What is it?
Programmatic video is the use of software to purchase digital video advertising. The benefit of programmatic video versus traditional video ad buying is that it uses real-time data to get your video ad in front of the right customer at the right time. Hyper-targeted video ad buys mean that you’ll get more out of your media dollars.
Programmatic video has grown partly because Internet providers now offer affordable high-speed bandwidth that allows nearly every Internet user to stream high quality video. This means that more people are watching video online, with some even choosing to “cut the cord” entirely and get all of their video and TV online. To keep up advertisers have been consistently switching their TV dollars to digital, which has been driving up the demand.
Aside from the increased online video viewership, there are a myriad of advantages to purchasing video programmatically and they revolve around efficiency. Unlike traditional TV buys, programmatic offers the ability to reach your target audience based on their real-time intent signals. These signals can be overlaid with general demographic profiles of target audiences and efficiently drive the audience through the conversion funnel. Basically, it means that companies don’t need to buy digital ad space based on broad data. With programmatic video, if someone is looking for jeans online, Levi’s can buy digital video ad space specifically targeted to that potential customer in real time. Data showing that a young soccer-enthusiast is buying beer for a party? Hello Heineken pre-roll right before a Best Soccer Fails Compilation.
However, the market does not come without challenges. The biggest challenge is that the increased demand has led many publishers to increase video inventory through questionable means. For example, many publishers started repurposing display ads as video ad units. To address the challenge, a variety of companies started offering tools to measure the quality of inventory.
Overall, programmatic video is a powerful channel for marketers to reach their target audience effectively with brand messages. The programmatic industry also offers many tools for ensuring brand safety and quality inventory standards. This allows, marketers to reap the benefits of programmatic video as long as they ask the right questions to ensure they spend their budgets wisely.
Completed-views: refers to the metric that measures the percentage of video advertisements that have fully played. If the ad is skipped or the user navigates away from the page, the video ad will not be counted as completed.
Viewability: this term measures whether the video ad was in view at the time it was playing. Per the MRC, the definition for video ads says that 50% of pixels have to be in view for two consecutive seconds to count as viewable.
Measurable rate: current technology for measuring video viewability has limits in terms of coverage (i.e. ability to measure all video impressions). The measurable rate refers to the percentage of all video impressions that could be measured by the viewability vendor.
Skippable: depending on the publisher, the video inventory that they are selling may have an option for the viewer to skip the ad (typically after a few seconds). This type of inventory is referred to as “skippable.
Pre-roll: refers to a video ad slot that is placed before the main content of the video.
Mid-roll: refers to a video ad slot that is placed after the content started playing but before the content has finished. There could be multiple mid-roll ad slots per video.
CPCV: cost per completed view
Marketer Friendly Definition:
Programmatic video: typically refers to the use of software to purchase digital video advertising, as opposed to the traditional process that involves RFPs, human negotiations and manual insertion orders. Basically, it’s using machines to buy video ads.
"US digital video advertising spiked 56.0% in 2014 to reach $5.96 billion, eMarketer estimates. Pre-roll placements were the most affordable ads in the category throughout the year." – eMarketer
- Enables use of demographic, intent, behavioral and context data to seek out the right audience
- Enables buys based on target audiences, not just publishers or sites
- Allows dynamic creative optimizations based on performance
- Combine with other creative formats (e.g. display or social) to drive audience through the funnel
- Measure engagement and effectiveness in real time
- Inventory is a mixed bag of good and bad quality inventory
- 3rd party measurement companies cannot measure everything yet (e.g. YouTube cannot be measured for viewability)
- US digital video ad spending will climb to $14.38 billion in 2019, from $7.77 billion in 2015.
- YouTube will reach $1.99 billion in net US video ad revenues by 2017
- Total TV viewing fell by approximately 10% year over year in Q3 of 2014 and by 9% in Q4 of 2014
- Among millennials ages 18 to 34, 73% said they watched some amount of digital TV, compared with 45% for Gen X and younger boomers who said the same.