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Programmatic Video Matures

Last fall, eMarketer reported that 67% of US ad buyers purchase video inventory programmatically, and will grow quickly over the next 24 months. For a publisher, that’s a good thing because video inventory earns super-premium CPMs, and programmatic streamlines operations and lowers the cost. What’s not to love?

Actually, there’s quite a bit to love, but with all opportunities come challenges. Right off the bat, we see five that need immediate attention.

Challenge #1: Responding to Inventory Scarcity

At present, there’s a definite scarcity in the programmatic market, which eMarketer attributes to a (temporary) lack of investment:

“eMarketer forecasts that 59% of the $26.15 billion spent on US digital display ads this year will be transacted programmatically, but just 39% of US digital video ad dollars will be spent that way. By 2017, however, that portion will move closer to the broader average for programmatic activity (72%), accounting for 65%, or $7.43 billion.“

Here’s your first challenge: How do you, as a publisher, respond to that scarcity? Is your best bet to seize on it by diverting all of your video inventory away from your direct channel and into programmatic so that you can “own” that market? What’s the impact of even modest diversions on your overall yields?

This decisions you make can have a huge impact on your bottom line, both in the near- and long-term. Which brings us to your next challenge: Data.

Challenge #2: Automating Data Analysis

You need a data-driven analysis to understand how best to allocate video inventory between your sales channels. But which data is useful? And where do you get it? More importantly, how do you test your allocation continuously throughout the year?

We’ve seen research teams knitting spreadsheets together in an attempt to answer these questions, when what they really need is the right business analytics coupled with data visualization. These two things will help you respond to evolving market conditions so you can optimize yields.

Challenge #3: Infrastructure Issues

Header Bidding is the hot new thing this year and for good reason: it examines the unique attributes of each impression and cherry picks the best (read: willing to pay the most) buyer for it, whether that’s a direct campaign, a real-time buyer or even an ad network.  But as you can imagine, it’s rather complex, so how can you be assured it works well with your adserver?

Additionally, if it selects real-time buyers executing high-paying retargeting campaigns over a direct campaign, does that put your volume commitments at risk? Are the impacts to direct-sold campaigns significant and can they be modeled? Can you accounted for it in your inventory forecasts?

Another concern: Integration of various ad-tech systems. Are they fully integrated, or are discrepancies rampant? In the old days of daisy chains, publishers lost up to 10% of their inventory sent to an ad network. Is the same happening within premium video inventory? What’s your strategy for resolving discrepancies that are part and parcel of fragile callbacks?

Challenge #4: Viewability

For many advertisers, viewability isn’t a nice-to-have, it’s an absolute requirement for their buys. Of course, standards exist, but how they’re supported vary significantly. In many cases, the publisher and advertiser use different viewability measurement platforms, which nearly always result in disparities in viewability counts. You’ll need to defend your counts to avoid unnecessary make goods. But where is that data housed?

Challenge #5: Developing Yield-Management Strategies

Video is complex and it requires some ongoing effort on your part. Naturally, you want to benefit economically for that work. Can you assume that the yield-management techniques you developed for display can translate to video? If not, how do they different? And what’s the impact on the video packages, sponsorships, etc. that you sell?

Okay, so am I being a naysayer here? Absolutely not; video is red hot and programmatic adds lots of efficiencies to both publishers and advertisers. But to reap the rewards you deserve, these issues need to be addressed. Otherwise, you can put a whole lot of resources into the channel, and not get what you expected out of it.