Real-Time Daily spoke with Ian Wheal, global strategy director at Adstream, a provider of creative asset management solutions, about the challenges posed by over-the-top (OTT) video advertising in a programmatic world, vertical video, and programmatic TV.
RTD:How does OTT video advertising need to evolve in the era of extreme automation?
Ian Wheal: It needs to become more targeted. But there are several obstacles holding OTT back from reaching its true advertising potential.
Beyond its scale, OTT is an Internet-based -- connected TV, desktop and mobile -- platform that offers access to rich data for one-to-one targeting. However, OTT’s targeting capabilities, on the supply side, have been slow to develop. Making inventory available via programmatic means would amplify targeting opportunities, but only a tiny portion of OTT is currently sold programmatically.
Hulu only launched its programmatic solution late last year, for example. Most other content creators have had little incentive to embrace programmatic, opting to sell untargeted impressions at a high price.
More OTT content suppliers will be forced to embrace programmatic as advertisers demand greater data-driven targeting. As programmatic OTT takes hold and standardizes, OTT ad spend will grow.
RTD: How will the adoption of vertical video evolve?
Wheal: Snapchat absolutely exploded this year, threatening Facebook and YouTube with more than 10 billion daily video views. Its user base in the U.S. also grew by nearly 30%. That adoption, along with other platforms like Periscope, has conditioned consumers to accept vertical video at a scale never seen before. This has forced the advertising industry to rethink everything about mobile video -- from formats to content.
More publishers and platforms are now offering vertical video support, and advertisers need to rethink how they approach content for video ads. Vertical video ads are more engaging -- with up to nine times more completed views than horizontal video ads. But having to ideate and develop new content with completely new aspect ratios across many channels -- social, mobile, OTT, video-on-demand, the Web, and more -- only drives up costs. As mobile video spend increases in 2017,a large chunk of those dollars to go toward vertical video.
RTD: What’s going on with programmatic TV?
Wheal: Digital media is beginning to outpace traditional TV advertising because of the benefits it affords advertisers: easier transactions, more targeted, personalized campaigns, and better ad measurement. But those same benefits can be enabled in the linear TV environment through programmatic technology.
Unfortunately, the industry has been slow to embrace programmatic TV. This year, programmatic was only 1% of total U.S. TV ad spend. In 2018, it’s projected to hit 6%. I think programmatic adoption is mired by a lack of broadcaster buy-in. National networks have withheld inventory from programmatic exchanges. They fear programmatic will ultimately drag down pricing. But programmatic has very real pricing advantages. For instance, by pairing undervalued and undersold inventory with granular audience data, broadcasters can sell at higher rates to advertisers.
More national broadcasters will have to embrace the technology in 2017, to make it a viable long-term growth area. The hope is that those broadcasters who have already adopted programmatic will see the benefits across undervalued inventory, boosting interest across the ecosystem.