Over the next couple of weeks, we're running content from our recently-published Programmatic Handbook. Here, Steve Wing, managing director of UK, Ireland and Nordics at Rubicon Project, explains how mobile video is driving global ad spend.
Video and mobile have hit a milestone. For the first time, the two have collectively won more programmatic ad dollars than desktop and
banner ads this year.
The explosion of mobile video consumption has undoubtedly contributed to this benchmark. More people are watching video content on their mobile devices, and more marketers are opting for mobile placements over desktop in media buying.
Smartphones have made watching digital video more accessible than ever before, and eyeballs are turning away from computers and traditional television and refocusing on mobile screens. According to Statista, the number of monthly active smartphone users in the UK will reach
53.96m individuals by 2022. Recent reports from the Internet Advertising Bureau (IAB) UK and PwC indicate that smartphone video is the fastest-growing advertising format. Last year, 45 per cent of all digital ad spend went on smartphones, compared to a mere 9 per cent five years ago.
Meanwhile, the way audiences are consuming content is changing significantly. Viewers are now watching digital video on their smartphone screens in social media platforms and increasingly in gaming apps. Each day, 500m people watch video on Facebook, and worldwide, people watch 1bn hours of YouTube per day. According to Bloomberg, more than 25 per cent of UK smartphone users are on Snapchat, and its ‘User Stories’ fuel 10bn video views daily. Audiences are also now toggling between platforms as they consume content: a viewer may start watching a film at home on their Apple TV and then switch over to their iPhone screen on their daily train commute. Be it over-the-top (OTT) long-form content, or short-form video on social channels, more audiences are consuming video across multiple digital devices – including television and movies.
This move away from linear TV towards digital video is driven by users. By 2022, 204m people will watch connected TV at least once a month in the US alone. With OTT devices, there’s a lower barrier of entry for viewers to access premium entertainment, and the ease and accessibility of an OTT device like Roku offers an appealing alternative to traditional cable. There’s the expression ‘content is king’, and linear TV juggernauts must now compete with the competitive content of Netflix, Amazon, Hulu and other subscription-based companies. Recently, Netflix revealed that close to 25 per cent of streaming globally happens over mobile networks, and in international markets like Finland, mobile consumption accounts for 75 per cent of total streaming. With more people watching video on mobile devices, media companies are now more open to rogramming for smaller screens.
To optimise and propagate the video-buying ecosystem, collaborative efforts are being made across media companies in the UK. Even rival media companies have come together to offer video inventory through programmatic pipes via the Unruly platform.
As TV has become smarter and more digitalised, the line between OTT and mobile video has consequently become more blurred. Millennials in the US aren’t just ‘cord-cutters’ – many are ‘cordnevers’ – and advertisers and media companies are changing how they buy and sell inventory to meet their heightened expectations. ‘Digital native’ audiences expect relevant ads that are unobtrusively integrated with premium content across screens and devices. As a result, the challenge for today’s media providers is to deliver and monetise high-quality, long-form content across devices with efficiency and scale.
The pressure on media providers and marketers to deliver a seamless viewing experience will only continue to mount: 40 per cent of the world’s ad spend is expected to take place online in 2018, according to new forecasts from Zenith. As reported by the agency’s Online Video Forecasts, average daily digital video consumption will hit 101 minutes by 2020 in the UK alone. Cisco reports that by 2019, video traffic will account for 80 per cent of all consumer internet traffic. Meanwhile, digital video ad revenue in the UK is expected to grow by 21.7 per cent in 2018 compared to the previous year.
Mobile video explosion
This explosion of digital video, particularly mobile video, is reflected in Rubicon Project’s earnings reports. In the first half of this year, video was a significant growth driver for revenue at Rubicon Project, growing over 70 per cent on a year-over-year (YoY) basis, outpacing industry growth rates and growth share. On the buy side, DSPs and marketers are heavily focused on scaling video audiences – which accounts for the 105bn new video ad requests on Rubicon Project’s platform last year. Mobile is explicitly driving this growth: more than half of all video viewing now occurs on mobile devices, and that number is steadily rising.
Meanwhile, the continued rise of programmatic is fuelling digital advertising growth on all fronts. Programmatic now accounts for 55 per cent of global digital media buying, and is positioned to continue to soar. According to Magna’s Programmatic 2018 report, the global programmatic market will reach over €30bn (£26.7bn) this year and grow to €53bn by 2022.
This growth is reflected in ad spend in our own earnings report, where video and audio continue to be our fastest-growing areas, generating significant market share gains. As shared in Rubicon Project’s Q3 earnings, ad spend increased 24 per cent YoY to €214.5m, driven by a 45 per cent increase in mobile ad spend and a 6 per cent increase in desktop spend.
Of course, explosive growth has created its own set of challenges. These include ad fraud, poor ad experience and fragmentation. And while initiatives like Ads.txt are steps in the right direction, we still have work to do to prevent fraudulent activity and to optimise the user experience. With all of this change, a significant pain point for marketers is a dependence on multiple-point solutions. What’s needed now more than ever is consolidation: a comprehensive approach to buying and selling in a transparent, streamlined way across platforms and devices.
Ultimately, there’s no denying that programmatic advertising is part of the future, and that future is being shaped by a hunger for mobile video content. Rubicon Project’s focus on transparency and inventory quality, along with our strong value proposition as a leading diversified independent exchange, uniquely positions us to help serve the increasing demand for programmatic advertising solutions across platforms.
You can read the entire Programmatic Handbook online here.