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Is There Room for Both Traditional and Programmatic Ad BuyingAccording to the CEOs of a number of mobile ad startups, there are now two distinct markets for online video advertising, one for high-end, long-form content and the other for shorter web-based videos that are usually paired with less lucrative advertisements.

The latter are attached to TV shows, live events and movies and are primarily still being sold by salespeople. Rates for these 15 and 30 second videos are also rising steadily due to heavy demand. Advertisements that are attached to shorter programs of twenty minutes in length or smaller are growing, but at a significantly slower rate. Pushing down the prices on these ads is the advent of a new type of software called programmatic buying.

“It’s a tale of two markets,” says Doug Knopper, co-CEO of FreeWheel TV, a digital ad technology firm that produced the report on 2013 Web video trends.

Whatever the case may be, experts believe that there’s still plenty of money to go around for both segments, something that’s being helped significantly by the fact that web video viewing is now switching from desktop PCs to tablets and smartphones. Per unit rates for ads that are being served to tablet computers are now more expensive by far, in fact, when as recently as a year ago they were equal to or less than rates for desktop.

“Tablet rates are twice desktop rates,” says Rajeev Goel, CEO of PubMatic, which operates one of the largest mobile ad technology platforms. “Smartphone rates are some discount to that.”

If you’re curious to see just how the market is segmenting, take a look at the following facts.

Compared to a year ago, the number of video ads now being displayed on tablets nearly tripled in the 4th quarter. That’s a growth rate 10X faster than the rate for desktop ads. When it comes to ads on smartphones, that’s rising 8X faster as well.

Brian O’Kelly, CEO of AppNexus, believes that there’s plenty of room left to shift even further, at least as far as tablets are concerned. “Thirty percent of content consumption is now mobile,” he said. When you consider that the iPad was first introduced a little less than four years ago, and the iPhone less than six years of age, that’s quite impressive. What it comes to automated ad buying, however, the market for shorter length video and mobile content is just gaining steam. “There’s pressure on all channels to go programmatic, even though it’s still a small piece” of the overall digital ad marketplace, says Bill Wise, CEO and director of Mediaocean, a start-up that facilitates ad buying both online and on TV and radio.

“If you’re an ad buyer, you can’t have 200 publishers calling you every day,” Wise said during the panel discussion at the Goldman Sachs Internet and Technology Conference.

The truth is, when it comes to shorter web video clips, advertisers don’t find them nearly as attractive, regardless if they are produced by true professionals or amateurs. In the case of long- form ads however, the opposite is true. That’s probably the main reason that they grew 4X faster last year.


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