Mobile video is set to command a premium: here’s why

April 3, 2018

This article ran in VideoInk April 2, 2018. To read the original article in full, visit it at VideoInk.

By Courtney McKlveen, Head of U.S. Field Sales, Oath

Whether it's Mobile World Congress or SXSW, flashy updated devices and more AR show us that the focus is on delivering a better content experience for audiences. This means more mobile video. It's built for engagement. Mobile video ad spend is on the rise, too. Publicis Zenith estimates it'll hit $18 billion in 2018, exceeding desktop video for the first-time.

This trend is happening for two reasons. First, mobile video ad spend will dominate non-mobile as younger mobile natives become the center of focus for brands. But the change in spend is also being driven by a change in perception among advertisers.

For years, brands believed that fixed video ads were more effective at selling brand messages than mobile video. The idea being that desktop ads would seem to benefit from being seen on larger screens and are in less distracting environments than mobile. So, many advertisers thought they should pay a premium for desktop inventory, not mobile.

But that's no longer the case. Mobile is commanding not only more dollars, but premium budgets, as well. And it's happening this year. Here's why.

1. Media consumption is now mobile-first.

Globally, mobile penetration is at an all-time high, with most Internet consumption occurring through mobile devices. The days of mobile as a second screen are long over. It's now the first screen. As a result, mobile will account for 72 percent of all digital ad spend by 2019*.

And in mobile, video is king and has been driving the growth. In fact, 70 percent** of all mobile traffic will be from video by 2021. If mobile is now the consumer's preferred screen, mobile video is their preferred media. As mobile video consumption continues to explode, so does advertiser demand for inventory. This has led to increased buyer competition for high-quality mobile video content, which is attracting premium dollars. This is why, across the industry, mobile CPMs are growing at a faster rate year-over-year*** compared to desktop.

2. Premium inventory is growing – and by a lot.

For years, high-quality or premium mobile inventory – especially mobile video inventory – was hard to come by. It's no secret that an explosion of mobile app inventory has occurred in recent years given consumer demand, as well as evolving technology and mobile capabilities. The growth initially led to a flood of low-value inventory. But, as publishers invest in mobile experiences, premium inventory has grown substantially.

Seventy-five percent**** of premium and high-value publishers are planning to expanded their mobile inventory last year, with mobile video expected to be their number one revenue driver. This is also why last year's NewFronts to this year's Mobile World Congress were dominated by promises of delivering short, snackable video content that's most effective for mobile audiences. The industry is quickly shifting from an undersupply of premium inventory as consumers and advertisers demand it, with mobile publishers seeking to take advantage and deliver on that. And with more premium inventory comes premium prices. Much of this premium video inventory is also shifting to programmatic marketplaces, making it easier to facilitate targeted investment at scale.

3. Built-in safeguards for viewability and fraud.

Some brands still believe that fixed video draws more focused viewing than mobile. But there are a few issues to consider when comparing eyeballs and attention across these two types of platforms – namely viewability and ad fraud.

Let's look at viewability. On desktop and PC, viewability rates – while improving – remain frustratingly low. In fact, mobile ads outperform desktop here. eMarketer finds that HTML5 standard banners (79 percent to 48 percent), Flash standard banners (70 percent to 50 percent), and HTML5 rich media (68 percent to 60) all have significantly higher viewability rates on mobile than on desktop. Mobile ads tend to be more in-view given device size, as well as browser and app design. Similarly, video ad fraud is lower on mobile compared to desktop.

Much of a consumer's mobile time is spent in-app, an environment that's technologically difficult to game. Apps are initially vetted by Apple and Google (though to varying degrees), while downloading them requires registered user information. All of this means that inventory has built in checks and balances, many of which go above and beyond desktop.

As advertisers realize this, mobile video ad spend is benefitting, with more premium dollars crossing over.

4. Mobile is rich in data for targeting.

Mobile also allows for hyper-focused targeting and personalization. Many advertisers mistakenly question mobile's data-targeting capabilities given the absence of cookies. However, the industry has grown to prioritize consumer privacy first, and responsibly leverage a single view of the user across devices. This enables advertisers to build ultra-tailored ad experiences through robust first and third-party datasets that are often more meaningful and reliable than frequently-deleted cookies. Targeting on mobile can be much more accurate, efficient and impactful.

Ultimately, the data possibilities, when infused with the natural benefits of mobile video creative, provide advertisers with unmatched value. For this reason, more premium dollars are going to mobile. Mobile video is one of the highest-performing and in-demand types of inventory. Unlocking the potential of mobile's unique data environment – which we're still in the early days of doing – will only increase its value. And advertisers will invest, because it's worth it.

Finish reading this article as it ran in VideoInk by visiting the original page at VideoInk.

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Article Sources:

* Mobile will account for 72% of U.S. digital ad spend by 2019, eMarketer, March 2015

** Video will account for 70% of all mobile traffic by 2021, tubularinsights, June 2016

*** Mobile CPMs now higher and growing faster than desktop [study], Marketing Land, October 2015

**** 2016 publisher outlook: monetizing in the age of mobile and video, One by AOL, May 2016