• by Jack Loechner , Staff Writer @mp_research, December 13, 2012

According to a survey of 700 digital marketing and media professionals by Digiday and Adap.TV, video ad spending is up substantially over last year, by an average of 27%. The double-digit cannibalization of cable and TV budgets to fund online video campaigns reported in last year’s survey markedly declined. Meanwhile, 22% say digital video budgets are now “incremental,” deserving of their own place in the sun.

Buyers, consisting of agencies, brands and trading desks, almost universally report that this year represented a double-digit rise in online video ad spending, and they expect the upward trend to continue an additional 20% in 2013.

Cable budgets were tapped 40% less than anticipated, yielding only 13% of their funding to online video. And search declined the least in comparison with last year’s estimates, dropping just 2% in contrast to a predicted 11%.

Only display advertising cuts exceeded last year’s estimates, with 37% of buyers saying they raided this budget to fund online video in 2012.

More than half of buyers now say that online video should be more aligned with TV than display advertising, a growth in this perspective of greater than 10% in just six months. 67% of respondents say that they see video as a direct compliment to TV display, an 8% increase over Q1. Less than 10% of respondents say they don’t know where online video fits in their cross-platform planning.

One fifth more buyers are planning TV and online video together than just six months ago, and nearly 80% of all ad buyers will be doing so by this time next year.

83% of agencies and trading desks said that the digital group remains in charge of all digital video ad buying, making it easier for video publishers to connect with existing and potential customers. 43% of publisher respondents say they’ve dealt directly with TV buyers.

There has been a dramatic shift this year away from publisher-direct buying Video and largely publisher-controlled Upfronts, into Exchanges and DSPs. DSP patronage more than tripled, and for Exchanges the increase was almost as dramatic. Even ad networks, thought to be in decline a year ago in the face of the rise of DSPs and Exchanges, show a marked 32% increase. 

When publishers hear the term “programmatic” applied to online advertising, they overwhelmingly hear “RTB” or “Remnant Inventory.” When advertisers hear the term, their minds turn to “Audience Buying” (targeting), followed closely by “RTB” (efficiency), and finally “Spot Buying” (convenience). Agencies consider programmatic buying and selling to be more indicative of “Spot Buying” and then “Audience Buying.”

Adoption of RTB is lowest among publishers in the survey.

Earlier this year, many publishers considered private marketplaces as an alternative to opening their inventory to RTB. Over the course of the last six months, there was a 20% increase in publishers running private marketplaces, coupled with a 17% drop in those planning to construct such marketplaces within the next year.

Percent of Publishers Running Private Ad Marketplaces

• Q1, 2012... 8%
• Q4, 2012... +20%

Whether or not publishers consider building their own platform, the move towards more automated selling is made clear by the following chart, says the report, comparing publisher’s use of ad networks, video exchanges, DSPs, and Trading Desks compared with TV Upfronts.

Use of exchanges is up 124%, and of ad networks 35%. DSP and Trading Desk usage was even greater as a percentage calculation, but from a much smaller base. 

Overall, 80% of the respondents in Q1 said that CPMs for their online video inventory were on the rise, by an average of 11%. By this quarter, 84% said CPMs were up 12%. Also this quarter, 93% said their available video inventory had increased 67%.

For 80% of publishers, fill-rates are up an average of 19% from last year. But last year only 21% of publisher respondents were able to fill 50% or more of their video inventory. This year, 70% of publishers said they have fill-rates of 50% or more.

Asked whether they use third party validation tools to guarantee audiences, half of Trading Desks do, 58% of Agencies and 41% of brands. 80% of Trading Desks not yet using these tools will within a year along with 60% of Agencies and 55% of Brands. Currently, only 39% of publishers guarantee their audiences with the same validation tools.

Asked whether, if they had access to unified reporting, would buyers and sellers optimize their advertising between TV and digital video, 89% of Agencies, 83% of Trading Desks, and 77% of Advertisers said, “Yes.”

Access to first-party data also appears to be catching fire as a targeting tool. As shown in the following chart, a majority of all buyers are using it. 

Predictions for 2013 and Summary Observations Among the predictions received in this quarter’s survey:

• Validated views will drive higher inventory value 
• Addressable advertising on TV 
• More fluid planning between TV and digital •Interactive multi-channel viewing 
• Proving effectiveness against TV 
• Greater collaboration between broadcast and digital teams 
• Increase in mobile platforms •Integration of digital into the main TV ecosystem 
• Standardization of verified viewability 
• Apple-to-apples measurement of TV and online 
• Customized web-based channels 
• Acceptance from brand clients 
• More RTB transactions 
• Rise in trading desks 
• Growth in YouTube channels

As more unified marketing tools enter the arena, more advertisers will begin to compare their ROI from television and digital video. Online video, for its part, is moving inexorably toward more automated buying and selling.

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