It's pretty clear on the verge of the end of the year that 2016 has been a truly extraordinary year for digital video.
Total digital video revenue, including mobile and desktop, rose to $3.9 billion in the first half of 2016, up 51 percent from the first half of 2015, according to the 2016 PwC IAB Internet Advertising Revenue Report, and it shows no sign of slowing down. When you look at mobile video, the trend is even bolder. Video on smartphones and tablets reached $1.6 billion in the first half of 2016, an impressive 178 percent rise increase over the same period in 2015.
Those are incredible leaps but also warranted. In a multiscreen world in which content is consumed on demand and everywhere, the sight, sound and motion of digital video offers unparalleled opportunities to tell brand stories. Meanwhile, data—and the ability to transform that data into actionable insights—offers the modern marketer tools of unprecedented scope and power. This is indeed the Golden Age of digital video when we're limited only by our own imagination.
As we approach the end of 2016, here are some of the biggest opportunities and challenges for digital video in 2017:
Platforms now control who lives, dies and thrives
More and more consumer time and advertising spend is concentrating in a smaller number of large platforms, challenging almost a century of comfortable advertising and media economics. Yet, with concentration also comes opportunity, as companies evolve their business models to adapt to the new realities. Already publishers are incorporating Facebook and Snapchat-like ads on their own media properties, and native apps are taking a platform-first approach to building creative. In 2017, every advertiser, brand and publisher will need to learn how to thrive in a world where increasingly dominant platforms are reshaping the media landscape. IAB is convening industry leaders at the Annual Leadership Meeting on this topic in January.
Pressure to develop third-party metrics and measurement is mounting
Platforms are the key distribution channels, but it's still too hard to see proven results. Industry leaders are eager to work with the MRC, Comscore, Nielsen, Moat and others to create better third-party metrics that work across platforms—and that will pave the way for growth over the next five to 10 years.
This year truly was the year of mobile
Marketers are rapidly pivoting to redirect their spend with eyeballs for the mobile-first ecosystem. As platforms prioritize mobile in their ad products, mobile now accounts for 73 percent of all digital advertising spending. The result is that 2017 will be an interesting year when messaging targeting, both in app and on the web, will become a major part of marketing budgets.
Mobile location, proximity and context-specific advertising will be more prevalent
Political advertising drove innovations in this area in 2016 and present a good test case for continuing their use in 2017 and beyond, especially for advertisers needing to reach niche audiences for direct response. The result will be even greater importance of mobile identity management as well.
Messaging is set to explode
2017 will usher in more native advertising options in mobile driven by new ad options in the messaging space, in HTML5 games and also with P2P marketplaces such as Uber and Lyft, which have already begun experimenting with new advertising models.
AR and VR are not just for games and brands
In 2016, Pokemon Go brought the power of augmented reality and virtual reality into the mainstream, just as companies have begun to tap into its breathtaking capabilities. Brands and publishers have only scratched the surface of what immersive and 360-degree video can offer. Watch for more and better AR and VR ads in 2017 as publishers and advertisers experiment with these formats, especially ones that go deep into product exploration and commerce.
Television viewing habits are undergoing a seismic shift
While people still enjoy TV on large screens, they also enjoy watching that content on phones, tablets and other connected devices. It's all about cross-screen content that is liquid across devices and consumers that are also liquid—flowing like water through different screens and content. That migration will continue to drive audience and dollars in 2017 as Advanced TV gains even more traction.
Great user experience, not technology, is the key to massive growth
Consumers have never had more control than they do today. They vote with their eyeballs and their swipes. This new world order that we find ourselves in embraces the consumer as someone we partner with rather than market to and reflects a major shift of power into the hands of the increasingly liquid consumer.
Indeed, as the recent IAB Ad Blocking study shows, consumers, whether they're currently blocking ads or not, are most annoyed by advertisements that delay or obscure access to website content. Long video ads served before short videos, for instance, were found to be particularly annoying. Delivering a better user experience means putting creative and data on a diet and developing technical standards and guidelines for how we deliver video.
Next year, expect to see an emphasis on immediate, real-time audience engagement to better understand what consumers really want.
Anna Bager (@annabager) is svp and general manager of Mobile and Video at IAB.