• by Gal Topaz , December 12, 2013

Programmatic buying has dramatically altered the online video landscape. What was once reserved almost exclusively for banner ads has now evolved into online video’s next big opportunity.

Programmatic video offers numerous benefits to marketers -- but ad networks stand to gain the most. Programmatically traded video ad spending is growing at an impressive rate, projected to hit $686 million this year, according to Forrester (a 71% rise from last year), and will reach $1.1 billion in 2014. As one example of the increasing influence of programmatic buying, Google’s DoubleClick ad exchange — home to YouTube’s ad inventory, among others — has seen a 200% jump in programmatic ad inventory.

Buyers are shifting more of their online ad budgets to programmatic, forcing networks to package their inventory in a more transparent fashion. Programmatic video deserves a deeper analysis and understanding by all marketers.

In order to tap into the unlocked growth of programmatic video, ad networks need to reinvent themselves. No longer can they serve as a conduit between advertisers and publishers for generic, broad audience buying. Ad networks need to evolve to become strategic media partners to advertisers, helping them get in front of the right video audience at the right time, by the most efficient means possible.

In order to remain relevant in an increasingly sophisticated programmatic ad buy world, ad networks should do the following:

Create more value through behavioral and data targeting. The programmatic approach to video ad spend provides marketers with audience segmenting precision at scale, agility and addressability in a data-driven, dynamic market.

Even though programmatic buying ad spend is growing, ad networks remain one of two preferred ways for agencies and brands to purchase digital ad inventory (the other being direct from a publisher), according to eMarketer.  Clearly, there remains a strong need for ad networks’ access to digital video ad inventory, as well as their expertise in optimizing that inventory.

Ad networks have access to reams of behavioral and demographic data that can be packaged for programmatic buyers. Programmatic video gives marketers the ability to effectively reach data-driven, strategic audience segments wherever they are on the Web. Accessible first- and third-party data fuels targeting precision, enabling marketers to drill down to a near-exact match of their desired audience segment. This gives marketers the ability to reengage both active and inactive audience segments with relevant video content that will help reduce churn and improve overall customer acquisition rates.

Establish partnerships with content developers. Ad networks are masters of packaging their services. Many have formed partnerships with a multitude of advertisers and publishers in order to maximize media opportunities for clients and provide more advanced media-buying capabilities. Ad networks should turn their attention toward developing the same level of relationships with video content publishers.

A lot of the in-stream video traffic currently on the market, outside of YouTube, is being packaged by ad networks. There is added value for publishers and advertisers alike in networks partnering with video content producers and syndicators. Establishing these partnerships will help strengthen ad networks’ ability to deliver efficient programmatic video ad inventory to advertisers.

Create scalable, customized video ad units. Working together with publishers and within the major ad exchanges, ad networks can create highly engaging customized video ad units -- from customized interstitials to in-video ad engagements. These will help further diversify a network's programmatic ad buying capabilities, giving it more leverage against other networks while also establishing a unique revenue stream.

Programmatic video is shaking up online advertising. Ad networks need to  adapt their services in order to survive this upheaval. Better use of data and behavioral targeting, establishing more partnerships with content developers and creating scalable specialized video ad units will help networks achieve long-term scale and success in programmatic video.