Despite Many Concerns And Challenges Publishers and Advertisers Have High Expectations Of Digital Video And Advertising

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New research by AOL Advertising reveals that digital video remains a bright spot in the digital marketing ecosystem. The study shows that consumer behaviors and industry trends are driving the evolution of digital video, and are pointing the way for advertisers and publishers looking to make the most of digital video and advertising in 2017.

Advertiser Trends

Advertisers are not only expecting to increase their digital video ad spend in 2017 but they also will transact a higher percentage of their video advertising dollars programmatically, according to AOL Advertising. 83% of advertisers polled by AOL Advertising plan to increase their video ad spend this year. About 8 out of 10 revealed they will also increase their spending on other digital marketing channels, including social media (81%), display advertising (79%) and search (77%).

Other recent research, by market research firm Advertiser Perceptions, among 358 marketers from a variety of industries, revealed that US advertisers anticipate spending more than $9 billion on their brand’s digital and mobile video advertising this year ‒ a 38% increase from 2016. Full infographic at the end of this post.

Digital video

Programmatic video advertising. 100% of advertisers surveyed by AOL Advertising said they have been using programmatic video advertising. On average they allocated 45% of their video advertising budget to programmatic. More than 8 out of 10 (82%) indicated they would increase the budget they allocate to programmatic video advertising in 2017.

Concerns about programmatic video advertising.  AOL Advertising reported that advertisers are concerned about various aspects of programmatic video advertising. “Lack of integration into existing processing & systems” (55%) is at the top of the list, followed by “inability to access premium inventory at scale” (52%) and “difficulty in creating video ads” (50%). It is no surprise advertisers are increasingly seeking programmatic technology solutions and platforms that have the flexibility to integrate with other technologies as there is no single solution for ad fraud prevention, brand safety, and viewability validation.

Top challenges advertisers are facing with digital video. Building traffic/audiences and acquiring quality digital video ad inventory is seen as a major challenge by 23% of advertisers, according to AOL advertising. Providing a quality consumer experience is a challenge for 21% of advertisers using programmatic digital video advertising.

Viewability, transparency, ad blocking, and ad fraud.  Noticeably absent from the AOL Advertising study is any mention of advertiser concerns regarding ad viewability, transparency, ad fraud and ad blocking. Ad fraud especially remains a top concern among advertisers and media agency executives. The amount of global advertising revenue wasted on fraudulent traffic, or clicks automatically generated by bots and counted as an impression or click, could reach $16.4 billion in 2017, according to a recent study by WPP.  The issue of viewability has long been a topic among advertisers and publishers. According to some estimates around 50% of programmatically served digital ads are charged, but never have a chance to be viewed, and the problem gets exacerbated by ad blocking.

Publisher Trends

As digital video grows, publishers continue to still struggle with issues regarding content quality, technology and the cost of video productions. 45% of publisher survey participants said that adapting to a variety of platforms was a challenge, 38% mentioned long video download times, especially on mobile devices, as a problem. The cost of producing premium video was seen as a barrier to full adoption of digital video by 35% of publishers participating in the survey.

Programmatic video advertising. 9 out of 10 (90%) publishers surveyed by AOL Advertising are expecting a revenue boost from programmatic video advertising and are anticipating an improvement in the merchandising of their ad inventory. 80% of publishers believe programmatic video advertising will give them access to more buyer demand.

Concerns about programmatic video advertising.  Despite the wide adoption publishers still, have many concerns about using programmatic technology for video advertising sales. Nearly half (47%) of publishers participating in the AOL Advertising survey cited  “risk of lower CPMs than direct sales” and “lack of existing processes & systems” as their top concerns regarding programmatic video advertising. Perceived risk of losing direct buyer relationships was also seen as a major concern.

Consumer Trends

92% of consumers surveyed by AOL Advertising said they were watching videos online every day and 88% indicated they were watching more video now than they did a year ago. 59% watched videos that are under a minute long every day, 45% watched videos of 1-5 minutes in length, 42% watched 6-9-minute videos, 40% 10-20-minute videos and 31% 20-minute or longer videos.

Top marketing channels consumers use to discover digital video content. The AOL advertising survey data revealed that more consumers are discovering digital video through search (57%), social media feeds (50%) and online recommendations (49%), than directly from publisher websites (34%).

Consumer experiences with digital video ads. More than two-thirds (71%) of digital video consumers polled by AOL Advertising said they don’t mind digital video ads as long as they are entertaining, relevant to their interests and interactive. The ability to skip pre-roll video ads was highly appreciated by 83% of the survey participants. Market research firm eMarketer expects US digital video ad spending to grow with double-digit annually through 2020.

Consumer preferences for video ad types. More than 8 out of 10 consumers (82%) polled by AOL Advertising revealed that they would like to have some control over which ads they watch. 72% agreed that ads that run after a video are less intrusive than ads that come before a video, while 77% would rather watch one longer ad instead of several shorter ads throughout the video.

Digital Video and Advertising