A Future So Bright
December 6, 2016
7 milestones in video that will influence advertising in the future
Contributed by Jeff Minsky
There’s a major revolution dawning in web advertising. Video is well on its way to becoming the dominant digital ad format, and recent changes in the industry are driving new ways of looking at the role of digital media. Narrowband metrics conceived in 1994 for transactional but uninspiring banner ads have little relevance in a world of video-based persuasion and storytelling.
From emotional advertising to vertical video, video advertising hit seven major milestones in 2016. As the year rounds out, here’s a look at the drivers of change that had the biggest influence on the video ecosystem and how they will affect 2017 and beyond.
1. 5G Connectivity Will Supercharge Video Consumption and Power Emerging Formats
Every major change in digital advertising has been predicated by a jump in bandwidth. From the early text days to basic animation and graphics to audio, low-resolution images, HD video, and rich media, ad units have always adapted to the connectivity available.
In 2016 cable operators have started to respond to services like Google Fiber with the initial deployment of Data Over Cable Service Interface Specification (DOCSIS) 3.1, the standard that allows the delivery of up to 10 GB per second over existing hybrid copper/fiber wires.
In 2017 there will be a dramatic jump in bandwidth as people begin the journey to gig-per-second service driven by the continued rollout of DOCSIS 3.1 and the further deployment of public digital- based media kiosks that act as gig-per- second Wi-Fi hotspots. Technology firm Intersection is installing these across New York City, and several other similar municipal web initiatives in cities across the U.S. are offering free Wi-Fi to the public. Bandwidth speeds will continue to grow exponentially over the next three to five years, and this extreme ramp up will result in one simple thing: more video consumption at a higher quality resolution across an ever-increasing number of devices.
For marketers, the pressure is on to not only create the most compelling creative, but to turn away from the old narrowband metrics of success in media communication. According to an April 2016 Google Doubleclick report, the average click-through rate across all ad formats is 0.17 percent. As marketers determine the metrics that matter to their bottom lines, making a connection through storytelling will only grow in importance. Through sight, sound, and motion, video drives an emotional response and tells a story. Regardless of the video format (e.g., standard video, virtual reality, or emerging forms of 360-degree video), measuring the emotional connection that video forges between brand and consumer will help marketers move away from focusing on narrowband click-through-based metrics and optimize the other 99.83 percent of their marketing communications investment.
2. Virtual and Augmented Reality Explode Onto the Scene
If the maxim “follow the money” is true, then what has been happening in virtual reality (VR) and augmented reality (AR) in 2016 is nothing compared to what we will see in the next few years. In a year where venture capital investment was dramatically cut back in the media and ad-tech worlds, VR and AR stand out as the beneficiary of more than $2.3 billion of investment over the past 12 months. And this year was just the start, with the official releases of major VR sets like Oculus, HTC Vive, and PlayStation Gear VR.
For AR, Pokémon Go demonstrated the platform’s true potential as a scalable medium, and while the scale has fallen since the game’s initial hype, gaming analytics firm Newzoo reports the app was still generating more than $2 million a day as of October.
Whether the technologies develop full-blown consumer mass adoption is yet to be seen, but with major levels of investment and players like Facebook, Google, Microsoft, and reportedly Apple supporting the media, VR and AR are officially here. Still, even with Microsoft’s Hololens beginning to ship this month and ventures such as Atari founder Nolan Bushnell’s fullbody-immersion tech Modal VR finding its way into consumers’ hands, it’s unclear how AR will scale in 2017.
At a recent Unruly Research Roundtable, attendees (mostly agency media strategists and buyers) were surveyed as to whether they felt that VR was a shiny new object or a lasting trend. It was unanimous that this was not just a fad but something their clients are committing to for both marketing communications and business evolution.
What wows consumers about VR is the immersive nature of the medium. Brands such as Jack in the Box, Jaguar, United Airlines, Carnival Cruises, Jean Paul Gaultier, and Nissan are beginning to test VR, even though traditional digital metrics will not be sufficient to optimize such an incredibly emotional experience. In an environment where the consumer is literally surrounded by new experiences and ways of storytelling, an entirely new lexicon of engagement metrics will need exploring. Brands using VR should analyze where a user spent the most time looking, how each element generates a different range of feelings, the various pathways chosen to navigate across the multidimensional storylines, and how those metrics tie back to brand perceptions driving the customer journey. Only emotional intelligence — measuring the range of emotions from amazement to fear to happiness to arousal — will give marketers the insight to optimize these immersive experiences.
While it will be a few years before VR remotely scales to a mass medium, marketers in 2017 will still be able to use their immersive creative in 360-degree or Live 360-degree formats. Most likely, many marketers will begin to use the digital video formats currently in place to distribute these new types of video formats.
3. Vertical Video Extends Beyond Snapchat
Increasingly, mobile phones are the device of choice for consumers watching video online. As eMarketer reports, 45 percent of all global digital video views now take place on mobile devices. And as the 2016 Unruly Mobile Video Survey shows, one quarter of consumers watch more than 10 videos a week on their phones. Regardless of orientation, mobile video is popular, but it’s vertical video that hit the scene in a big way in 2016.
According to the Mary Meeker Internet Trends report, almost one-third (29 percent) of videos are viewed vertically. In fact, according to the Unruly survey, 53 percent of consumers and 57 percent of Millennials find it annoying to turn their phones horizontally to watch a video in full screen mode, and 34 percent of consumers and 43 percent of Millennials always or often keep the rotation lock on their phones in vertical mode. What’s more, Snapchat, which helped popularize vertical video, reports seeing an engagement rate for vertical video that’s nine times higher than horizontal video.
Naturally, marketers are looking to leverage this growing ad format but are debating the merits of investing in the creation of an incredibly specific ad unit type. With viewers increasingly particular about how they want to engage with content on mobile devices — for instance, 74 percent of them say they stop watching a video ad when the sound plays automatically, according the Unruly survey — marketers will need to adopt the 9:16 video aspect ratio for vertical video if they want to keep pace with consumer behavior in 2017.
4. The Smart TV Evolves As Consumers Upgrade Devices
There’s a famous photograph of a group of people on a photo safari who are so intently watching the amazing scenery directly in front of them that they fail to notice the giant elephant that’s just come up behind them. While it may be the greatest photobomb ever, it’s also a terrific analogy for what’s been going on in the marketing industry. Marketers have not noticed the behemoth of ultra-high definition television slowly making its way into consumers’ homes.
Television sales are robust, especially those of 4K high-dynamic-range sets. According to the Consumer Electronics Association, 8 million 4K sets exist in the market and more than 10 million 4K sets will be sold in 2016, increasing to 19 million in 2017. This rate of sale dramatically outpaces the adoption rate of HD TVs in the early 2000s. Currently 4K native content is limited, with most distribution based on subscription video services like VUDU, Netflix, Amazon, and BTSport, but the format reached a milestone this year when the Summer Olympics in Rio de Janeiro were broadcast in 4K. While mass broadcast networks likely are not switching to 4K content in 2017, experimentation and long-tail video networks will accelerate, and there may be a 24/7 4K linear video network by the end of the year.
As marketers’ tech IQ grows, so must their emotional intelligence, and making an emotional connection will be the one key constant as video takes its dominant role across all screens.
Over the past three years, tens of millions of smart TVs (i.e., TVs that can connect to Wi-Fi) have shipped into the U.S. marketplace. The processing chips and user interfaces of these TVs have dramatically improved from previous models. Consumers have been moving through the learning curve and accessing apps more frequently. Marketers who are investing in branded entertainment now have a myriad of new ways to distribute that content. While Roku, Amazon Fire TV, Apple TV, and Google’s Chromecast have served the purpose as transitionary over-the-top systems, the dramatic improvements of smart TVs, along with their falling prices, will hasten the exit of those interim devices.
Most smart TVs collect second-by- second viewing data, regardless of the input device connected to the TV. By 2017, any legal uncertainties around the collection and use of this data should be clarified, and this could be extraordinarily useful in managing cross-platform reach and frequency, giving marketers an opportunity to reach viewers on every screen available, from the big screen in the living room to the small screen in the consumer’s pocket.
Making content that works across these various screens will help marketers stretch budgets and make their message ubiquitous. As marketers’ tech IQ grows, so must their emotional intelligence, and making an emotional connection will be the one key constant as video takes its dominant role across all screens.
5. Programmatic Ad Buying Becomes the Preferred Method to Purchase Video
Every major change in 2016 coalesces into the most disruptive advertising trend: ad buying continually moving to programmatic methods.
According to eMarketer, more than half of all digital video ad spending in the U.S. will be programmatic by the end of 2016, with programmatic desktop-based video ad spending reaching $3.73 billion and programmatic mobile-based video ad spending reaching $3.89 billion by 2017.
With this increased shift to programmatic ad buying, the need for viewing quality has shot up along with it. According to Unruly’s Programmatic Video Pulse Survey, quality of inventory, viewability, and ad fraud remain top concerns. This means smart advertisers and publishers need to work together to deliver polite, visitor-friendly ad formats on premium websites. Marketers are increasingly seeking out partners who guarantee brand-safe inventory. The Trustworthy Accountability Group keeps a list of audited companies that meet its Inventory Quality Guidelines. Advertisers should seek to have their video impressions take place on measured sites and make sure their demand-side platforms and supply-side platforms offer third-party verification tracking for viewability, invalid traffic, and content misplacement. According to Unruly’s Mobile Video Survey, four out of five Millennials say they usually or always mute video ads.
While the targeting capabilities of programmatic ad buying are alluring, it’s important to keep a balanced perspective and not target oneself out of a scaled audience. Marketers should use fewer targeting filters and consider a mix of performance-boosting private marketplaces (PMPs) like those optimized for Nielsen Digital Ad Ratings audiences, high viewability, completion rates, and even emotional PMPs that can boost performance by matching the mood of a site to that of a video ad.
It’s also important to remember that consumer preference continues to be king. According to Unruly’s Mobile Video Survey, four out of five Millennials say they usually or always mute video ads, so it’s important to use polite placements that don’t force the ad view and to never autoplay audio. As video campaigns continue to proliferate, launching user-friendly programmatic campaigns will become absolutely critical in 2017 and beyond to stem the tide of ad blocking.
6. Artificial Intelligence Is Becoming Even More Intelligent
Whether it’s big data artificial intelligence (AI), such as IBM’s Watson, or more consumer-friendly interfaces, like Siri, Alexa, Cortana, or Google Assistant, there is no question that marketers now have very different ways of parsing out data and driving technological communications with consumers. Recently, Google announced that its AI interface Google Assistant will be at the center of all of its activities going forward. In Google Photos the Assistant can now correct videos and create video montages from users’ photos. It’s only a matter of time before brands will be able to integrate themselves into those videos based on user profiles (and, of course, permission).
In anticipation of the emergence of AI, the White House recently released a 58-page report called “Preparing for the Future of Artificial Intelligence” that outlines the benefits and challenges that AI will bring to the economy and humanity. While there are far more important ramifications than marketing, there is no doubt that marketing will be affected. It is not a stretch to think that consumers will soon see devices with embedded AI that will not only make recommendations but also deliver the most relevant videos as customized program channels. Additionally, it’s not far-fetched to think marketers will include Alexa, Cortana, Siri, or Google Assistant in video and display messaging as a call to action (e.g., “Ask Alexa for more information about Tesla”).
Marketing data scientists are grappling with the challenge of creating targeting segments without sacrificing scale. The ability to create new definitions of audience through AI, such as psychographic audience-targeting based on emotional personality traits that can only be gleaned through tech like AI, is a big part of marketing’s future.
7. Emotional Intelligence Fuels Data-Driven Campaigns
Academic studies have repeatedly shown the benefits of emotional advertising and how connecting with consumers on an emotional level can increase brand and business metrics. According to a recent Nielsen Consumer Neuroscience study, ads with above average EEG scores (i.e., emotionally charged ads) deliver a 23 percent lift in sales volume, while the IPA report “Selling Creativity Short” stated that awarded campaigns (i.e., emotional campaigns) were 10 times more efficient than non-awarded campaigns.
Forward-thinking brands will use emotional testing to understand the consumer response to content as well as biometric testing techniques to gain feedback on content in real time. In 2017, cutting-edge companies will augment the facial coding process with neural net technology to identify facial expressions for the full gamut of psychological responses, beyond simple smiles and frowns. And all of this data will, of course, be used to target the most interested audiences.
This is only an indication of the changes coming to video in 2017. The revolution is nowhere near peaking and is only accelerating.
Jeff Minsky is the SVP of client and agency development at Unruly. You can email him at firstname.lastname@example.org.
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