2018 was a strong year for video advertising. As major brands and media owners invested increasing amounts of budget in the format, competition between the duopoly and media companies for ad spend heightened.
Following the acquisition of Appnexus, telecom giant AT&T announced plans to launch a new marketplace for TV and digital video advertising to compete against Google and Facebook. The Walt Disney Co. entered a global partnership with Google allowing the tech giant to handle all of its digital video and display advertising. And music streaming service Spotify revealed it was seeing growth in video ads outpace audio ads.
This shows a healthy pace of progression, but there’s still a long way to go if brands are to give consumers video ads they want, when and how they want them. Here are three predictions for video advertising in 2019:
1. Netflix and Amazon will launch ad-supported streaming services
In 2018 Amazon reported net ad sales of $2.5bn in Q3, with a projected $10bn annual figure and became the third largest digital advertising platform in the US, as reported by emarketer, overtaking Microsoft and Oath (which has since been rebranded as Verizon media group).
Video advertising revenue is still small for Amazon and while not officially disclosed, it’s estimated to be lower than video ad revenue from Snap or Twitter. Last year there were rumours Amazon was looking to deliver an ad-supported service to Fire TV owners, but the predicted launch of a free ad-supported version of Amazon Prime, likely to be tested in select international countries first, would give Amazon the opportunity to become the third largest video ad platform in 2019. By 2021 it could even overtake Facebook.
The move would be great news for brand advertisers who are looking to accelerate the shift from TV to digital and are looking for brand safe and contextually relevant video inventory. With some advertisers already moving more than half of the budget they normally spend with Google search to Amazon ads instead, expanding that remit to video advertising doesn’t sound like much of a stretch.
You can bet if Amazon launches a free ad-supported streaming service, Netflix won’t be far behind. Together these streaming giants are a serious challenger of video ad growth for Facebook/Instagram which raked in $6.8bn in the US in 2018.
2. 5G will boost mobile video ad revenue and interactive ad formats
Driven by mobile video ads, US mobile ad spending will outstrip all traditional media ad spending combined by 2020, according to eMarketer’s latest forecasts. It estimates that mobile video ad spending in the US will nearly double, going from almost $16bn in 2019 to almost $25bn in 2022.
This huge spend increase will largely come down to brand marketers looking to switch from TV to mobile, experimenting with new video formats. The introduction and widespread uptake of 5G will have a massive effect on whether mobile ads will be able to deliver successful ROI; 40% of the world’s population is expected to be subscribed to it by 2020.
A new report from Adobe Digital Insights (ADI), “A Mobile-First World”, predicts that 5G and improved connectivity could mean an additional $12bn in revenue per year for retailers by 2021. This is largely down to the correlation between conversion and connection speed or page load times, with slow load times turning consumers (and their phones) off.
3. The renaissance of contextual targeting through AI
Brand safety and GDPR started off a resurgence of demand for contextual targeting.
While YouTube has introduced significant improvements in brand safety, the conversation amongst CMOs has moved on to brand relevance.
AI-powered contextual platforms can help brands ensure their video campaigns are not just brand safe but are placed in a contextually relevant environment that will use brand awareness as a KPI to improve the performance. This puts the control back in the hands of brands.
The results speak for themselves: WARC reported a 65% jump in brand lift and a 71% increase in stated purchase intent on ads viewed in the right context. Another IRI report on the consumer impact of contextually relevant advertising found that marketers can increase ROI by up to 30% with the right context strategy.
Progressing into 2019, increased video ad spend is a given. What remains to be seen is how those in the industry can bolster new formats and technologies to boost audience engagement. Those that can keep pace will reap the biggest reward.