Commentary

As More Companies Make Programmatic Inventory Available, CPMs Are Rising

Programmatic trading platform Ooyala just released its Q1 2016 Video Index, which compares AVOD (audio/video on-demand) to SVOD (subscription video on-demand) business models, and explores new programmatic and anti-ad-blocking trends. The report compared engagement trends between AVOD and SVOD services to understand how viewership differs between the two business models to better inform monetization strategies. 

The findings revealed a strong correlation between content size and engagement in each model and found there are opportunities for publishers to tailor their monetization strategies accordingly. For SVOD services, which are almost exclusively comprised of long-form content like episodic series and full-length feature films, nearly 100% of viewing across all devices is with long-form video—content that’s 20 minutes or longer. However, consumption on AVOD differs significantly.

Smartphone and PC viewers prefer short-form content the most, at 66% and 55%, respectively. For tablet users, viewing is evenly split between long-form (43%) and short-form content (44%). Connected TV viewers watch long-form content 92% of the time with AVOD services.

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The report also analyzes how consumption of AVOD and SVOD assets differ by device and content length. The findings show a near -split in engagement between small and large screen devices. AVOD viewers spend 55% of their time on PCs, while SVOD viewers do the opposite, spending 55% on their time on mobile devices. The findings suggest SVOD services offer more personal experiences and tend to favor more personal devices.

One of the most interesting findings was that in Q1 2016, there was a 22% increase from Q4 2015 in the amount of premium video inventory being made available programmatically, a sign that supply of premium programmatic inventory--combined with buyer demand--is growing. That’s a positive trend for programmatic media. In addition, Ooyala found that programmatic activity from premium buyers in Q1 led to a 74% increase in paid impressions.

Scott Braley, Ooyala’s GM Programmatic, tells RTBlog: “It’s the continuation of a trend that more publishers are making their inventory available programmatically. The biggest ‘aha’ finding is the growth in CPMs.” Also, the report found a 13% increase in the average CPMs that are garnered by private marketplaces. “That’s noticeable,” Braley said. The rise is a function of premium supply being made available and an increased demand for premium ad inventory.

What does Braley mean by “premium”? He characterizes it as “high quality inventory that’s in brand-safe environments—news publishers and publishers of episodic content.”

That 13% increase also supports a trend that more broadcasters and premium publishers are placing more of their inventory into programmatic channels. So there’s a higher demand for inventory to be transacted programmatically vs. direct sold inventory that’s based on a rate card, according to Braley.

The report found that when anti-ad blocking technology is deployed as a managed service, it tended to increase ad impressions by as much as 23%. The flip side was that publishers that don’t deploy such technology could potentially lose 23% of available ad impressions that no longer can be monetized. The report suggests that as more consumers turn on anti ad-blocking technology, the potential gains from such technology are significant. Ad inventory that’s being blocked is valuable. If average CPMs are somewhere between $15 and $25, this is a potentially lost opportunity to generate revenue because of ad blocking.

Among other highlights from the report:

 Mobile viewing now represents 48% of all online viewing, up 14% from a year ago and up 129% from 2014.

  • Nearly one in five (18%) of all mobile views are now on tablets, marking the third consecutive quarter of growth for tablet viewership.
  • After being served recommended viewers will average a 10% organic lift in video viewing thereafter, leading to a 6%-23% uptick of time spent on site.
  • During weekdays, all devices experience an increase in viewerships synchronously in the morning. PCs outpace tablet and smartphones combined, but at night, tablets and smartphones increase as PCs decrease.
  • Notably, during the weekends, all devices share similar cycles: they ramp up in the morning, maintaining steady usage throughout the day and dip heading into the evening.

 The report drew insights from more than 3.5 billion video events per day from 220 million viewers across the world.

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