Consumers continue to indulge in an ongoing love affair with TV, especially as digital set-top boxes, catch-up TV and on-demand services enrich the living-room environment. In fact, research firm TNS recently found that 75 percent of respondents in a survey said they sit in front of the box every day. ‘TV dinners’ are also alive and well, with three out of four viewers (76 percent) giving TV their undivided attention while eating in. But, online TV viewing is inexorably growing, and is often complementary to the old-school boob tube experience. Going forward, these trends have major implications for advertisers, who will need to gain the interest of viewers across screens.
“While there is no disputing that our love of traditional TV remains, advertisers must continue to adapt to our changing viewing habits,” saids Matthew Froggatt, chief development officer at TNS. “Online devices are offering more ways to access TV and video content, meaning that brands will need to adopt a more integrated online approach in order to engage consumers.”
As a result, a cross-platform approach to monetization is rapidly becoming an imperative for an industry that is seeing consumer behavior evolve quickly.
"The main challenge for today's media companies is transforming analog dollars into enough buckets of digital dimes," said Ron Yekutiel, Kaltura chairman and CEO. "When the audience is highly fragmented in its tastes and cuts across territories, channels and devices, a hybrid and personalized approach to monetization ensures the optimal revenue yield.”
That said, right now, video viewing is a complex and fragmented environment, in which complementary activities (and at times conflicting activities) are taking place across multiple screens. Distraction is a concern for advertisers—if someone is watching a show and then tweeting about that show during linear commercials, how can they capture that screen shift to make the most of their engagement efforts? This has made accounting for viewing behavior orders of magnitude more difficult than it ever has been in the past.
“The consumer has evolved significantly since the early days of online video. Today, traditional TV viewing is down marginally, while we are seeing across-the-board gains in time-shifted, online, mobile and over-the-top video viewing. But the measurement systems have not yet caught up,” said John Muszynski, chief investment officer at media buyer Spark.
Ratings companies like comScore and Nielsen are working on it. Nielsen for instance is trialing the Nielsen Cross-Platform Campaign Ratings service, which aims to take the commercial exposures from an advertiser’s TV ads and its online ads, and report on the combined audience for campaigns, amount of overlap and overall reach. Its partners so far are Unilever and Mondelez International, formerly known as Kraft Foods; agencies include Omnicom Media Group, Aegis and Universal McCann London; and publishers and ad networks like Adap.tv.
“More and more consumers are living platform-agnostic lives, and the advertising world needs to adapt to that,” said James Oates, Nielsen managing director of media in the UK. “Creating a way to reach, measure and monetize inventory across screens and platforms advances the industry towards the high-caliber, seamless standard that can provide new opportunities for advertisers, agencies and publishers – allowing a mutual exchange of value between buyer and seller. Nielsen Cross-Platform Campaign Ratings is an exciting step forward in helping them further understand the impact of their campaigns, wherever they run – across platforms and markets around the world.”
Ad platforms are evolving rapidly too. Kaltura has beefed up it flagship monetization product with in-player advertising, over-the-top (OTT) monetization, subscription billing and transaction management, as well as targeted distribution and syndication.
A Flow of Funding
According to the Q4 2013 State of the Video Industry report from Digiday & Adapt.tv, programmatic video spend by brands more than doubled in the past two years. And as a result, the interest in cross-platform and programmatic ad buying has sparked a rash of funding into the ad tech space.
For instance, TubeMogul, which provides a platform and related services for managing digital video advertisement campaigns, has announced terms for its IPO, indicating the latest vote of confidence for the advertising technology space.
The company, which was founded in 2006 and based in Emeryville, Calif., plans to raise $75 million by offering 6.3 million shares at a price range of $11 to $13—the pricing is expected this week. At $12, the company would have a fully diluted market value of $394 million. It will list on the NASDAQ under the symbol TUBE.
The company reported $64 million in sales for the fiscal year ended March 31, and has signed a couple of high-profile deals of late. Notably, media buying company Harmelin Media is partnering with TubeMogul to streamline the agency's video advertising and help power its in-house programmatic buying team, effectively unifying its TV buying and digital media buying strategies.
The partnership follows on the heels of Harmelin's trial run with TubeMogul's BrandPoint, a solution for accurately planning, buying and measuring digital media on a gross rating point (GRP) or on-target audience basis. Harmelin has consolidated more than a dozen video vendors onto a single platform to gain insights on the performance of its direct buys with premium publishers.
"Technological development and a rapidly evolving digital landscape were key factors in establishing our internal programmatic team," said Brad Bernard, vice president of digital media and analytics at Harmelin. "TubeMogul's commitment to robust planning tools, transparency and service set them apart during our evaluation process. It is important to us to have a self-serve solution that we can use to plan, buy and measure media across any device, but it is even more important to us to be able to act on the insights we gain in real-time – TubeMogul allows us to do all of that.”
Oreo-maker Mondelez International has also inked a deal with TubeMogul to streamline its online video advertising strategy – including media planning, buying and ad serving, using TubeMogul's software. Media bought through alternate channels will be served and audited for viewability by TubeMogul. Mondelez will debut the use of the software in the Canada and United States, with potential expansion to additional markets in Africa, Asia, Eastern Europe and the Middle East.
These deals—and TubeMogul’s IPO aspirations—reflect a growing trend of utilizing programmatic buying to improve online video effectiveness. And TubeMogul is not the only company to go public on the back of this online-TV convergence. YuMe, the digital advertising specialist, filed, priced and executed its IPO during the first half of the third quarter last year with fair results.
YuMe filed a registration statement last July disclosing its plans to raise roughly $65 million with an IPO that would bring its shares to the NYSE under the ticker symbol YUME. But from there, it had to revise its expectations downward and went out at $9 per share—though it hit a high of $12.08 in intraday trading just a few weeks later, the day after it launched a new multiscreen targeted video advertising product.
Since then, YuMe has been steadily rolling out new technology — a goal for gaining the IPO funding. It announced that it had improved its fraud detection system within its Placement Quality Index (PQI) to offer a variety of new features for customers of its digital video brand advertising solutions, and the company has developed a series of best practices with the aim of improving the overall safety and delivery of digital ads throughout the industry.
The new fraud detection capabilities include tools to detect impression scams, in which fraudulent publishers send out bogus ad requests; ad stacking, in which ads are stacked onto a single out-of-view or below-the-fold ad; and click-fraud, in which bots do the clicking.
The stock may not have hit the highs that it wanted, but a successful IPO nonetheless gives validation to the sector. Earlier in the summer, Adap.tv took $405 million in cash from AOL in a sale, and Tremor Video had a successful IPO last June.
“From our perspective, it’s market-validating to have Tremor Video go out and now Adap.tv,” YuMe CMO Ed Haslam told Forbes. “All those things roll up to be great opportunities and market validating facts.”
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