Audiences, Familiarity, and the Removal of Risk: the Ascent of Mobile Video Advertising

Stephen UpstoneWhile mobile video advertising has fought hard to be perceived as an extension of TV and desktop video advertising, the reality is that it also forms part of the mobile advertising ecosystem, which can sometimes seem like an industry in its own right. Few people understand the mobile advertising space better than Stephen Upstone, CEO of LoopMe, a London-based start-up specialising in rich media and mobile video formats. Here Stephen looks at role mobile video plays and at the forces likely to drive future growth.

Mobile display advertising was born when the iPhone launched. It was Apple’s apps – those distilled concentrates of mobile goodness that we know and love today – and app developers running direct response campaigns who fuelled mobile advertising’s growth, lured in by the ease with which they could incorporate ads and secure conversions.

Since then the mobile advertising world has come a long way in a relatively short space of time, rapidly going from SMS and static banners to rich media and video. While developments in technology have of course played a role, at the industry level there are four main forces driving the growth of mobile video advertising: audiences, scale, proof, and risk reduction.

First, let’s look at audiences. The first rule of advertising is to be where your audiences are, and today they’re mobile. Regardless of which market you look at, smartphone adoption is booming and they’re no longer the preserve of the tech savvy. According to eMarketer, 4.4 billion people around the world now have a mobile phone, while 1.75 billion of those are smartphones, with even more expected to come online as 3G and 4G services advance.

The opportunity here lies for brands to reach those audiences, providing they can get around the limitations of SDKs and unleash the potential of video to move from incentivised performance advertising to real, scaled-up brand awareness.

Secondly, brands just ‘get’ video. They’ve been using the medium for well over half a century (you can still see the first TV commercial, broadcast in 1941, for Bulova watches). They absolutely know how to make the most of it, and have huge amounts of content to draw upon. Video is a natural, logical progression from TV, and to shift this expertise from a one-way broadcast medium to an interactive targeted approach presents a significant opportunity in mobile.

Thirdly, the pioneers have proven that mobile advertising works, and that video mobile advertising really works. Gaming brands were first to embrace mobile video advertising, particularly full-screen formats. This is because they’re innovative in their DNA, and embrace new formats such as full-screen video that are a natural fit for the gaming experience. As soon as they found something that worked, they cranked it up, and were soon getting up to 10x increased performance from full-screen ads, and 3x better targeting. From then on it was a question of not if, but when, other brands would follow the gaming lead.

And finally, video is just eminently measurable, which brands love because it reduces risk. The IAB offers complete guidelines for measuring digital video advertising (which in itself represents endorsement) but video has in place effective means of measuring impressions, reporting and counting, with robust processes and controls in place. The old adage still stands: if you can measure, you can manage, and for many big brands this militates against the risk of adoption.

Looking to the future, I don’t see a shift in formats because we have a rich format ecosystem now. What I do see is more – scale, power, sophistication, people, with even greater ubiquity and diversity among these devices, from mobile phones, to tablets, to phablets, to wearables and Smart TVs. This is the point at which mobile video advertising effectively ‘comes home’.

For the scale to be realised however, we need to work around the SDK bottleneck. App developers find SDKs irksome, and SDKs are a limiting factor when trying to get the widest possible reach across all exchanges. Work around the SDK and you reveal huge audience figures, comparable to TV, in which video breaks out of the incentivised niche and into real brand awareness territory. Mobile video will have truly come of age when it can easily reach a billion people.

I also see the rise of programmatic in all its forms, from open to premium to direct. This is another scale argument, because programmatic is the only way to deliver mobile advertising at scale with efficiency and targeting. Together, SDK-free mobile video advertising and programmatic delivery represent a sweet spot where reach, targeting and engagement meet, and this is why there has been a huge number of IPOs and M&A around video and programmatic recently.

And I also see more entrants. The gaming brands have blazed the trail, but now I’d like to see how other players embrace video. For example, utility apps are attracting huge attention as they vie for the opportunity to automate our homes. These are companies that have traditionally competed for brand spend on TV and video could again be a natural step for them to take.

Is everything in the mobile video advertising garden rosy? Not yet. There are still challenges, primarily around the fragmentation of mobile technology. We have multiple platforms, with multiple brands manufacturing multiple devices for them. Without significant investment in addressing these challenges there is no guarantee that what works on one device will work on another. Brands, quite rightly, want this guarantee.

But I’m confident we can overcome these. We’ve come a long way and overcome many significant challenges already, for example by implementing HTML5 delivery which addresses the SDK issue, enabling standards-agnostic delivery of any format.

Audiences, scale, proof, and risk reduction– let’s see how this looks in August 2015.

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