When it comes to video advertising, a lot can happen in a year. In 2014, digital video advertising experienced huge gains in spend and viewership, took a giant leap into automated programmatic buying, and saw a continuing wave of consolidation with Facebook buying LiveRail and Yahoo announcing the acquisition of my company, BrightRoll. After such an eventful year, 2015 will be the year that digital video advertising fully ‘grows up’. We’ll continue to see IPOs and industry consolidation in 2015, and as a result the video ad market will settle into a more mature phase.
Here are my predictions for the year ahead…
1) Programmatic goes mainstream for digital video.
In 2014, advertisers and publishers laid the groundwork for a fully automated video ad future, with $700 million worth of video inventory transacted on programmatic platforms in the US, according to eMarketer. By the end of 2015, buyers and sellers will transact more than $2 billion worth of video ads on programmatic platforms, more than tripling 2014 spending.
Advertisers and agencies are already sold on programmatic, and in 2015, publishers, will finally fully embrace programmatic technology, realizing it represents a huge opportunity to improve efficiencies and boost profits. Top-tier publishers will begin to shift to automated processes, adopting private marketplaces and programmatic direct platforms to gain operational efficiencies while maintaining control over how and to whom their premium inventory is sold. Gains will also be made in open, RTB-based video ad exchanges, as advertisers seek to consolidate their video ad buys across publishers via single programmatic platforms.
2) Mobile video spending skyrockets.
Consumers around the world are moving their media attention to smartphones and tablets, so it makes sense that advertisers will look to put their messages in front of these mobile eyeballs. However, despite the rapid consumer move toward mobile, in 2014, supply outstripped demand in mobile video, with many advertisers unsure of the format’s measurable impact. A lack of standard practices about how to effectively target, measure, and frequency cap mobile video ads across devices has also held back mobile until now. Thus, mobile video CPMs generally remained lower than desktop video in 2014, but that’s set to change in 2015.
Sophisticated mobile targeting and measurement has finally arrived, allowing advertisers to target and measure in the same ways they have on desktop devices. Publishers will offer mobile video inventory that more closely mirrors (and integrates with) desktop video. Significant progress on device ID mapping will enable cross-screen targeting and measurement, while more precise geo-targeting capabilities will also emerge. These advances will generate more premium inventory, causing average mobile video CPMs to rise. In fact, research by Business Insider predicts that over the course of the next few years, mobile video ads will grow almost five-times faster than desktop. That said, by the end of 2015, there’s a real possibility that advertisers will spend more on mobile video ads than desktop.
3) Programmatic performance guarantees will become the norm.
In 2015, advertisers will expect publishers and ad tech platforms to guarantee some performance metrics such as completion and clickthrough rates, as well as targeting metrics such as audience, inventory quality, and viewability. With 2014’s rise in awareness around fraudulent ad activity, advertisers will also demand metrics identifying non-human traffic. Providing such ‘guarantees’ will require many ad tech platforms and publishers to upgrade their data analytics and measurement capabilities, helping the video ad industry tie ad investment to concrete returns. When advertisers trust their investments are going to high-performing, viewable, and non-fraudulent inventory, they will spend more so we can expect to see advertisers focusing more on performance, rather than price.
4) Ad tech will come back in favor in capital markets.
2014 was a challenging year for ad tech in the capital markets, as newly public companies saw their share prices decline. 2014 was also a year of big exits via acquisition for video platforms, as larger technology companies began to understand the value in video. With such a tumultuous year behind us, 2015 will be the year top ad tech companies rise back to favor in the capital markets. Video platforms that provide a full-service ad buying and management solution — including programmatic trading, metrics and measurement, cross-channel targeting, and partnerships with anti-fraud providers — will emerge as leaders, attracting more of advertisers’ video budgets. Investment banks, like Woodside Capital Partners, are bullish on the space and “foresee continuing disruption of the traditional media advertising landscape, with video and mobile Ad Tech driving the change.” On the other hand, video platforms that offer point solutions will be acquired by larger players or fail to gain critical mass.
When we look at how ad tech companies have performed in the market lately, it’s easy to forget ad tech is still a young category, especially programmatic video. The future potential for automated, targeted, and measurable video advertising is tremendous. As we move into 2015, ad tech will continue to grow in step with its potential, bringing investors back to the strongest players.
Tod Sacerdoti is the CEO and founder of BrightRoll, the industry’s largest programmatic video advertising platform. The company’s proprietary technologies connect buyers and sellers of digital video advertising to help them reach audiences across the web, mobile and connected TVs.