Mobile Video Advertising Is Set To Explode - TechCrunch

Mobile video has been growing steadily for years but it is now close to justifying the hype that it generated throughout the years. Mobile video ad spend in the U.S. more than doubled from 2013 ($720 million) to 2014 ($1.5 billion) and will reach $6 billion in 2018, representing about half of the total online video ad spend.

The growth in mobile devices, broadband coverage and 4G services, device screen size and video consumption on mobile devices are the first obvious drivers. Other, less obvious drivers relate to the way users consume video on mobile. More and more of users’ time on mobile is spent in applications (86 percent of users’ time in mobile in 2014).

Since in-app video inventory is usually more engaging and can be coupled with more data, it is usually valued higher than mobile web video inventory. More users are watching video on tablets than on smartphones, which is another contributor to the bottom line since we are seeing that tablet video ad inventory is usually 30-50 percent more expensive than smartphone video inventory.

Another interesting driver is the democratization of video production and distribution. Some of the most beautiful, professionally produced videos I have seen lately were created with smartphone video cameras. Talented individuals are creating niche category mobile video hubs, “unbundling” YouTube and other large, more general video hubs. Mobile sharing is easy and intuitive and has immediate, powerful distribution potential across multiple, viral channels.

This significantly increases the rate of growth of video “inventory” – potential ad slots for the more expensive video ad units – pre/mid/post-rolls. I say “potential” because most user-generated content is not ripe for ad monetization. Video ads are usually a brand awareness play and the big brands behind the ads prefer to have their brand associated with premium content.

The democratization trend does produce a lot more cat-walking-on-piano videos, but it also generates more professionally produced video content, at scale, contributing more inventory that is relevant for pre/mid/post-roll demand.

Multi-channel networks such as Maker Studios (acquired by Disney) and Fullscreen also assist in the production and distribution of quality video content for brands. As these entities seek to branch out of YouTube, they also look to significantly increase their mobile footprint. Competing new environments, like the up-and-coming Vessel platform, are built primarily for smartphones and tablets. In time, these tectonic shifts will translate into a spiked surge in mobile video inventory.

Large, classic publishers such as Yahoo and AOL also understand the potential of video and are investing significantly in producing, partnering and syndicating video content (Yahoo’s Brightroll acquisition and various video content partnerships) and building video infrastructure (AOL’s acquisition of Adap.TV, Facebook’ acquisition of LiveRail and RTL’s investment in SpotXchange). They also understand that users’ attention is shifting to mobile, especially to applications. However, while their traffic shifts from desktop to mobile – it mostly shifts to mobile web, and apps still account for a small portion of their mobile inventory.

And so publishers are trying to compete on users’ attention by reimagining themselves in mobile environments. This will no doubt be including a mobile-specific video consumption experience. Better mobile-specific content and environment, along with first-party data that these large publishers can apply for targeting in their properties and beyond will contribute to increasing CPM rates.

Facebook and Twitter are already there, at least in terms of in-app user experience and native display ad monetization. Video advertising is definitely next. Social and communication apps such as Snapchat and Tango are generating tons of video content and have figured out creative, relatively user-friendly ways to monetize it.

Increased standardization around this medium, better measurement capabilities (mostly around completion rates and viewable impressions but also TV-specific metrics such as GRP that provide a familiar benchmark for TV buyers) and increased targeting capabilities beyond device ID and lat/long (and with more video inventory, more refined targeting executions will be possible at scale) will go a long way in helping brands and agencies identify the right KPIs and quantify value. These understandings will lead them to allocate more dollars to a standalone mobile video budget item.

More sophisticated, video-specific pricing models will make it even easier for advertisers to not only better calculate their ROI but also shift the risk to the publisher side, making them even more open to this medium. Cost per thousand views (CPMV) will enable brands to only pay if their video ad was actually viewed by a user. Cost per Completed View (CPCV) takes it even further in minimizing the risk for advertisers who are only required to pay for an ad that was viewed in its entirety by a user.

Views and especially completion rates are arguably indicators of engagement, but they are not easy to implement and require some market education. However, based on what we are seeing, these metrics and related pricing models assist to allay concerns among advertisers still new to the mobile video medium and, in my mind, will become the norm in the not-so-distant future.

Finally, the way mobile video ads are sold also affects the evolution of this medium. Online video is still mostly sold through direct channels, as publishers prefer to secure the high CPM rates that they can command for such premium, in-demand inventory.

The largest brands and agencies work with video exchanges, but these marketplaces are considered less premium channels. Publishers are concerned about Real-Time Bidding (RTB)-based buying triggering a race to the bottom, resulting in low prices and sales-channel conflicts. This is especially true for mobile video, leading to a reality in which mobile video exchanges are having a difficult time getting their hands on premium inventory.

This will still be the case this year. However, with the development of more premium programmatic platforms such as private marketplaces (a private, more premium version of the current open exchange model) and programmatic direct (the automation of the current direct sale process), we are seeing that publishers are feeling more comfortable directing more of their premium ad inventory, including video, into those automated platforms. This change of perception is key to unlocking the true potential of online video in general and mobile video in particular.

The combination of increase in (premium) inventory, higher prices, clear KPIs for advertisers and publishers and the rise of more efficient, automated marketplaces to facilitate trade is guaranteed to take mobile video advertising to the next level.

SOURCE: TECHCRUNCH 
AUTHOR: YONI ARGAMAN

Editor’s note: Yoni Argaman is the vice president of marketing and business strategy at Inneractive

The Changing Anatomy of a TV Viewer (infographic)

Created by Videology

Facebook Drops More Than 15 Companies From FBX (via AdExchanger)

Facebook has decertified more than half the seat holders on its Facebook Exchange (FBX) as part of a revamp of its marketing partner program, unveiled Tuesday. Among the partners no longer badge-certified to buy on FBX are some very big ad platform players, including Adobe, Advertising.com (AOL), Rocket Fuel, IgnitionOne and Dotomi/Conversant (Epsilon).

In total, the number of publicly listed FBX partners shrank from more than 25 to just 12. Many of the departed vendors will continue to do RTB-based ad buys through Facebook's APIs and its Custom Audiences program. Others will not, citing rising media costs and restricted access to inventory in the news feed.

Remaining third parties qualified to buy on FBX include TellApart, Triggit, Criteo, AdRoll, AppNexus, MediaMath, Turn and Nanigans. [See the whole list.] Additionally, sources tell AdExchanger that Facebook has granted a small number of partners FBX access without certifying them with a badge. Facebook is not saying which companies are on this silent buyer list, but Google's DoubleClick Bid Manager and DataXu are two possible candidates.

Downsizing the FBX partner set is consistent with Facebook's long-range focus on building out its own real-time bidding capabilities through its APIs and Custom Audiences program, which lets advertisers apply first- and third party data to create Facebook audience segments of their customers and prospects. Going forward, Facebook wants FBX to be more purely focused on dynamic product-level retargeting of the sort that has become common in the retail and travel sectors.

Put another way, it made sense to have dozens of FBX partners when FBX was the only way to retarget on Facebook. Now that Facebook offers plain retargeting directly to advertisers, agencies and ad networks, it wants to preserve FBX as a zone for more complex modeling and data-driven use cases. And it is hand-picking the partners that are driving the most spend in this area.

One senior executive at a former FBX-certified company said his firm gladly exited the RTB platform after seeing the mandatory minimum spend required to stay. This person said FBX has been vulnerable to intermediaries looking to game attribution systems.

"FBX favors carpet-bombing with retargeting cookies. There are players out there that made hay with that for a while," said the executive. "It's a game that's going to play out for a little while, and then it's going to go away."

While Facebook might do away with FBX if it develops a powerful enough retargeting solution on its own, clearly that day has not yet arrived. One ad tech CEO, speaking on background, said it could take years of development to get to that stage. And given that the platform is still a very large revenue contributor for Facebook – delivering an estimated $500 million in 2014, according to a source – it could be a costly mistake to force migration to a less robust Facebook solution.

For other partners that have left FBX, migrating from FBX to Facebook's mobile-friendly RTB access only makes sense. (FBX is desktop-only.)

A prime example is Rocket Fuel, whose CMO Eric Porres told AdExchanger, "Rocket Fuel is migrating from FBX to the API because it is more aligned with giving our customers access to a wider range of ad units and specifically, access to the 1.19 billion people who access Facebook via mobile devices monthly. We believe the Facebook API solution is where the broadest inventory (mobile, video) and most robust first-party data sources are available, not FBX."

Rocket Fuel says it is in the process of developing its integration with Facebook's API and that once that process has been completed and verified, it expects to be listed as an "Ad Tech" marketing partner.

Here is a partial list of third parties that are no longer publicly certified on FBX: Adobe, Advertising.com, Brand Networks, Chango, DataXu, Dstillery, IgnitionOne, myThings, Netmining, Perfect Audience (Marin subsidiary), Quantcast, Rocket Fuel, Struq, and [x+1].

Update: MyThings tells AdExchanger it still has access to FBX to run dynamic creatives both on the right rail and in the news feed. We have reached out to Facebook for clarification.

FULL ARTICLE HERE

Programmatic Waterfall Mystery

by AdExchanger // Friday, January 23rd, 2015 

“The Sell Sider” is a column written for the sell side of the digital media community.

Today’s column is written by Ari Paparo, CEO at Beeswax.

It may sound like the latest in young adult fiction, but this mystery is not dramatic or amusing, nor will it make your teenager ask you for money for the movies.

The mystery is this: In the supposedly super-efficient world of RTB, why would publishers continue to waterfall their demand sources?

Spoiler alert: This column will not actually answer the question. I merely posit possible explanations, which you will have to wait to see if the writer can tie together in an as-of-yet unscheduled Episode 2.

First, let’s start with some economics. As should be familiar to anyone who has anxiously waited for an airline upgrade, there’s a big difference in price between coach and business class, and it’s not easy to switch between the two. The economic theory behind this is that, as a seller, you can maximize your profit by touching different consumers on different portions of the demand curve.

Differential pricing maximizes yield on a demand curve:

Before the exchanges, most publishers executed demand segmentation through a waterfall of tags. Tags from various ad networks would load only after someone else had passed on the impression. The lower you were on the waterfall, the fewer premium impressions you had access to, which was a form of quality discrimination. If you don’t believe this matters, consider the difference in ad impression value between the first page of a slideshow and the last one.

Differential pricing using an old-fashioned waterfall/daisy chain

Fast forward to today’s world, where every impression can be simultaneously auctioned to every potential demand source in real time, with business rules customized to maximize revenue. This should allow publishers to maximize yield, not just on two points of the demand curve, but theoretically on every point.

Diagram: How RTB should be the perfect solution to maximizing yield

So what do smart publishers actually do? They waterfall, or "daisy chain," supply-side platforms (SSP). They send an impression to their preferred SSP with a relatively high floor price, then if the impression doesn’t clear, they redirect it to a second SSP with a slightly lower floor price, and repeat the process until AdSense clears the impression at pennies. This is essentially differentiating demand based entirely on the buyers being unaware that they could buy the same inventory cheaper. It’s as if you were able to repeatedly reload the American Airlines site and get cheaper prices for the same seat. When you ask publishers why they do it, they say, “Because it works.”

This is the ugliest secret in programmatic. I’ve personally verified it with more than a few top ad ops folks.

Any economist could tell you that this is a bad idea. But the ad ops folks insist that it works. So let’s trust them and try to answer the waterfall mystery: Why does it work?

Hypothesis No. 1: Different SSPs Have Different Demand Density

This seems like the obvious answer, but upon closer inspection, it doesn’t make sense. The top 80% of demand comes from a handful of bidders that integrate with everyone. Further, if one SSP had so much more demand than the others, it would always be the first in the daisy chain and gain significant share. But publishers insist they must move the order around over time and the SSP market remains a fairly stable oligopoly.

Conclusion: Unlikely.

Hypothesis No. 2: SSP Tools Produce Different Yields On The Same Inventory

The SSPs do have varied tools to manage yield. But once again, if one is dramatically and consistently better than the others, the market would reach equilibrium with the leader on top for most clients. This is not the case.

Conclusion: True, but unlikely to be the cause of the waterfall.

Hypothesis No. 3: Buyer Tools Differentiate By Supply Source

Do bidders price the same inventory differently if it comes from different supply sources? If so, this would cause some unpredictability in determining optimal auction settings, and switching between SSPs would be a crude way of generating incremental yield. But this could also cause reduced yield, since the combination of auctioneer, inventory and buyer would be hard to predict.

Conclusion: Possible, but hard to test.

Hypothesis No. 4: The Buyers (And Their Tools) Are Dumb

What if most buyers just don’t realize they can get the same impressions at lower prices and are instead consistently buying impressions for higher prices than they would ultimately clear for?

This would explain both the need for multiple auctions – to fool buyers into thinking they are distinct impressions – and the need to switch the order of the waterfall – to throw off the demand-side platforms once they have reached an optimized state.

Conclusion: This is a clear contender!

Hypothesis No. 5: Ad Ops Teams Like Messing With Things

What if yield is just going up because someone is paying close attention and tweaking settings a lot? See the Hawthorne effect.

Conclusion: Possible, but don’t tell ad ops.

Full AdExchanger Article

Video Ads Take Off in Mobile Gaming Apps

If you play games on your smart phone, chances are you've noticed the video advertisements that pop up while you are playing. Though annoying, they keep the app free - and are the newest link in the evolution of gaming.

Nearly half of all mobile phone users in Europe have downloaded a gaming app - and of that group, 40 percent play it every day. But one company from California with a significant beachhead in Berlin seems to have solved the puzzle of serving ads without interrupting the gaming experience.

Ville Heijari of in-app advertising platform Vungle says such platforms are bridging a gap: they are helping game developers earn money from mobile users who are generally reluctant to pay for apps, while at the same time delivering advertisers a new captive audience for mobile ads.

About 50 percent of the advertisements that Vungle places inside mobile games for Android and Apple iOS are actually promoting other games or smart phone apps. The strategy is to build up a customer base and increase app usage overall, in order to create space to plug in ads for consumer brands. Indeed, the other half of the ads on Vungle's platform are paid for by companies like Unilever and Nokia.

Kaikkonen experienced massive success for his game RGB Express once it was offered free

But Heijari says Vungle's platform differs from similar offerings by the way it gives gamers incentives to watch ads.

"Advertising traditionally used to be something that disrupted the game play and drove people out of the game," Heijari explains. "But when we do an opt-in approach, people actually want to see the ads," he adds.

"They download the other applications that are being advertised, but they also gain some kind of benefit within the game or app."

Ads for hints

One game on the Vungle platform is RGB Express. Its developer, Markus Kaikkonen - a Finn who divides his time between Berlin and Helsinki - says his puzzle game became a number-one hit after Apple made it a free download of the week last September.

"Usually it costs a little under 3 euros [$3.50] in the app store," Kaikkonen says. "And it got 2.6 million downloads in eight days, at that time."

"We didn't get money from those sales, but we got a huge amount of publicity," Kaikkonen adds.

Five months on, RGB Express is still selling well in the Apple store. But when Kaikkonen launched the app for Android this past December, he chose a different strategy: He decided to offer the Android version of his app for free.

Heijari is working on incentives for mobile gamers to watch ads

Only 1 to 2 percent of Android users pay for apps. To make money with Android, Kaikkonen joined the Vungle platform, which serves video ads inside his game and rewards players with hints or game credit for watching 15-second advertisements.

"In the Android version of the game, the player can use hints to watch the solutions for the problems," Kaikkonen said. "He can buy more hints if he wants to, but if he doesn't want to buy those, he can watch a Vungle video ad to get a free hint."

Long tradition

Vungle's work is the newest development in brands trying to reach consumers through video games. One of the first product-oriented video games was launched by Johnson & Johnson in 1983. It ran on the Atari 2600 system, with a gaming premise like a cross between Pong and Space Invaders.

Fast-forward three decades, and the advertising gaming experience is more sophisticated. Tanya Lee of Vungle says today, brands want to be sure people are actually watching the ads.


"One thing that we're going to be testing out is a video for a major American car maker, as well as a game that will test whether users have seen the ad - what color that car was, that sort of thing," Lee says.

"I think what you're going to see is that there will be a lot more of that - efforts to make the users recall, interact and engage," Lee adds.

For Finnish puzzle app maker Markus Kaikkonen, video ads in mobile games are a welcome change from popup banner images that usually interrupt game play. A more seamless advertising experience satisfies his need to make money, along with users' demands for a constant stream of free mobile games.

"Especially with smart phone games, users have this idea that games are free," Kaikkonen says. "Advertising is the only way to make money for most of the apps from most of the players."

Deutche Welle Article Here Deutsche Welle Article Here

Video Advertising Startups Ignite A Funding Fire

If four video ad tech acquisitions in the second half of 2014 weren’t enough evidence the space is hot hot hot, a barrage of new investments in video marketing startups should help drive that point home.

Vidyard, a video marketing automation platform, just raised $18 million in Series B funding from Bessemer Venture Partners and existing investors iNovia Capital, OMERS Ventures, Salesforce Ventures and SoftTech VC, bringing its total financing to $25.7 million. The company employs 60, but expects to grow to 100 by the end of the year.

Vidyard’s capabilities differ from some of the exchange-based video startups purchased last year.

Its software distribution platform is designed for brands and agencies to create, host, distribute and track their video content with integrations to marketers’ existing CRM, analytics and back-end systems.

Marketers can access that data to see how their videos performed – for instance, when audiences dropped off and who was watching, said Michael Litt, CEO of Vidyard. Clients can also integrate this information into marketing automation platforms to improve lead scoring.

“If you develop a three-minute-long video, and data shows people drop off before they see a call to action, it can really help improve the production of content,” he said.

“Video at all stages of the funnel, either on owned-and-operated sites or via social campaigns, etc., is accelerating,” Litt said. “We’ve seen more top-of-the-funnel content pieces distributed to Facebook and Twitter to drive awareness.”

Marketers who use Vidyard for distribution generally experience the most traction with email and Facebook campaigns, Litt said, which is in lockstep with the marked uptick in video posts per user recorded by Facebook in the US and globally.

Publisher-Focused Platform Surge

The video investment dollars are going to publisher-serving platforms, too.

A number of supply-side-focused companies got snatched up last year, including LiveRail, SpotXchange, Videoplaza and Ooyala.

Parisian video supply-side platform Teads, which merged in 2014 with demand-side video tool eBuzzing, on Tuesday announced it had raised $30 million in financing, $15 million of which was equity-based, the remainder coming from a mid-term line of credit issued by Bank of China and HSBC.



Bertrand Quesada, Teads’ CEO, said the video ad platform did $100 million in net revenue last year, a 65% increase year over year.

Teads develops something called an “inRead” video ad format, which only activates sound or motion when a viewer scrolls over a placement. Quesada says it’s consumer- and advertiser-friendly, since Teads runs semantic analysis to align ads with contextual content, and only charges advertisers for completed views. Forbes, Slate and Reuters all white-label its tools, and Videology, Turn, DBM, Adap.tv and others hook in on the demand side.

“We’ve only been operating in the US for a year and a half, but now we’re working with over 500 premium publishers including Hearst, Condé Nast, Reuters and The Washington Post,” said Quesada. “Publishers are desperate to grow their dollars in the video space and it’s a good way to address the challenge of lack of premium video inventory that exists today. We plan to use the financing to expand our team and offices globally.”

Full Article Here

Facebook’s New Year Resolution: More Video Ads in News Feed - Bloomberg

The amount of video on Facebook Inc. (FB)’s news feed more than tripled last year, as many users and advertisers discovered the option for the first time. How much bigger video will get on the social network depends largely on Fidji Simo.

Simo is Facebook’s director of product in charge of video. After the social network debuted video ads last March, her team added tools for advertisers to measure whether the promotions fit goals they’d set. This year, Simo said she plans to tweak the website’s design so marketers can more easily buy video ads and monitor their campaigns. She’s also working to improve video targeting so the right Facebook users see the right ads.

Her efforts are central to Facebook tapping the U.S. online-video advertising market, which EMarketer Inc. estimates will reach $7.8 billion this year, up 30 percent from $6 billion in 2014. While that’s a fraction of the $70.1 billion U.S. television-advertising market, the growth rates in digital video promotions exceed that of other parts of the advertising industry, providing a lucrative revenue source for Menlo Park, California-based Facebook.

“We’re just really at the beginning of understanding what video on Facebook is about,” Simo said. “We want to make sure that we’re really communicating on how people are engaging with video so marketers can really understand.”

Embracing Video

Facebook today is releasing a progress report about video on the social network, including how users and brands have boosted the amount of video in the news feed by 3.6 times in the past year. In addition, the number of video posts per person has jumped 75 percent, with more than half of daily U.S. visitors watching at least one video a day, the company said. Facebook Chief Executive Officer Mark Zuckerberg said in a November public question-and-answer session that in five years, most of Facebook will be video.

Still, Simo’s job remains complicated -- especially with marketers. Brands typically measure a promotion’s success against television and other parts of the Web. Facebook’s video ads don’t work the same way as those offerings, as they can be targeted more specifically to certain demographics. Facebook ads also run alone, instead of appearing ahead of other content like on Google Inc. (GOOG)’s YouTube and Hulu Inc.’s streaming service. What’s more, the social network’s promotions play automatically without sound in the news feed until people click on them.

Education Kick

That means Simo has had to create new metrics for marketers to evaluate their video-ad campaigns in Facebook, including how many people clicked on a link at the end of a video. She has also had to educate advertisers on video, attending the company’s advertising council meetings, where executives at Facebook meet with consumer giants like Coca-Cola Co. (KO) and Unilever Plc. (ULVR) Marketers have asked to see more clearly how their advertising leads to sales, Simo said.

Facebook doesn’t break out revenue from video ads, for which it has been charging $1 million or more a day for 15-second spots, people familiar with the situation have said. Advertisers including Kate Spade & Co. (KATE) and Gap Inc. have used Facebook’s video ads, the company said.

Facebook “is coming on strong and has the potential to put pressure on YouTube,” according to an EMarketer report today that said social media will change the rules for video advertising.

More Steps

Facebook has been taking more steps to improve video ads. In September, the company unveiled an ad server tool called Atlas to let marketers get data on how often individuals saw ads and on what device -- something that’s essential for video now that 65 percent of Facebook’s video is viewed via mobile devices. In July, Facebook also agreed to acquire startup LiveRail, which will help it serve video advertisements outside of the social network.

“LiveRail will make it so that publishers can be more efficient, and Atlas can help them understand how it helped their business,” said Brian Boland, a vice president focused on ads at Facebook.

Simo, who joined Facebook in 2011 from EBay Inc. (EBAY) and who has helped the social network simplify its ad-format options, got her team to build more ways for advertisers to measure video last year, such as letting them see how many people are watching at a certain time. The company also added prompts at the end of its ads that sent people to websites or asked for an action.

This year, one type of video-ad campaign Simo said she’ll continue to pitch heavily to advertisers is one that involves following up on videos with other kinds of ads, called retargeting. That will help Facebook get closer to proving that it can drive sales, she said, with videos helping to brand a product and the follow-up promotion moving someone to actually purchase the item.

“This is really the year where we made a lot of investment and advertisers are now embracing the fact that we are big in video,” Simo said.

Full Story from Bloomberg Here

Verizon Has Approached AOL for Possible Takeover or Joint Venture - Bloomberg

Verizon Communications Inc. is exploring a potential acquisition or joint venture with AOL Inc. (AOL) to help it expand mobile-video offerings, people with knowledge of the matter said.

The wireless carrier hasn’t made a formal proposal to AOL, and no agreement is imminent, said the people, who asked not to be named because the discussions are private. Speaking at a conference today, Verizon Chief Executive Lowell McAdam said the company isn’t having “significant acquisition discussions” and is more interested in partnerships with media companies and content providers, rather than buying them.

“AOL, along with lots of other media companies, are potential for us to do partnerships,” McAdam said.

Verizon is primarily interested in AOL’s programmatic advertising technology -- the automated buying and selling of ads online -- which could be paired with a future online-video product, two of the people said. With a takeover it would also gain paying subscribers and Internet properties including the Huffington Post.

AOL CEO Tim Armstrong has used digital-advertising acquisitions to transform it from the Internet portal once known for its “You’ve got mail” alerts. Verizon is seeking expertise in three areas: online content, mobile video and advertising, one person said, and a venture -- rather than a takeover -- would keep it focused in those areas.
‘Digital Response’

“Verizon needs a digital response and AOL has shown the best strategic foresight of navigating the digital-video world,” said Laura Martin, a senior analyst at Needham & Co. “Verizon can buy or build that, but it’s unlikely to build it fast enough.”

The company also has held talks with several of AOL’s peers about how to bolster those businesses, one person said.

Full Article From Bloomberg Here

Why 2015 is Video Advertising’s Breakout Year

  ~ by Tod Sacerdoti, CEO and founder of BrightRoll as reported by VentureBeat

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 withFacebook 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.

Full Article Here

Yahoo to Acquire BrightRoll

November 11, 2014 04:40 PM Eastern Standard Time

SUNNYVALE, Calif. & SAN FRANCISCO--(BUSINESS WIRE)--Yahoo! Inc. (NASDAQ: YHOO) and BrightRoll, Inc. today announced a definitive agreement for Yahoo to acquire BrightRoll, a leading programmatic video advertising platform. The transaction will combine Yahoo’s premium desktop and mobile video advertising inventory with BrightRoll’s programmatic video platform and publisher relationships to bring substantial value to advertisers on both platforms. BrightRoll is a large, growing and profitable business with net revenues expected to exceed $100 million this year.

Yahoo expects the transaction to enhance its EBITDA.

“We believe the next step for programmatic video advertising as an industry is to extend and
standardize globally, make cross-device buying simple and measurable, and complement and
integrate with TV.”

The acquisition will accelerate Yahoo’s strategy, which is focused on search, communications, and digital content through growth in mobile, social, native, and video advertising. Acquiring BrightRoll will dramatically strengthen Yahoo’s video advertising platform, making it the largest in the US.

Online video advertising is increasingly fragmented across thousands, if not millions, of sites and mobile apps. More so than with traditional broadcast television, advertisers are seeking ways to buy online video advertising at scale across many sites in fewer, simpler transactions. BrightRoll provides an elegant solution, aggregating high-quality publishers together into a unified network and utilizing programmatic advertising and aggregation to allow real-time buying on the largest set of online video advertising inventory available. BrightRoll’s approach not only benefits advertisers and publishers, but also improves experiences for consumers, through better quality, more relevant advertisements.

BrightRoll is the industry’s leading programmatic video advertising platform for reaching audiences across desktop, mobile and connected TV.

BrightRoll powers digital video advertising for the world’s largest brands and agencies, including 87 of the AdAge Top 100 US advertisers, all of the top 15 advertising agencies, and all 10 of the leading demand-side platforms.

BrightRoll served more video ads and reached more consumers in the US in 2014 than any other platform, according to comScore. Tens of thousands of sites and mobile apps send approximately two billion requests per day to BrightRoll to monetize the inventory they worked hard to create

“Video, along with mobile, social, and native, is driving a surge in digital advertising. Here at Yahoo, video is one of the largest growth opportunities, and BrightRoll is a terrific, strategic and financially compelling fit for our video advertising business,” said Marissa Mayer, Yahoo CEO. "As with every acquisition, we have been extremely thoughtful about our approach to the video advertising space.

This acquisition will accelerate the growth of both companies – we can help BrightRoll scale to even more advertisers globally and they can bring their tremendous platform offering to Yahoo’s advertisers. The combination builds positive momentum for Yahoo’s broader display advertising business in 2015.”

“We believe the next step for programmatic video advertising as an industry is to extend and standardize globally, make cross-device buying simple and measurable, and complement and integrate with TV,” said Tod Sacerdoti, BrightRoll CEO and Founder. “We are excited to join Yahoo to materially advance efforts in each of these areas. We’re still in the early innings as an industry, and together, BrightRoll and Yahoo are committed to the vision of helping grow the entire video advertising ecosystem.”

Following the closing of the acquisition, expected in Q1 2015, BrightRoll will continue to offer its current suite of industry-leading products and services. With Yahoo’s additional investment and global support, BrightRoll’s platform and advertising solutions will continue to improve and expand. BrightRoll will retain their talented team of approximately 400 employees, all of whom will remain completely focused on digital video advertising.

Yahoo is acquiring BrightRoll for approximately $640 million in cash. The transaction is subject to customary closing conditions.

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