“The future of advertising is video.”
That quote, from an unnamed C-level media executive, is cited in a new report – Video Advertising Requires New Monetization Strategies – undertaken by research firm Forrester and sponsored by digital ad firm PubMatic.
PubMatic told ClickZ that Forrester “prepared the analysis and writeup,” while it was allowed to comment and add input.
Surveying 622 sales, operations and IT professionals at publisher and media companies around the world, the report found that nearly two-thirds of programmatic ad spend this year will be video-based.
According to a Zenith Forecasts study cited in the report, global digital video ad spending hit $45 billion last year and is expected to exceed $61 billion by next year, for an 18 percent annual growth rate.
The biggest takeaway from this report, PubMatic director of marketing research Susan Wu told ClickZ via email, is that video ad monetization, while a “tremendous revenue opportunity, [requires] different strategies, capabilities and best practices from what publishers have become accustomed to with traditional display.”
The report said that client-side header bidding is publishers’ most chosen strategy for increasing ad revenue and fill rates.
Fifty-seven percent of respondents said that client-side bidding on desktop was their top method for boosting revenue and fill rates, while 54 percent cited hybrid header bidding, which utilizes server-side implementation along with client-side. Open real-time bidding was chosen by nearly 47 percent.
For mobile, open RTB was selected by 58 percent, with client-side header bidding at 57 percent and hybrid header bidding at 55 percent.
PubMatic is a pioneer in the use of bidding, in which there is a direct auction among all advertisers at the same time. This contrasts with the previously dominant waterfall-type bidding process, which was seen by publishers as giving preference to some bidders over others.
While the report finds that header bidding is a hit for making money off video ads, that’s for desktop. Mobile in-app header bidding, however, is a more complicated animal, although the report notes that mobile ads are expected to account for almost three-quarters of all digital ad spending this year.
Wu noted that mobile in-app “is not the same as desktop when it comes to implementation,” since it requires additional SDKs (Software Development Kits) that add latency. But the report said that mobile is the biggest growth opportunity for video ads, and added that 30 percent of publishers expect to increase video ad placements on either mobile apps or mobile web.
Additionally, the report points to the growth possibilities of header bidding for video ads on Over-the-Top (OTT) TV and Connected TV (CTV), although that implementation is less developed than mobile. Video ads are expected to grow on OTT by 21 percent over the next 12 months, and by nearly 26 percent on CTV.
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