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What: Advertisers will spend more than 10 billion in digital video in 1, representing an 85% increase from 2 years ago, based on“Digital Content NewFronts: Video Ad Spend Study,” a study conducted by Advertiser Perceptions on behalf of the Interactive Advertising Bureau (IAB).
Why it matters: 68% of those marketers and agency executives believe that original digital video will become as important as original TV programming in the next 3 to 5 years.

Advertisers and media buyers have made an impressive 114 % increase in investments in original digital video programming over the past two years, according to the third annual “Digital Content NewFronts: Video Ad Spend Study” conducted by Advertiser Perceptions on behalf of the Interactive Advertising Bureau (IAB).

Reinforcing the critical role the Digital Content NewFronts has played in media buying decisions, eight out of 10 respondents said that their attendance at the 2015 NewFronts resulted in increased spending on original digital video content in the 12 months that followed, and/or motivated them to increase original digital video budgets overall.

Buyers who primarily focus on TV were more likely to commit those extra dollars at the NewFronts (64% vs. 42%), while digital-focused buyers were more likely to spend them throughout the year (49% vs. 41%).

Buyers who primarily focus on TV were more likely to commit those extra dollars at the NewFronts, while digital-focused buyers were more likely to spend them throughout the year.

Nearly three-quarters (71%) of those surveyed also said that they plan to attend the 2016 NewFronts, expecting to spend more than a third of their overall digital video budgets for the year at the annual marketplace.

The study further revealed that more than two-thirds of marketers and agency executives (68%) believe that original digital video will become as important as original TV programming in the next 3 to 5 years. In order to close the gap between digital video and TV programming, both groups want to buy digital video that reaches target audiences in high-quality programming and delivers more concrete ROI metrics.

68% of marketers and agency executives believe that original digital video will become as important as original TV programming in the next 3 to 5 years

While the majority of buyers surveyed plans to spend more overall on all digital video (63%) and mobile video (62%), original digital video content has grown in importance, now accounting for 44% of a typical digital video budget, up from 38% two years ago.

Native advertising has also established a foothold in dollars spent on original digital video, accounting for one-third (32%) of that investment.

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Ongoing Strong Growth for Digital Video

  • Advertisers are spending on average more than US$10 million annually on Digital Video, representing an 85% increase from 2 years ago, based on a survey of 360 advertisers and marketing professionals.
  • Video represents an increasing share of Digital/Mobile Ad Spending, with growth driven by a substantial increase in Mobile Video allocations.
  • Robust spend optimism (plans to invest more in next 12 months) for both Digital and Mobile Video; while most are expecting to maintain current TV spend levels.
  • Cross-Platform spending (TV + Online Video) seeing continued growth in 2016 – driven by TV-Primary Buyers, 82% of whom plan to increase crossplatform spending.
  • Cross-Platform spending (TV + Online Video) seeing continued growth in 2016 – driven by TV-Primary Buyers, 82% of whom plan to increase crossplatform spending.
  • Original Digital Video Content Spending & Trends – Robust growth: Ad spending on original digital programming has more than doubled since 2014. Nearly one-third of ODV dollars are going to Native advertising opportunities.

In addition, Yahoo partnered with Nielsen & Hunter Qualitative to collect insights related to different variables within the pre-roll and native video ad formats. The study suggests the greatest growth in digital video consumption is coming on mobile devices, while traditional TV viewing time has declined slightly.

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The study further suggests cross-platform digital video ads are more effective for brands than PC or mobile-only video campaigns.

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Yahoo’s video creative best practices:

  • Larger logos deliver higher brand metrics than smaller logos, and even more so for Millennials.
  • CTA’s should be included in video ads, as they generate increases in lower-funnel metrics such as Purchase Intent and Brand Recommendation.
  • The brand should be introduced at any point in the video ad. Key brand metrics are not impacted whether the brand is introduced in the beginning, middle, or end of the video.
  • Different ad tones should be employed to drive Millennials down the purchase funnel.
  • Video ads must be optimized for screen alignment.Horizontal is more effective at increasing familiarity and purchase intent when compared to the relatively newer vertical portrait ads.
  • 15/:30 ads in pre-roll formats as they drive higher aided recall, affinity, purchase intent, and recommendation than : 05.
  • :15 native video ads drive greater recall and purchase intent than longer video units.
  • When it comes to native, auto-start ads drive a slight increase in brand affinity and outperforms userinitiated ads in recall and fixation.

“Marketers and agencies are telling us they clearly see great value in original digital video programming,” said Anna Bager, Senior Vice President and General Manager, Mobile and Video, IAB. “This study demonstrates that the NewFronts has the ability to move ad dollars. Considering this year’s presenter line-up of top-tier, innovative media companies, and content creators, we expect that the event will inspire spend during the marketplace’s two-week period and beyond.”

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What: Vista Equity Partners has acquired a majority stake in automating trafficking and billing software Company Mediaocean in a deal that values Mediaocean at about US$720 million.
Why it matters: The investment, which helps the company to continue development of products that address the convergence of digital video and TV, doesn’t hinder Mediaocean’s interoperability with other major video buying systems, including TubeMogul and Adap.tv.

Tz-ar2xE_400x400Vista Equity Partners has acquired a majority stake in automating trafficking and billing software Company Mediaocean. The deal values Mediaocean at about US$720 million, the company confirmed. Mediaocean was the result of the 2011 merger of Mediabank and Donovan Data Systems, a deal valued at US$1.5 billion.

The investment will help the company to continue development of products that address the convergence of digital video and TV. Mediaocean’s products are designed to accelerate the agency workflow and planning process. In 2013, it launched a Connect Partner program, a marketplace where agencies are charged on the percentage of spend they put through the platform.

Mediaocean is also investing in Spectra, a “broadcast exchange” of sorts for TV buyers, and recently extended that offering to include digital video via its partnership with Videology. Working with Videology doesn’t hinder Mediaocean’s interoperability with other major video buying systems, including TubeMogul and Adap.tv, according to the company.

“Four years ago we created Mediaocean with the goal of providing the industry with an open platform to easily integrate campaigns across all traditional and digital media,” said Michael Donovan, chairman of Mediaocean, in a statement. “When Vista approached us, we were impressed by its strategic vision.”Donovan said Vista is more like an “enterprise software holding company than a classic private equity firm with nearly 200 employees – most of whom are operators, not finance professionals.”

Buyers ,actually, expect more convergence on the back end. “They don’t want to just partner with one, they want to partner with several to see which is most effective for their needs,” Jim Tricarico, CRO of broadcast and multichannel video programming distributor  partner Cadent Network, said.Tricarico noted, for example, that MAGNA Global uses TubeMogul while WPP/Mindshare use Videology, which underscores the importance of supporting multiple video/TV planning instances. This is what Mediaocean is building toward.

if you can get the financial outcome of an IPO without the burden of managing a public company, what’s better than that?

descargaAccording to Bill Wise, CEO of Mediaocean, so far, Mediabank had raised a total of US$50 million over a course of their tenure before merging with Donovan.

“if you can get the financial outcome of an IPO without the burden of managing a public company, what’s better than that?, ” said Wise.

Mediaocean will first help with media convergence, specially  TV and video to one marketplace design, similar to what the company did with digital radio with Pandora and Spotify. Secondly, with geographical expansion. As Digital is inherently global, it’s much easier to expand geographically, and the copany is already implementing in both France and Germany, UK and scoping out Asia-Pacific for 2016.Third is diversifying our product, one being connection to the sell side of the market and then extending into planning. On the partnerships, the ones who really stuck out are the ones who represent supply: Pandora, Spotify, AdStruc, Videology, all the companies who aggregate supply and want to plug into Mediaocean’s demand.

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aol park benchDigital Content NewFronts grow as line between TV and digital blurs. How Horizon Media, AOL, SMG, INNOCEAN USA, Havas, AOL and Yahoo  see the NewFronts evolving.

As the 2015 Digital Content NewFronts wound down, AOL said it had shifted from a NewFront “season” to a NewFront “year,” part of its “Content 365” strategy. (It’s unlikely that this means AOL would not hold a NewFront in 2016. A spokesman said, “It’s not enough to hold a once-a-year event, trot out some programming, and then never talk to advertisers again.”) It announced the renewal of original series including Park Bench with Steve Buscemi (pictured).

AOL and NBCUniversal also announced a content distribution and development agreement for both exclusive and non-exclusive content. This summer, NBCUni video clips and segments will be available to stream on AOL online and its mobile app.

AOL The_Pursuit[1]Meanwhile, Yahoo announced 18 new premium video series, including the live series Ultimate DJ and the original, long-form series The Pursuit.

Armando Rodriguez, head of Yahoo, Latin America and US Hispanic, says his team works in parallel with Yahoo’s global teams. “Not only do we localize US video content for our market, we also locally produce close to 150 original video clips per month, divided between daily news coverage and weekly video programs,” he says.

These NewFronts, as well as many others, illustrate the contradictions in the Digital NewFront/TV Upfront dichotomy – a divide that’s becoming more and more unnatural. It’s clear that consumers don’t pay that much attention to whether the video content they’re watching originated as a broadcast, a theatrical release or a digital-only release. So, why should advertisers and agencies?

It’s clear that consumers don’t pay that much attention to whether the video content they’re watching originated as a broadcast, a theatrical release or a digital-only release.

 

Total Video Plans

While INNOCEAN USA, for example, looks at a total video plan for clients, rather than considering TV and digital separately, Greg Braun, executive creative director, says that the NewFronts have not outrun their purpose. “Some content [digital producers] are putting out is groundbreaking,” he says, giving kudos to Netflix for its Emmys. And, he adds, “The Amazon Prime model is awesome.” Braun does appreciate that the NewFronts and Upfronts are now contiguous in time.

AbruzzoBecause the NewFronts come before the Upfronts, they remind agencies and advertisers to set aside funds for the digital properties they see, according to Joseph Abruzzo, vice president and chief exploration officer for Havas Media. “Everyone continues to spend in television, but, as new dollars become available, they are noting to allocate those dollars for opportunities in digital content,” he says.

Because the NewFronts come before the Upfronts, they remind agencies and advertisers to set aside funds for the digital properties they see.

There’s evidence that digital video is increasing overall ad spending, according to ZenithOptimedia’s Advertising Expenditure Forecasts. According to the report, global ad spend will grow 4.4 percent to reach $544B in 2015. Meanwhile, it said that global online video grew 34 percent to$10.9 billion last year, and it’s expected to grow at an average of 29 percent a year to reach $23.3 billion in 2017. Meanwhile, spending on TV advertising is expected to decline 5 percent in 2015.

MarlaSkiko, SMG Multicultural
MarlaSkiko, SMG Multicultural

It’s unclear whether – or how much – ad spending digital video is taking away from broadcast. Certainly some of that additional ad spend will go to traditional broadcasters that are offering broadcast/digital packages. “For broadcasters, TV is the number-one game, but they are shaping how they are serving up their content and the Upfronts, understanding they have to be more screen-agnostic,” says Marla Skiko, executive vice president and director of digital innovation for SMG Multicultural.

But TV audiences continue to decline. According to ZenithOptimedia, to date during the 2014/2015 TV season, primetime television usage has declined 7 percent among adults aged 18 to 49 and 5 percent among total viewers.

Because broadcasters want to maintain their revenue from one year to the next, they have traditionally offset the audience decline by increasing the cost of advertising. This is not a sustainable proposition.

“Advertisers and agencies hate to spend more for less,” Abruzzo says. While broadcasters can definitely charge more for top-tier programming like Walking Dead, he says, “There is such a long tail for television programming that it won’t support that kind of inflationary thinking. Because TV audiences are shrinking, that money will become available for digital.”

While broadcasters are making more and more content available for digital replay – such as the AOL/NBCUNI deal – Abruzzo says, “It’s the same content, so it probably has the same audience — and it tends to be on the expensive side, not necessarily any less expensive than television.”

SMG Multicultural has seen a shift in budgets from television to digital in general, according to Skiko.

SMG Multicultural has seen a shift in budgets from television to digital in general, according to Skiko. She says, “The appetite for digital video is only growing, and this will cause more and more questioning of how much we spend on television.”

Loosening up

While the TV Upfront season does result in deal-making, the NewFronts have always been more about showcasing content, with a “save some money for this” message. What’s new this year is a greater flexibility, along with a growing emphasis on targeting and programmatic buying on the part of content platforms.

Jason Smith Headshot (highres)In the past, according to Jason Smith, vice president for digital media activation at Horizon Media (photo), “A lot of publishers were asking brands for firm upfront commitments around inventory very similarly to the Upfront; but there hadn’t been a lot of ability for advertisers to control that inventory.” For example, they might not have been able to optimize across sets of digital video inventory; advertisers were expected to buy a certain number of channels; and there were limits on audience guarantees. There was even a lack of flexibility in cancellation policies.

During this year’s NewFronts, Smith says, “They have been more focused on giving brands more control and programmatic access to some of the inventory. They are offering more forward-thinking ways to help people understand how to put their money against the inventory. That is a very big step.”

Armando Rodriguez Yahoo smallerSays Yahoo’s Rodriguez (photo), “When I speak to an advertiser they are looking for an efficient way to buy video impressions at scale.” He points to Yahoo’s integration of Brightroll as a way of giving video advertisers more access to data and programmatic buying. “Yahoo’s data from over 1 billion global users including desktop, mobile video advertising inventory, and audience insights available on BrightRoll’s media-agnostic DSP,” he says.

While deals are less likely to be forged at the NewFronts, Skiko says there’s a lot of value in them. For one thing, she’s always keeping an eye out for a client that might want to, for example, reach an audience of acculturated, bi-lingual Hispanics with an English-language cooking show. “You go there to learn and to assess,” she says. “It gives you the ability to begin the negotiation from a much better place.”

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