How quickly is traditional television giving way to online video? Over the last five years, total cable subscribers dropped by 6.7 million, and a quarter of millennials have never once subscribed to cable. No wonder, then, that Nielsen’s Total Audience Report from the first quarter of 2016 reveals that Americans age 18-24 are watching less and less traditional television each year.
Considering how quickly television viewing habits are changing, it only makes sense that advertising models are changing as well. And marketers, to be sure, don’t want to abandon video commercials altogether. Whether an ad runs during a traditional television broadcast or on the internet, video spots remain tremendously valuable, because there is still no better way to make an emotional connection with consumers.
So the question for advertisers today isn’t whether they should continue to spend money on video ads, but rather how they should spend their video budgets in the new age of streaming and online watching.
Programmatic video comes of age
In the old way of doing things, advertisers would buy up inventory on traditional television shows in advance, hoping that the audience for the show would match the audience they wanted to reach. It was never an ideal model, but marketers were stuck with it for decades because, frankly, it was the only option they had.
But something interesting happened in the world of advertising over the last decade. As eyeballs shifted from pages to screens, programmatic advertising arose to take advantage of the new possibilities. Why target a magazine’s entire audience, the thinking went, when, thanks to cookies and other technologies, it was suddenly possible to target the specific people you most wanted to reach?
As more and more opportunities for targeting arose, programmatic display advertising would soon become a multi-billion dollar industry. Once digital video began to take hold, it was only a matter of time before video advertisers would begin to ask an obvious question: Why shouldn’t video ads be targeted with the same precision as programmatic display units?
Skip ahead to today, and programmatic video is taking over the industry. A recent Interactive Advertising Bureau survey of 360 industry professionals found that programmatic video spending is expected to come to 41 percent of the total digital video ad spend this year—a 26 percent increase from only two years earlier. Meanwhile, eMarketer projections are even rosier, with spending on programmatic video expected to reach $5.51 billion this year.
Even with all this growth, programmatic video is still in its early years. Streaming services are experimenting with different ad formats. News organizations such as The New York Times are producing better and longer video segments, opening the door to a future of much more premium programmatic video inventory. And user-generated content will only proliferate as smartphones transform every last one of us into an amateur videographer.
Intent killed the traditional TV model
“Intent,” in the digital marketing world, is shorthand for the signals consumers provide about how and where they’re likely to spend their money. Search marketing was so massively profitable because every time someone types in a search term, it’s a powerful intent signal about what they’re looking for. But search terms are only one way to infer a consumer’s intent.
With each new year, programmatic—be it via display or video—has learned to capitalize on more of these signals, from the sites a user visits, to items placed in a shopping cart, even to offline purchases, which can now be anonymously matched to digital IDs. Given that more than 20 percent of millennials are now estimated to rely exclusively on mobile for accessing the internet, mobile video makes it possible for programmatic video marketers to narrow in on a user’s precise location and serve ads that are even better targeted.
While the shift to online video and streaming might cause some initial anxiety, it’s making watching more convenient while making advertising smarter and more efficient. At the very least, video ads are something that both marketers and millennials can subscribe to.
Finding quality inventory for your video advertising campaign can be challenging. Read more on how to #doitbetter here.
