Programmatic Video Complexity Still Baffles The Industry

Marketers are set to triple their investment in programmatic video next year, according to eMarketer, but a substantial flow of dollars doesn’t necessarily mean programmatic video advertising is widely understood. I have written before that  video is still in the early stages and there are serious inefficiencies in video advertising. Others have gone on record saying that quality video is scarce, but the major concern about programmatic video is that it’s still far too complex.

With all of the recent activity in the programmatic space, including Yahoo’s agreement to buy Brightroll, it’s worth taking a closer look at how well people really understand programmatic video today.

Testing their knowledge of  programmatic advertising in our online quiz, more than 3,000 publishers and advertisers scored an average of 76%, or 26 out of 34 questions answered correctly. Clearly, there’s more to be learned, so let’s look at the few topics that had quiz takers stumped.

One question that surprised us was “How long does it take to deliver an ad in an RTB auction to the end user?” Nearly three quarters (73%) of quiz takers believed that the transaction occurs instantly. This shows that many in the industry take the term “real-time” very literally. The truth is, it can take approximately one-third of a second (according to Turn’s "The Life of an Ad" chart)  or longer, depending on the technology layers and media involved with each programmatic transaction. Even with standardization across the advertising ecosystem, latency will persist due to system limitations.

Another frequently missed question asked how bid pricing impacts impression volume and session depths. While this is a more technical and nuanced question, only 42% of respondents selected the correct answer, which is that advertisers with the highest bids typically yield higher impressions and lower session depths. 

This is a result of how frequency capping impacts winning bids in an RTB auction, and these incorrect answers show that many do not understand the correlation between the tactic of frequency capping and session depth. Consumers see dozens of ads in their online sessions, with the highest bidders typically winning impressions early in the sessions. Once the frequency cap is hit, the next highest bidding advertiser begins winning impressions as the session goes deeper.

Terminology also tripped up many quiz takers, including one question that asked them to define an “ad tag,” as well as two questions about deduplication and the process that allows DSPs and SSPs to communicate unique ID info.

Low scores on more technical questions underscored the wider issue, which is that programmatic is still in a relatively nascent stage, which has led to many companies simply inventing their own language. For additional proof, look at the confusion swirling around “programmatic premium” and “programmatic direct,”  two terms sometimes used interchangeably.

Buyers and sellers are just beginning to look towards industry associations like the IAB for definition and standardization. The IAB is creating a “glossary/wiki” of terms, while MediaPost has started compiling an industry Wiki to build foundational understanding for programmatic marketers.

Programmatic video is set to grow exponentially, but it’s clear that the ecosystem of buyers, sellers and technology platforms is still getting its educational footing.  Programmatic is shaping a more efficient and effective online video marketplace, but the industry needs to lay a foundation of consistent understanding to build on. The industry has a passing grade right now, but let’s get those quiz scores above 90%.

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