, and we expect this trend to continue in 2014 and in the years to come.1 For advertisers, the question is, “are these highly engaged audiences worth more to you and your brand?” The answer may be that it depends, but if you’re looking to reach a specific audience multiple times in one viewing session, live and long-form video provide the best opportunity to deliver multiple campaign messages and increase brand recognition. Mobile ad spending is also expected to grow. By 2017, mobile is expected to account for 15.8% of all ad spending, or approximately $31.1 billion. Mobile ad spending is expected to grow by 48% over the next five years, which by far outpaces the projected growth rates for traditional TV and digital advertising at 3% and 11%, respectively.2 For publishers, live and long-form present an opportunity to deliver more targeted ads at a higher CPM by capitalizing on very engaged audiences. For some clients, we’ve seen a nominal drop in engagement for a significant lift (5–10x) in the number of ads and corresponding ad revenue. In addition to knowing the device on which your viewers are watching, it’s also important to understand when they are watching. Did you know that mobile and tablet viewing spikes early in the morning and through commuting hours, while PC video plays peak midday? Or that tablets become the “first screen” on the weekends, while PC views dip significantly? This information is critical for publishers who want to promote a trending video and for advertisers who want to target their campaigns as precisely as possible. Adding Midrolls +10X ad opportunities -7% viewers +930% revenue % of viewers 100 75 50 25 0 Watched 1/4 Pre-rolls only Watched 3/4 Finished Video Midrolls Source: Ooyala customer data Video Plays by Time of Day Knowing which devices to target, and when, can increase your views and improve the likelihood your ad will hit the mark. % of Maximum Mobile Viewers 100% 75% 50% 25% 0% 6AM 12PM 6PM 12AM 6AM 12PM 6PM 12AM 6AM 12PM 6PM 12AM 6AM 12PM 6PM 12AM 6AM 12PM 6PM 12AM 6AM 12PM 6PM 12AM 6AM 12PM 6PM Monday Mobile Tuesday Tablet Wednesday Thursday Friday Saturday Sunday PC Source: Ooyala customer data 1 2 Source: Ooyala Q3 2013 Global Video Index Source: eMarketer, Aug 2013 How to Get the Most Out of Online Video Advertising 2 TECHNOLOGY MATTERS A technology platform can also provide the transparency and data required for more targeted ads. Having ads that match individual consumer interests will result in higher engagement and reduce drop off rates. As more content is viewed across multiple platforms and devices, managing the complexities of growing ad inventories and the growing number of advertising relationships is becoming essential. Publishers are now aiming to connect to all major ad networks, DSPs, trading desks, and exchanges. Optimally managing inventory requires technology to help automate the various rules and nuances unique to each ad buyer relationship. Furthermore, access to all demand relationships in a single centralized platform can help populate an auction and drive competition for ad inventory, thereby maximizing potential revenue. Across the major video content categories — Arts and Entertainment, Hobbies and Interests, and News — there was a consistent trend that showed five types of video advertising that performed best. For publishers, having access to more advertisers means a higher likelihood that you’ll be able to deliver high CPM ads against your high-value content and get closer to a 100% fill. Ad Performance by Content Category These five types of video ads perform best across the major video content categories. Arts and Entertainment Hobbies and Interests News Sum of Impressions 4.00B 3.29B 3.00B 2.73B 2.00B 1.56B 1.06B 1.00B 9.86B .90B .88B .65B .79B .72B .59B .54B .54B .48B .36B 0.00B Retail Business and Finance Automotive Food and Beverage Communications and Telecom Source: LiveRail customer data WHAT CAN YOU DO TO BE MORE SUCCESSFUL WITH ONLINE VIDEO ADVERTISING 1. Study Your Audience Publishers who understand their audience and offer a better overall viewer experience are more likely to attract new viewers and retain existing ones. Ads are increasingly a key part of the video experience and if a viewer is exposed to the same ad repeatedly or presented with an ad that doesn’t match up with their interests, it detracts from the overall viewing experience. Publishers also need to understand their viewer’s tolerance for ads and offer the appropriate inventory to several buyers. Doing so will increase the likelihood that the best performing type of ad is delivered against the optimal content type, thereby maximizing revenue creating the best possible viewer experience. In addition, the ability to track viewer engagement, coupled with advancements in ad technology, means that advertisers can be much more precise in how they buy ads and how they reach their target audiences. The more you know about your target audience — what devices they watch on, when and for how long, what shows are most popular, their tolerance for ads — the better you can reach and influence them. Working with a publisher and/or vendor that offers these types of advanced video analytics will give you an advantage. 2. Strive to Be Everywhere Consumers today watch video on multiple devices throughout the day. Your ability to identify the most important devices — whether they are iOS devices, Android devices, Smart TVs, set-top boxes or game consoles — and deliver an engaging experience on those devices will determine your online video success. From a technology standpoint, the more you can offload How to Get the Most Out of Online Video Advertising 3 — ingestion, transcoding, delivery, app development, ad insertion, or ad management — the more time you have to focus on developing great content. For advertisers, the proliferation of devices means having a targeted, multi-channel strategy is now an imperative. Your brand message needs to be visible in as many places as possible if you hope to increase brand recognition and customer retention. 3. Know the Data Studies show that simply offering the ability to consume content on multiple devices leads to greater customer satisfaction,3 which in turn leads to reduced churn, higher lifetime value of the subscriber, and lower acquisition costs. The rapid adoption of mobile and tablet usage brings new challenges and opportunities. For publishers to capitalize on this trend, they need robust analytics that provide insights into how people are watching and on which type of device. In addition 3 to promoting the right content at the right time on the right device, your ability to segment your viewers by demographic and interest will enable you to attract more buyers and generate higher CPMs. 4. Embrace Technology Look for technology partners that will help you capitalize on the recent growth of online video and monetize this opportunity. Technology that provides insight into your consumer’s interests and device usage will enable you to deliver the most relevant and appropriate advertising and enhance the overall viewing experience. Programmatic advertising also provides the highest potential in maximizing revenue generated from video advertising placement. Lastly, the optimal video monetization platform will increase the number of potential advertisers within the publisher’s network to better ensure the publisher’s advertising inventory is filled to its highest capacity. Source: Epix Survey, June 2013 CONCLUSION It’s becoming increasingly clear that TV will soon be powered by the Internet and that the lines between broadcast and online will blur. It might require different advertising strategies, but the opportunities and money are real. The world is watching. Are you ready? WWW.OOYALA.COM [email protected] 1-877-3-OOYALA Ooyala harnesses the power of big data to help broadcasters, operators and media companies build more engaged audiences and monetize video with personalized, interactive experiences for every screen. We go beyond traditional online video platforms, providing software and services combining bestof-breed technologies with industry-leading video analytics to help our customers optimize and automate video programming, streaming and syndication. Some of the most successful and innovative media companies in the world—ESPN, Bloomberg, Telstra, NBC Universal, Univision, Comedy Central, VICE, The Washington Post, Arsenal, Dell and more—rely on Ooyala. WWW.LIVERAIL.COM [email protected] 1-415-512-7017 LiveRail is the leading publisher monetization platform for video with more than 5bn impressions (20% of all US video ads) delivered via its platform each month. LiveRail provides premium publishers with the technology infrastructure to sell their video inventory smarter and safer, across all devices. Recently recognized by Digiday Publishing Awards as the Best Monetization Technology for a Publisher, LiveRail is used by hundreds of major publishers who benefit from sophisticated analytics, advanced controls and unparalleled transparency ultimately generating maximum yield for every ad impression. How to Get the Most Out of Online Video Advertising 4