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Brands Embracing Programmatic Video Faster Than Agencies [Study]
New study from Aol Platforms' Adap.TV shows 60 percent of brands online video budgets is spent via programmatic.
Brands are embracing programmatic video at a faster rate than buying agencies, according to a new study from the Adap.tv division of Aol Platforms. The fifth annual US Video State of Industry Report also finds that half of publishers said they make premium inventory available via programmatic.
Brands report 60 percent of their online video ad spend is now via programmatic, with more than half reporting their investment in programmatic video rose by double digits. In contrast, just 40 percent of buying agencies said they are using programmatic environments to buy online video ads, and their investments are not rising nearly as rapidly as that of brands.
DSPs (demand-side platforms) are benefiting from the adoption of programmatic selling and buying. Nearly half (47 percent) of brands buy via DSPs versus just 21 percent a year ago. Nearly three-quarters (74 percent) of agencies report using DSPs, compared to 36 percent in 2013.
That said, brands are still nearly as likely to buy directly from publishers this year as last (67 percent versus 68 percent). Agencies, however, are moving away from direct-to-publisher buying, falling from 89 percent to just 67 percent of agencies buying directly from publishers this year.
Private marketplaces could see more money in the coming year with 55 percent of agencies and trading desks and 59 percent of brands saying they’ll purchase video inventory via private marketplaces in the next 12 months.
So where are budgets coming from?
To a larger extent, buyers are reallocating budgets rather than adding incrementally to programmatic video. Display and TV budgets are still the most likely to be tapped. However, the number of agencies reporting they will be shifting budgets jumped 76 percent for broadcast TV and 40 percent for cable.
Brands are even more likely to carve out money from TV and display. Half of brands said they are willing to shift from display, compared to 30 percent the previous year. Brands report a likely shift from cable TV shift will quadruple, though, from 10 percent to 40 percent.
Publishers are seeing revenue opportunities in programmatic video. Three-quarters saw increase in video ad rates in past year, with average CPM growth of 10 percent (up from 7 percent CPM growth year before). More than half (55 percent) said they say higher fill rates versus just 16 percent saying so the year before.
A big reason for better performance, according to the report, is that publishers are getting better at packaging inventory for buyers. Programmatic selling has matured past real-time bidding to a more targeted, data-driven approach to selling. Additionally, more publishers are selling via private marketplace, with 32 percent now doing so compared to 20 percent last year.
Over half (51 percent) of publishers also say they now make premium video inventory available via programmatic compared to just 36 percent in 2013.
Challenges still remain as road blocks to further adoption of programmatic. Only 25 percent of brand buyers and sellers said they are up to speed on viewability issues, which was cited as the most problematic issue for them – higher than verification/placement and bot fraud. Viewability may be more top-of-mind with the Media Ratings Council’s new guidelines for programmatic video going into effect this year. Next year’s report will provide a better sense of how those measures impact buyer perceptions. Overall, worries about programmatic are much more prevalent on the buy side.
The complete study is available for download here.