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Here’s Why Mobile Video Is Confusing and Scares Advertisers

Report finds opportunity, big concerns

In the U.S., 105 million people watch videos on their smartphones.

There is a consensus in advertising that mobile video is the future, but that future is still hazy.

Mobile video can run in apps like Facebook, Snapchat and YouTube or be bought through ad networks that serve the mobile Web. There are six-second, 15-second and 30-second formats, and there are Gifs. There also are ways to measure by impression or engagement.

It's this fragmented landscape that is creating uncertainty at an otherwise golden moment for mobile video, according to eMarketer, which released a report today taking a comprehensive look at the forces shaping the sector.

"There's still some inconsistency with the ad formats for mobile video," said eMarketer analyst Jeremy Kressmann. "There's in-stream video working off publishers' native players; there's interstitials that pop up; there's in-app, in-game video; interactive video; in banner and in-feed video."

"It's confusing on the ad-buyer side trying to figure out what they're buying and how to get scale," he said.

Mobile video is among the fastest growing segments in digital advertising, attracting $2.6 billion in the U.S. this year, an increase of 70 percent since last year, according to eMarketer. But that figure still only represents about 10 percent of all mobile advertising.

Everyone from Facebook to Twitter to Pinterest is developing video ad styles, and YouTube is evolving to attract more brand dollars.

One of the top concerns is a lack of uniformity across all the places to buy and all the formats.

"Ad buyers are on the fence about investing more dollars other than a few experiments," Kressmann said.

Media buyers and brands are looking for proof that the video ads work and want standard measurements to compare all the different ways they can buy.

"Mobile video is critical as delivery and consumption increases," said Gian LaVecchia, MEC's North America digital content marketing leader. "The behavior is there, and the marketing opportunity is there, and we're seeing interesting new ad formats. But it also has to reach a level of maturity." 

There are some signs that the major players are working to ease ad buyers' concerns. Yahoo, which owns video ad network BrightRoll, said it would give advertisers independent audits of how well their video ads performed and how many people saw them.

YouTube this week said it would have more insights for brands like whether their ads increased consumers' intent to buy a product, whether they increased awareness of the brand and how  they affected brand favorability.

"If mobile video is the 'holy grail' of brand advertising, measurement is the riddle you have to solve to get access," Neal Mohan, Google's vp of video and display advertising, said in an e-mailed statement. "We've been looking to help our partners and clients with this by investing in brand measurement that works across screens. This includes Active View for viewability, which works for YouTube on desktop and in-app, and today we announced that our Brand Lift solution works across mobile as well."

These brand-focused metrics could be ideal for mobile video, perhaps better than direct marketing stats, which track how many consumers took an action after watching a video ad.

"It's not about views; it's not about cost per views. It's about did my video increase brand awareness, and did it lead to real ROI?" said Chris Tuff, evp and director of business development and partnerships at 22squared.

Facebook has been influential in shaping demand for highly visible ad units, because they show up right in people's News Feeds, taking up a large portion of their small screens, Tuff said.

The social network also is pushing brands to team up with the top digital creators like Fullscreen, Maker Studios and Vice Media to create "thumb-stopping" content.

Quality content is becoming a must, even as quality inventory remains scarce. "The mobile video unit is broken—it's only as of recently that we're discovering this as platforms like Facebook reinvent the unit to be truly native," Tuff said. "The reason why mobile video spends have been so small is because of bad inventory and units."

Here's a look at some of eMarketer's most important findings:

  • Mobile video ad spending will increase in 2016 to $3.94 billion, an increase of 50 percent.
  • Desktop video ad spending will increase 10 percent in the U.S. in 2016 to $5.65 billion.
  • Mobile video spending is growing faster than any digital ad segment in the U.S., increasing 67 percent this year. Mobile social ads are second with a spending increase of 63.1 percent.
  • TV ad spending still dominates ad budgets with $70.6 billion in spending.
  • Mobile video ads will make up 2 percent of ad budgets in the U.S in 2016.
  • Meanwhile, 105 million smartphone users will watch video at least once a month this year, up 14 percent from 2014.
  • Completion rates on digital video ads are 46 percent on smartphones compared with 99 percent on over-the-top boxes that deliver ads to TVs.
  • Click-through rates on smartphone video ads were 2.36 percent, compared with 0.46 percent on desktop.
  • Marketers say the three most important metrics are completion rate, conversions and brand lift. 
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