DIGITAL VIDEO 2013 US VIDEO ADVERTISING: FIRMLY ROOTED AND GROWING

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1 DIGITAL VIDEO 2013 US VIDEO ADVERTISING: FIRMLY ROOTED AND GROWING BrightRoll US Video Advertising Report: April Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc.

2 INTRODUCTION Digital video: firmly rooted and growing Video has emerged from the shadow of digital media options and planted itself in the center of the advertising ecosystem. Adoption is widespread as digital video continues to make technological advancements that prove its effectiveness across a wide range of verticals and advertiser objectives. No longer do brands consider digital the Wild West and an unknown territory. They now realize video can complement TV advertising and expand their reach to an even greater audience across screens computers, smartphones, tablets and connected TVs. Overall US ad spending is expected to rise 3 percent in while the digital video ad category is projected to increase 41 percent 2. As BrightRoll presents the fifth annual video advertising report, it s becoming abundantly clear that it is no longer a question of if, but when a majority of advertisers will adopt video at a much more substantial level into their digital advertising budgets. This year s survey validates that video is an established leader in digital advertising with proven effectiveness, clearer success metrics to measure ROI and continued technological advancements to meet advertisers campaign goals. This year s report is based on survey responses from more than 150 executives at top advertising agencies across the US. It reveals key trends and significant changes in the digital advertising industry. Video and TV are considered less competitive and more complementary ad media while programmatic buying is catching the attention of advertisers and playing an increasing role in media buying this year. Marketers are continuing to expand to multichannel campaigns and targeting and measurement are now even more important when considering the bottom line. - Tod Sacerdoti, CEO & Founder BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P2

3 TRENDING Video in the driver's seat Video is securely in the driver s seat as it leads the digital advertising category in overall growth. From 2012 to 2013, video saw the greatest increase in spending among all US digital ad formats and is expected to reach $4.14 billion by the end of the year 2. Nearly half (45 percent) of survey respondents say clients consider targeting the most valuable aspect of video advertising. This is followed by reach (27 percent), continuing a similar trend from last year. 1. Which aspect of video advertising do your clients view as most valuable? Targeting capabilities capabilities Reach Price relative to TV Price relative to TV Ad unit format Ad unit format Other Ability Otherto reuse creative Ability to reuse creative Targeting Reach Price Format Other Creative reuse Targeting Interestingly, price relative to TV is still considered the third most important aspect of video advertising (at a distant 10 percent), yet most advertisers find video to Reach Price Format Other Creative reuse be just as effective as TV. In fact, three in four respondents find video advertising equally or more effective than TV, a 17 percent increase from last year. An overwhelming 91 percent of respondents find video to be equally or more effective than display, a response that has grown rapidly year-over-year. This illustrates that advertisers are no longer comparing the effectiveness of digital and TV media, but rather the categories of advertising that offer the sight, sound and motion of video, no matter the screen. 2. Compared to the following channels, is video equally or more effective? more less Yes 91% 7 68% 52% 4 No I don t know Display TV Social media Search Direct response When asked what is the most limiting factor to the growth of video, a third of respondents state price is too high, although this is a significant drop of 15 percent from Fewer planning and measurement barriers, greater reach and proven effectiveness have enabled advertisers to embrace video but at the same time they still need to be sure of its ROI, especially when coupled with TV in advertising strategies. BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P3

4 GROWTH Video: no looking back Since 2010, a steadily increasing amount of digital RFPs include a video ad component. Two out of three survey respondents indicate that half or more of their RFPs had video in 2012 up 35 percent since the question was first asked in What % of your digital RFPs included a video ad component in 2012? The doors are open for the growth of video advertising today. - Survey respondent s fill-in answer to the question, What factor is most limiting to the growth of video advertising today? Around half or more of RFPs (40-10) Since more advertisers are including video in their digital RFPs, it s no surprise they also expect to see the largest increases in spending for online and mobile video categories, followed closely behind by mobile display. User adoption of smartphones has driven the industry to follow consumers to where they are increasingly engaged. US mobile ad spending is expected to increase 83 percent for mobile display and 112 percent for mobile video in On the other side of the spectrum, TV and connected TV are two categories expected to see the smallest increase in spending in Less than half of RFPs (0-39%) Which advertising categories do you expect to see the highest and lowest growth in media spending this year? HIGHEST GROWTH (% of respondents) Online video LOWEST GROWTH (% of respondents) 32% 33% Direct response Mobile display 17% 23% Mobile video Connected TV TV Categories include: Connected TV Direct response Mobile display Mobile video Online display Online video Search advertising Social media TV 2012 was touted as the year of connected TV 3. However, as industry standards are a frequent topic of discussion, consumer adoption is progressing slowly. Nearly a quarter of all US households currently have and use Internet-connected TV, yet only 17 percent of consumers used it at least monthly by the end of As a result, it s likely that advertisers are waiting to see how the technology and consumer adoption develop before allocating more significant ad dollars to the device. BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P4

5 TARGETING AND MEASUREMENT A numbers game While targeting is considered the most important aspect of video advertising, behavioral is deemed the most valuable form of targeting according to 36 percent of respondents. Nearly a third of survey respondents say that lifestyle is the type of behavioral targeting they expect to use most. This might be attributed to advertisers level of comfort with this broad form of behavioral targeting since they have used it for many years in TV and print advertising. The technology now allows advertisers to use this more advanced targeting method for video across screens and ad media, whether it is TV, print or digital. 5. What type of behavioral targeting do you expect to use the most in your video advertising in 2013? 3 3 Lifestyle Lifestyle Look alike / spend alike Look alike / spend alike Purchase-based Purchase-based TV targeting In-market TV targeting In-market When asked what form of audience measurement clients value most for video advertising, respondents indicate that GRPs/TRPs are most important, a 46 percent lift from This could be attributed to agencies no longer questioning if video is effective for campaigns and rather asking how video can complement TV buys. With GRP planning and measurement, advertisers can ensure their ads reach the appropriate target audience and desired number of viewers. 6. When it comes to audience measurement, which metric do your clients value 4 most for video advertising? %0 % % unique viewers in target in target % impressions % impressions in target in target GRPs or TRPs GRPs or TRPs I m not sure I m not Other sure Other BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P5

6 I N S I G H T Not all metrics are created equal There are many options when it comes to success metrics for video campaigns. According to this year s survey, completed views are again the most important metric a 42 percent increase from last year. At the bottom of the ranking is GRP, accounting for only five percent of responses. This may be due to the industry idea that views, when used as a success metric, are complementary to GRP as an audience measurement tool. GRP enables advertisers to plan their potential reach to target audiences while views measure the engagement of target audiences with video ads. It s a notable dynamic as advertisers buy more on a CPV (cost per view) basis than before What is the most important success metric for your video campaign? 4 3 Views Brand lift Sales impact CTR Conversion GRP Following the birth of TV and the adoption of TV ratings, GRP soon became the common currency for media planning and reporting. Online video is often compared to TV commercials leading to a growing demand to apply online GRP (a.k.a. igrp) to new media. However, there is a fundamental challenge: Unlike TV, there is no rating for online content, so how is online GRP calculated? igrp BUILDS ON THE BASIC MODEL OF REACH X FREQUENCY Traditional GRP: igrp: UVs* UNIVERSE FREQUENCY IMPRESSIONS UVs X 100 igrp IMPRESSIONS UNIVERSE X 100 *Unique viewers exposed to video ad The calculation is straightforward and in line with TV GRPs. Does this mean that TV GRPs and online GRPs can be added together and then used for cross-platform delivery? Download the BrightRoll igrp white paper to learn more about these calculations at brightroll.com/reports BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P6

7 I N S I G H T Ready for research Search the web for video advertising research and dozens of results will offer best-practice presentations, studies and articles that seek to answer a marketer s need to effectively measure campaigns. Since first asking advertisers three years ago the areas of research they would like additional research, the responses have shifted dramatically. This year, the two leading areas are the impact of video on offline purchase behavior (32 percent) and the translation of GRP to online video buying (23 percent). (This high ranking of GRP translation underscores the lead response that GRPs/TRPs are deemed by advertisers as the most important audience measurement.) Also important to note this year is the selection of the least important area of research: the performance of video compared with TV advertising, down 59 percent from when the question was first asked in This may illustrate that advertisers are less concerned with the performance of video versus similar media, but are more interested in how video can increase ROI. 8. In which area of video advertising would you most like to see additional research? Offline impact Purchase intent Performance GRP Audience profiles Brand effectiveness Impact on offline purchase behavior Change in purchase intent or brand lift Online performance vs television advertising Translation of GRP to online video buying Audience profiling Brand effectiveness Video Advertising BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P7

8 LOOKING AHEAD Predictions for programmatic Spending for real-time bidding (RTB) for digital advertising in the US is expected to increase 71 percent in and survey responses support this prediction. More than a third of survey respondents say that around half or more their budgets will likely be programmatic in the next 12 months. As brands and agencies look for more effective planning and measurement tools, it is likely they also need a more efficient solution to identify and reach target audiences at scale. W H AT I S PROGRAMMATIC BUYING? What percent of your overall digital budget do you expect to be programmatic in the next 12 months? 5 4 Small minority (0-19%) Minority (20-39%) Around half (40-59%) Around half (40-59%) Majority (60-79%) Majority (60-79%) Large majority (80-10) Large majority (80-10) The practice of automating the buying of online ads by using algorithms to drive the best possible price for each impression. This occurs in real time, on demand and on an impression-byimpression basis. - Goldman Sachs (0-19%) (20-39%) (40-59%) (60-79%) (80-10) As advertisers migrate to programmatic buying to maximize efficiency, they are focused on opportunities of this solution that offer the greatest campaign benefits. According to respondents, pricing efficiency (34 percent) is considered (0-19%) (20-39%) (40-59%) (60-79%) (80-10) the top benefit for programmatic buying of digital advertising, which is not a surprise as media costs are always at the forefront of advertisers minds. This is followed by targeting (27 percent), optimization (16 percent) and audience efficiency (12 percent). With the forecast for tremendous growth of RTB and programmatic solutions this year, it will be interesting to watch how these benefits may shift or if specific efficiencies rise to the top as the market matures. 10. In your opinion, what are the key benefits to programmatic buying for digital advertising? Programmatic Buying Programmatic Key Benefits Buying Key Benefits 12% 12% 16% 16% 27% 34% 34% Pricing efficiency Pricing efficiency Targeting Targeting Optimization Optimization Audience Audience efficiency efficiency Universal frequency capping capping Time savings Categories include: Categories include: BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P8

9 EDUCATION Efficiency prophecy With the growth of programmatic buying for video and the proliferation of publishers, ad networks, demand side platforms and exchanges, it s no surprise brands and agencies are increasingly questioning how to best create efficiencies across all of their campaigns. To address this, some buyers are considering single platform solutions. Moving to a single platform for video promises to provide efficiency to streamline processes and maximize ROI by delivering one point of contact for inventory, ad serving, targeting, optimization and unified reporting across screens. In support of this, 43 percent of survey respondents say they are somewhat likely or likely to consolidate all or a portion of their budget to a single platform, while 46 percent indicate they are unlikely to do so. This may be attributed to a a need for further education about the benefits of using any particular platform for all or a majority of an advertiser s video buying. 11. How likely are you to consolidate all or a large portion of your digital ad spending on one platform? Unlikely Somewhat likely I don t know Likely 4 Likely Greater efficiency BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P9

10 CONCLUSION Fast times in digital video Programmatic buying is at the forefront of helping advertisers save time and money. The digital ecosystem is rapidly changing with video leading the way. The number of video ads served from 2012 to 2013 increased 64 percent 7. This trend won t likely slow down as more brands and agencies are embracing digital video and realizing how it enhances digital advertising strategies and bottom lines. Technological innovations in digital video are rapidly advancing planning, targeting and measurement capabilities. These have the benefit of not only arming advertisers with more effective tools, but also enabling video to be the greatest category of growth in digital advertising 2. According to respondents, video has proven its effectiveness and has been found in other studies to be viewed as more complementary to TV advertising. Video ads can actually increase the efficacy of TV spots: 29 percent of viewers who were exposed to both online video and TV ads recalled the message versus 19 percent that viewed the TV ads alone, a 53 percent increase in message performance 8. While the conversation about video and TV has shifted, the value found in advanced targeting, especially behavioral, and the importance of audience measurement through views still remains a big priority to advertisers. They seek to better understand GRP to more accurately plan their digital campaigns, while views help them measure campaign success through audience engagement. As digital video advertising solutions continue to evolve, programmatic buying is at the forefront of helping advertisers save time and money. The value of single platform media buying solutions will be a key trend to watch over the next 12 months to see how they gain traction and become more prevalent in the industry. Eighty-five percent of the US Internet audience viewed online video in March 2013 and video ads accounted for 25 percent of all videos viewed 9. It s clear video has staying power and can have a major impact when incorporated into a larger advertising strategy. Brands and agencies are taking advantage of the benefits video offers but are still eager for further innovation and advancement to continue to achieve campaign goals and drive ROI. BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P10

11 GRAPHS & CHARTS 1. Which aspect of video advertising do your clients view as most valuable? P3 2. Compared to the following channels, is video equally or more effective? P3 3. What % of your digital RFPs included a video ad component in 2012? P4 4. Which advertising categories do you expect to see the highest and lowest growth in media spending this year? P4 5. What type of behavioral targeting do you expect to use the most in your video advertising in 2013? P5 6. When it comes to audience measurement, which metric do your clients value most for video advertising? P5 7. What is the most important success metric for your video campaign? P6 8. In which area of video advertising would you most like to see additional research? P7 9. What percent of your overall digital budget do you expect to be programmatic in the next 12 months? P8 10. In your opinion, what are the key benefits to programmatic buying for digital advertising? P8 11. How likely are you to consolidate all or a large portion of your digital ad spending on one platform? P9 CITING & SOURCES 1 emarketer: 2 emarketer: 3 Reel SEO: 4 emarketer: 5 IAB/Break Media Digital Video Advertising Trends: 2012: 6 Forrester Consulting: RTB Powers The Rapid Growth Of Online Video: SpotXchange-RTB-Powers-the-Rapid-Growth-Of-Online-Video-Forrester-TLP-April-2013.pdf 7 comscore Video Metrix Key Measures, Jan Jan Nielsen/IAG Microsoft Advertising Video Effectiveness Research Report: NielsenIAG_MicrosoftAdvertising_VideoEffectivenessReport_2011.pdf 9 comscore Video Metrix Key Measures, March 2013 ABOUT BRIGHTROLL BrightRoll is the largest independent video advertising platform for reaching audiences across web, mobile and connected TV. The company powers digital video advertising for the world s largest brands including 90 percent of the top 50 US advertisers and 17 of the top 20 advertising technology companies. The platform enables advertisers to reach 4 in 5 video viewers online and consistently ranks among the top two video ad platforms in ads served. As a result, BrightRoll technology collects and analyzes hundreds of billions of data points monthly enabling real-time decisions that drive ROI for advertisers. The estimates and projections contained in this report are those of BrightRoll, Inc. as of the date of this report and are subject to change without notice. BrightRoll endeavors to ensure that the contents have been compiled or derived from sources that BrightRoll believes are reliable and contain information and data that are accurate and complete. However, BrightRoll makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. BrightRoll US Video Advertising Report: April 2013 brightroll.com Sansome Street, Suite 600, San Francisco, CA Copyright 2013 BrightRoll, Inc. P11

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