Programmatic Buying in Video: A trend that’s here to stay


 

Every day, someone announces a new trend in digital marketing. With video, it seems to happen even faster. Programmatic buying of video has been in the news recently, and we believe this is a real trend – something that is fundamentally changing how video advertising is bought and sold. Brands take note!

After returning home from a month of speaking at video conferences  – the iMedia Video Summit in San Antonio, Digiday NY and Digiday LA , one common theme stood out – the debate about programmatic vs. pre-sold/upfront. Having worked in digital for more than a decade, I can tell you that while the debate was intense, the balance of power has shifted in favor of programmatic buying. As the first platform to programmatically decision in video, you could say we’re biased.

 

Numbers these large aren’t lying

Our friends at Forrester (and our partner SpotXchange) confirmed this hunch recently when, for the first time, they estimated the size of the video RTB market.  Everyone suspected that it was growing fast and becoming an important part of the video ecosystem:

  •  In 2012, RTB video will account for $387M out of $2.48B.  That’s 16% of the market, or about $1 in $7 dollars spent online.
  • A year from now, Forrester estimates that share will grow to 22%, or about $1 in $5 spent online ($667M out of a $3.06B market)

To be even more stark: Video advertising is growing at an annual 23% clip. RTB Video? 72%.

The reason is? Programmatic buying is just more efficient to the advertiser.  Assigning a value to an ad impression when it becomes available based on various factors of value like placement position, context of the ad, performance it delivers, etc. still trumps pre-determined buying.

 

What’s next?

We at DataXu see strong market evidence confirming what Forrester and SpotXchange found in their research.  Every day, more and more of our customers are asking us about video RTB and how that should be a part of their overall video advertising plans.   As more advertisers put video RTB on their plans, more publishers will logically follow and make more impressions available.

One of our partners, Adap.TV recently published out an interesting ‘State of the Video Advertising’ study which further substantiated this view.  Compared to 2011, they asked, “Where are advertisers buying their video inventory?”

Their findings:

  • Direct from Publishers:  Went down from a 75% share to 72%.
  • Ad Networks: Almost stayed flat from 72% to 73%.
  • Exchanges: 15% up to 29% (almost a 100% increase!)
  • DSPs: 15% to 32% (more than a 100% increase!)
  • ATDs: 29% (no benchmark last year).

As you can see, the fastest growth is driven by exchanges, DSPs and ATDs – all of which take advantage of programmatic buying.   Ad networks can see the writing on the wall – a full 82% (or 4 in 5 ad networks) source inventory through exchanges.

The above facts bode well for the rise of programmatic buying in online video.  The industry’s job is to ensure that buyers and sellers fully understand the power of programmatic buying and how it can deliver value for advertisers and publishers. It is a job that the industry should collectively adopt, and we at DataXu are doing our part in educating the industry.