The next 10 years of video advertising: don't expect specific ad formats

Just think: 10 years ago, you probably hadn’t even heard of YouTube. Now, a little more than a decade since the platform officially launched and nine years since Google bought it for $1.6bn, people upload 300 hours of video per minute to the platform.

Via recently created YouTube channels Mutant Giant Spider Dogs, Bitten Fingers and K-Pop, big business has woken up to the potential of issuing the most compelling advertising format – video – on the second most visited site in the world with over two billion views per day.

YouTube has defined the past eight years of video advertising, mostly off the back of what are known as pre-roll ads, which play for either five seconds and are then skippable (introduced in 2010), or a full 30 seconds before you can view the content. So what will the next 10 years of video advertising look like? Definitely, this will involve mobile. But the ad formats may look radically different. Here’s why.

Firstly, the video ad is here to stay. Video is simply the most engaging, emotional and compelling format available. From the very early days of the magic light, which had people leaping from the aisles to escape locomotives steaming towards them, moving pictures have exercised a grip on the imagination like no other format.

This applies to advertising too. You may possibly remember a print ad, maybe even a jingle (in which case you’re likely to continue humming it for 17 minutes). But almost certainly you’ll be able to conjure up ads that you’ve seen over five, 10, 20 or more years ago. If you’re in the UK and you’re Generation X you’ll be familiar with, say, Smash ads. Generation Y might recall the Horses and Surfers of Guinness. Generation Z (whenever that really begins) have their Meerkats, or, Three Mobile’s Dancing Pony.

This is because our minds work best with video. Dr Simon Hampton, resident psychologist at the IAB, points out that we’re hard-wired to understand images, whereas we spend thousands of hours learning how to read. It’s partly why YouTube has overtaken TV, according to Google boss Eric Schmidt, referring to a recorded audience figure of one billion unique users per month. It’s also why companies such as Reed experienced a 3.6 per cent clickthrough rate, with 1.5m views and a 13 per cent increase in web traffic through YouTube advertising,

Even individuals, through creating their own YouTube channels, are generating huge viewing figures and reaping the advertising rewards, such as PewDiePie earning an estimated $4m in 2014.

Meanwhile, other dynamics are at play. Mobile has overtaken desktop, and as recently as last year it was mooted that mobile would soon overtake TV ad spend. In emerging markets, desktop has never really had a foothold and mobile has always been the primary connection to the Internet. Again, mobile works for similarly compelling psychological reasons according to Dr. Simon Hampton. We like to touch things, again because we’re hard-wired for this. So tactile interfaces that encourage us to tap, tilt or swipe are inherently attractive to us.

So we would appear to be at somewhat of a tipping point. In the western world, we’ve had years of YouTube on a desktop and now on mobile, we are going through a period of flux to determine what works. What will be the successful format in the future?

While YouTube supports several formats, including pre-, post- and mid-roll, text and in-display ads, these are very specific formats with pre-defined sizes and spaces. You might not even have noticed the ads to the side because you were so engrossed in the video you were watching. So the future of video advertising needs to be something that people don’t automatically ‘blank’ from their minds. It has to be more sophisticated in the way it slots into the user interface, or indeed the user experience. Does this pave the way for native video advertising?

Native advertising is a format that is specific to a site or app. It doesn’t appear in a pre-defined slot, shouting for attention and thereby informing the user which areas to ignore. Instead, it’s designed to be less intrusive and, when combined with accurate targeting, more relevant. You’ve probably already seen native video advertising on Facebook: scroll down and as soon as a video ad is displaying more than 50 per cent of its pixels, it starts playing, albeit with the sound turned off.

There’s plenty of evidence to suggest that native advertising works. People view native ads 53 per cent more than banner ads, because they slot into the interface and aren’t as readily ignored. They also simply perform according to classic ad metrics, with click-through rates of up to ten times higher and uplifts in brand affinity and purchase intent when compared to other formats.

Individual publications such as the Washington Post are experimenting with native ads, and the New York Times has already seen ad revenues climb off the back of native advertising initiatives. But if you want to know whether specifically native video advertising really works, then look at what the big players are doing.

The major native mobile video players are actively rolling out their offerings, with estimates that Facebook could sell $700m worth of auto-play native video ads in 2015 and that’s not counting Instagram which has yet to publish numbers. Meanwhile Twitter is testing autoplay video for iOS, Snapchat is gaining admiration for what it is achieving with mobile native video and Yahoo is rolling out an entire raft of mobile video ad programmes.

So if you want to see where video advertising will be in the next 10 years, don’t look to specific ad formats. If anything, the next 10 years will see the end of specific formats. It will be around how to use the most compelling format – video – in the most popular devices – mobile – in the most sophisticated way – native. Here’s to the next 10 years of video advertising.

Stephen Upstone is the chief execitive of Loop Me

Stephen Upstone

With 18 years’ experience working in adtech, of which 10 have been in the mobile industry, Upstone is currently chairman of the UK Mobile Marketing Association.

Working as part of the senior management team that listed Velti on the Nasdaq in 2011, he went on to found LoopMe in 2012 to meet demand for a premium mobile video solution in the market.

Today the demand-side platform reaches 1.25 billion users worldwide.

All by Stephen