Consumer demand for sight, sound, and motion ignited mobile and
programmatic video advertising growth; new challenges emerged

---

Digital ad spend in the U.S. is projected to top $58 billion this year and $93 billion by 2019, according to eMarketer. Much of that growth is coming from digital video, with the category poised to absorb significant television ad spend.

Digital video is on an explosive growth track, showing no signs of slowing – more dollars continue to pile into video and new opportunities are emerging. Yet, with unprecedented growth comes unprecedented challenges, and many are beginning to realize just how truly disruptive digital video will be.

What’s fueling digital video’s tremendous growth?

“Sight, sound, and motion” advertising dollars are moving across screens. Viewers are fragmenting across video distributors and programmers as advertising technology races to evolve, and marketers are realizing just how powerfully digital video can tell their stories. Under pressure from marketers wanting to find their consumers across devices, media buyers are pulling from TV budgets to fund digital video growth.

For our sixth annual State of the Video 2015 Report, we surveyed 300 brands, agencies, and publishers to examine these dynamics and learn how key players are adjusting to newly emerging challenges.

Here are our key findings from this year’s State of the Video Report.

Marketers are reprioritizing traditional ad budgets, adding dollars to digital video.  TV budget growth is stagnating, with a sizable portion of dollars being moved to video advertising. Nine in 10 buyers are shifting dollars from linear TV to digital channels, reallocating on average 10% of television budgets. Of marketers moving TV dollars towards digital channels, 88% are shifting that television spend to video, including desktop, mobile, or over-the-top (OTT).

Mobile and video are converging, posing new opportunities and challenges.  Bolstered by faster network speeds and more screens, the growth of mobile video content consumption has been meteoric. This year, more than 191.5 million Americans watched more than 50.5 billion videos via mobile, according to comScore.

Marketers and publishers are attempting to keep up. According to industry estimates, desktop video spend grew 27% from 2014 to 2015, while mobile video grew 75%, eMarketer data shows – trends that align with buyer optimism. Our survey showed overall mobile video advertising spend increased 18% since 2014.

But marketers say measurement and attribution remain key pain points with mobile video. Mobile performance is more difficult to track than desktop due to reliance on deterministic or probabilistic identifiers. Both have benefits and flaws, but neither method can replicate the accuracy of desktop analytics – yet.

Programmatic is ubiquitous – and the sell side is rising to meet buy side demand. Over 90% of brands and agencies report buying some portion of video programmatically. Eighty-eight percent of publishers report selling video inventory programmatically, up 37% from 2014.

Not surprisingly, buyers remain concerned with premium/quality inventory and scale, noting that there still isn’t enough premium video inventory accessible at scale. Addressing these concerns, two-thirds of sellers are establishing standards for video content and ad quality, and are adding in-house support for inventory quality control.

Brands are also building momentum around in-house video strategy and programmatic buying. Twice as many brands have already brought programmatic buying capabilities in-house, compared to last year – a move that can be easier said than done.

Programmatic TV is gaining popularity as audience fragmentation hits an inflection point. This coming year, 41% of television buyers – a three-fold increase since 2014 – plan to rely on programmatic to make TV investments – a threefold increase since 2014, signifying that change is coming to linear buying practices as well.

Marketers moving television spend to digital video cite the ability to target consumers more granularly and superior measuring capabilities as reasons. Similarly, programmatic TV brings the benefits of digital advertising to linear television.

But this is still a nascent space. Buyers express concern with premium, quality inventory and scale. Brands are concerned with issues like integration and qualified personnel.

Branded video is taking hold.  Advertisers and agencies devote over 30% of overall video budgets to branded video content – defined as digital video content co-created between a brand marketer and a publisher. Still a maturing marketing tactic in the digital world, advertiser interest and spend are significant.

Both buyers and sellers cite cost as the biggest obstacle for investing in branded video. Due to the nature of the form, it’s still traditionally thought of as a kind of custom brand messaging that requires a heavy investment of talent, time, and dollars. As for distribution, the majority of publishers rely on their owned and operated sites and social media, indicating that branded video distribution remains limited.

2015 has been a year of significant shifts: as consumers demand sight, sound, and motion everywhere, marketers and publishers are increasingly investing in mobile video and programmatic.

For the first time, television has shown signs of stagnation, though TV dollars are fueling video growth in other formats.

Considering how much movement we’ve seen in such a short time, there is little doubt that 2016 will bring more of the same: consumers are constantly evolving, and brands, agencies, publishers, and technology providers must evolve or risk extinction.

---

JoAnna Foyle has a passion for both technology and creativity, with nearly 20 years of experience in executive leadership, go-to-market strategy, client business management, TV and digital media, and advertising technology. She has worked with some of the best agencies, publishers and technology companies in the world, driving innovative and holistic technology solutions. As senior vice president of enterprise platform services for AOL, she is responsible for ONE by AOL technology engagements, driving activation, adoption, and expansion for AOL’s biggest partners.