Spotlight on Multiscreen Video Advertising Convergence
Tipping Point: Advertisers Usher In a New Era of Convergence
We already know that consumers are embracing video convergence by diversifying their time spent with TV, online and mobile video. What do advertisers need to do to switch from following those consumers to leading them?
As of today, advertisers claim that the reason they are on any new digital channel – from search, display, social and mobile – is for the purpose of following eyeballs. Reach dictates spending, and most of the argument for the ‘inevitable’ growth of digital ad spending is focused on making digital several times cheaper than traditional advertising, when broken down to spending per internet user.
The argument the online industry relies on is that the internet is a more efficient way to reach the same number of or more viewers than TV, print or other forms of traditional advertising. Or at least, it doesn’t cost that much to add reach to your existing traditional campaigns, so why not?
With the evidence presented in the prior section, the game has changed from a simple competition for eyeballs to a race for brand engagement, a race where video represents a turbo boost. In today’s cut throat world, single digit changes in mindshare or consumer preference can make or break a quarter, reaching the largest number of potential customers with video can be a kingmaker.
Today, online and mobile media play more of a complimentary role to TV, enhancing the experience of content and ads through multiple touch points, such as social media, local content or campaign specific games and contests.
“This opens up an entire world of opportunities for marketers to deliver fun, relevant, highly visual and meaningful content in a way that feels more natural to users,” said Sosti Ropaitis, McDonald’s Director of Digital and Social Media, in an article in AdAge. “The basics of storytelling are being amplified as we now have the opportunity to interact in multiple dimensions where context is becoming increasingly more important.”7
For marketers, the heart of this is the converged experience centered on video. The possibility of engaging consumers, who are going to be multitasking anyway, simultaneously via several devices has them salivating with excitement.
The State of Video Ad Spending
eMarketer estimates that ad spending in the US will reach $171.5 billion in 2013. TV controls the lion share of spend at 38.7% ($66.4 billion), but digital advertising, including mobile, accounted for 26.8% of the total ($42.5 billion).
Broken down further, video advertising will account for 9.7% of digital (both online and mobile) this year for a total of $4.14 billion. By 2017, eMarketer estimates that video will account for a full 15% of digital spending, or $9.06 billion. Combined, US TV and digital video revenues will hit more than $70 billion in 2013 and $84 billion in 2017.
The Shift: Multiscreen Campaigns Result in Higher Reach and Engagement
Ultimately, the push for online video is being driven by results: advertisers are seeing a better sales lift from multiscreen campaigns incorporating digital as opposed to only running on TV.
Recently the Wall Street Journal reported that major advertisers are beginning to shift media budgets to online video, but the sources of the spending varies. The story highlights two brands, American Express and Reckitt Benckiser, which have taken different routes to fund their push for online video.
American Express sourced most of the budget from its online display budget, while the CPG brand claimed to have shifted spending for online video directly from its TV ad spending.
The reasoning behind the shift is clear: “In some online video campaigns, we saw sales lifts that were double what we got from the TV ads,” said Laurent Faracci, Reckitt’s general manager for U.S. marketing.
While increasing faster in absolute terms, advertising spending growth for TV is slowing down to the slow single percentage points. For digital video to maintain torrid growth of between 40-to-13 percent per year, it will have to continue to nab some of TV spending in the long run.
A February 2013 IAB/Nielsen study of 18 TV digital advertisers by the IAB and Nielsen found that even shifting as little as 5% of budget from TV to digital increased total reach by 2.5%, while a 85% TV to 15% digital split increased unduplicated reach by 4.2%.
This is evidence that convergence (TV and digital advertising) drives incremental increases in reach. That incremental reach is enough to edge out the competition, or possibly keep a brand from losing mind and market share.
The exhaustive IAB study went on to detail that multiscreen campaigns were not only farther reaching, but more effective as well. Analysis of Nielsen’s VideoFusion data found that using both online video in a full-episode player and TV increased brand recall by 15% over TV only exposure. In addition, sequencing was important: the study found that viewers who were exposed to an online ad (video ad in a full-episode player, short form video ad, or even a banner ad) before seeing a TV ad increased overall recall by up to 40%.
DG MediaMind’s own studies show that the type of online video ad used can impact engagement and recall, too. Interactive in-stream video ads, as defined by the IAB's VPAID standard, received incredible click-through and interaction rates.
Interactive video ads contain elements that encourage the viewer to engage with the ad, be it clicking on a button for more information, choosing your own adventure style storylines, or even playing a mini-game. The possibilities are only limited by the advertisers own creativity.
As with other marketing efforts, there are diminishing returns with the shifting of budgets to digital, but a 4.2% boost in reach at no additional media cost is tremendous for a campaign’s bottom line. The implication for media planners is clear: multiscreen campaigns work.
How Can Online Increase Reach Without Adding to the Overall Media Buy Budget?
It’s simple: online advertising is still pretty cheap in comparison to TV. eMarketer estimated that there will be a total of 182.5 million active US digital video viewers per month in 2013; with total digital video ad spending reaching $4.14 billion, advertisers will spend under $2 dollars every month to reach them. In comparison, advertisers will spend approximately $19.50 each month to reach every TV viewer (as per Nielsen’s Q4 2012 Cross-Platform Report there were 283.9 million US TV viewers for eMarketer’s projected $66.35 billion in TV spending in 2013).
The Nielsen study found that overall cost-per-reach point and cost-per-thousand (CPMs) went down as advertisers shifted more of their budget to online. Granted, this study includes online display (banner) ads, which the IAB said are definitely cheaper than online video. However, the evidence is there – online is more effective AND cheaper. An advertiser's dream!
According to the YuMe/IPG Media Lab study "Are All Screens Created Equal?" (PDF), most TV and video consumption occurs in a lean back state, where a viewer is passively watching from the couch or on a TV. In those positions, video via a personal computer and linear/broadcast TV commanded the most attention. The highest level of attention the user paid by device and location was when respondents watched video on a connected TV at a table or desk. Not surprising considering the active engagement of users when at a desk.
Video ads, of all kinds, aren’t going anywhere any time soon. The one place convergence will have the most impact on economics is increasing prices across the board, including TV. In theory, advertisers should be paying more for ads that span TV, online and mobile screens, which add to the brand story in a meaningful way. And agencies and ad tech companies that offer these types of products should be able to charge a premium. The fully engaged environment is worth the extra cost.
Challenges: What’s Next?
Multiscreen Campaign Management
When will advertisers be able to manage TV campaigns with the same accuracy as online? As more online video is viewed through the TV and audiences shift to digital sources of content, we may find ourselves forced into this position sooner than we thought. Many networks bundle their online inventory into their upfront sales to sweeten a TV deal and some digital content producers are pushing a New Front, but this still doesn’t translate the near-real-time capabilities of online advertising to video as a whole. A few organizations are attempting to mirror the online ad network model for TV, utilizing emerging technologies to breach the divide between traditional TV and online advertising. As a result, targeted advertising on cable, satellite, IPTV – across live and VOD – is making headway, if slowly.
Measurement
Multiscreen campaign management goes hand in hand with multiscreen analytics. Analytics provide multiple functions, but the goal is determining return on investment of any particular campaign: the who, how, when and returns are necessary to keep advertisers happy. Even today, measurement firms operate on a panel basis and reporting products operate in a semi-black box. IAB and MRC accreditation is one step, but in order to satisfy both digital natives and traditional folks, the industry needs to do more to educate both sides on each other’s methodology.
Verification & Viewability
TV is considered reliable because any advertiser can turn on the program they’ve bought for and see their ad run, in real time, but even those aren’t fool proof and require high levels of service to make sure that spots appear according to an advertiser’s rules. For online, there are verification services on offer to ensure that your ad was served among appropriate content using spiders and tracking pixels, and viewability is being standardized by the IAB, Media Rating Council (MRC), and a bevy of industry groups under the Making Measurement Make Sense (3MS) initiative. As ad loads increase and more advertisers jump in, concerns about competitive advertisers in the same pod and the minimum time between an advertiser’s ads will have to be addressed.
Personalization
How do you serve the right ad to the right person across multiple screens? Right now in TV, this is nearly impossible beyond some geographic targeting based on local operators. There are more options in mobile and online, but there are also a host of questions and problems that must be answered by the industry. Will unique identifiers, like an Apple ID, serve to unify the pathway to the consumer and drive personalized ads? What happens when all three converge – TV, online and mobile – how do we reliably personalize ads for the right user and screen and while remaining agnostic to preempt consumer privacy regulation?
Profitability
Can advertisers extend the life of current video ads to ensure that maximum value for production is achieved both online and off? Producing the right formats for the right screens doesn’t come cheap, but adopting a common set of formats that could be easily transferred would go a long way to producing great looking content for all three. Granted, a truly custom campaign created specifically along a consumer path with each screen will be expensive, but the engagement expectations will also be relatively high.