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Programmatic & mobile video: How we got here and where it’s going

by Katie Jansen on May 9, 2017

The objective of advertising is to target and delight individual users while simultaneously achieving great market scale. For a long time, this was easier said than done.

In the past, advertisers had to buy from publishers directly, requiring complex, one-off negotiations with long cycles, so it was tough to be agile in response to market conditions. Impressions were bought in bulk and based on loose audience definitions, and neither publishers, nor advertisers, had much real sense of the impact those impressions were having.

As a little time went by and consumer behaviors continued to be inexorably changed by our increasing web connectivity, it became clear that manual methods weren’t going to cut it.

The evolution of programmatic

In response to the shift in consumer demand for web-based experiences, a barrage of new innovations emerged to insert display ads (originally in banner form), giving rise to the first digital ad networks that promised to monetize unused inventory in a quick and painless way. But as more and more publishers and advertisers jumped on-board, the omnipresent nature of these ads tired and confused consumers. As a result, click-through rates (the only real standard metric of the time) fell quickly. The model was clearly broken for all parties and something had to change.

This reality shifted digital advertising’s POV from messaging everyone with everything, to targeting the right person with the right thing. Forward-looking brands experimented with new ways to engage web users, often without any immediate hope of ROI, or even revenue. But, with time, use-cases were proven out, more KPIs were identified, business partnerships were formed, and clear financial models emerged.

It is through this process that programmatic advertising as we think of it today came to be, but that’s really just the beginning of the story. The rise of mobile video, its similar path to market prominence, and emerging confluence with programmatic methods will most certainly write the next chapter in the story of advertising.

The rise of mobile video

Mobile video is exploding. From its humble origins in the early days of the iPhone, through the advent of “second screen” experiences and the phenomenons of UGC and video-centric social networks, mobile video will account for 78 percent of all mobile traffic by 2021, according to Cisco. That’s almost 9x growth from 2015 levels, making video, by far, the fastest-growing category of mobile data usage.  

Like programmatic, this growth is entirely driven by changing consumer behaviors. Mobile video views grew by about 78% in North America between 2013 and 2015, and continued to grow by about 35% over previous years. Other key factors influencing the growth of mobile video include a rising tide of the short form video content favored by heavy users, growing availability and adoption of 4G networks, and viewers’ continuing shift from traditional TV to OTT content.

Social has been hugely impactful in the growth of mobile video as well. As of the end of 2016, Snapchat, Facebook and YouTube users watched more than 22 billion videos per day. In the same year, Facebook users watched more than 100 million hours of video on the network every day. Mobile now makes up 84% of Facebook’s ad revenue, accounting for $7.25 billion in Q4 of 2016.

With that kind of money on the line, it’s no surprise that a secondary ecosystem of advertising technologies dedicated to optimizing ad spend on mobile has emerged, and that seamless integration with programmatic technologies is the ultimate goal.

The Confluence  

Mobile is almost too big to conceive of: there are billions of users, devices, and apps producing quintillions of individual data points every day (1 quintillion = the number 1 followed by 18 zeros). That number will only continue to rise. Much of this data is of interest to advertisers who, you’ll recall, want to both scale massively, and target individually. Fortunately, mobile data is easier to apply to programmatic solutions than the stuff that comes from desktop cookies. That means that mobile solutions “ . . . can be more nimble with targeted campaigns, resulting in better quality outcomes for advertisers and publishers. It’s really a match made in heaven: robust data about customers that can be aggregated and analyzed, paired with powerful software that is up to the task.”

It is for this reason that mobile video programmatic spending will exceed its desktop counterpart for the first time in 2017, according to eMarketer. This, in turn, is pushing mobile publishers to create more creative formats and native experiences, driving better brand engagements and experiences for consumers, which require further programmatic innovations to keep up with demand — a virtuous cycle, indeed. But where will this rushing confluence of mobile video and programmatic take us next?

Looking ahead

The data at hand tells us mobile users watch a lot of video, but often with the sound turned off. We also know that mobile users balk at any video ad that runs more than about 10 seconds, and that, if they’re unhappy, mobile users will just skip the ad, open another app, or go to another screen.

As these behavioral drivers push brands and marketers to find creative methods to engage with users via increasingly saturated mobile screen real estate, hardcore technologies are arising. Their goal is to vastly improve the way that brands and advertisers measure the whole of the consumer’s experience with mobile video. That includes everything from when they watch to how, and with reference to correlating behaviors in other channels (i.e. social, SMS), across screens and geography, in both the digital and physical realms.

These technologies are being developed, trialed and deployed by global tech and media companies right now, and, while the market for programmatic advertising methods for mobile video is still young, everything happening in mobile is happening more quickly than it did on desktop, making it easy to envision an accelerated path to prominence.

A handful of adventurous innovators and brands are already creating and experimenting. Soon, a critical mass of industry-specific case studies and KPIs will be established to prove out the opportunities. Then will come widespread acceptance, followed quickly by an explosion of revenue, experiences, and enabling technologies.

One way or another, it’s clear we’re only looking at the tip of the iceberg for programmatic in mobile video.

Katie Jansen is AppLovin’s Chief Marketing Officer. In addition to her work, Katie is an advocate for women in tech and equality in the workplace.

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