The mobile channel has by now established itself as the future of digital advertising, and the growth shows no signs of slowing. The lion’s share of new investments in digital are going toward the mobile space; every day new technologies emerge in the space, and video is a primary area of focus for advertisers. eMarketer projects that the mobile video market will have grown by 81 percent by the end of this year and will grow by another 57 percent next year.
Getting in on the ground floor of mobile still offers a wealth of opportunity for publishers to boost revenue, but what does the still relatively nascent and constantly evolving mobile video channel mean for publishers looking to stay on top of, or ahead of, the game?
It is challenging for anyone in the advertising game to decide the right tools and platforms to get the returns they want, and even more so when there are fewer best practices, success stories and pitfall warnings to guide them. So here are a few of those hidden truths that publishers need to know to be successful. For publishers just starting out or those looking to make their mark on the mobile space while it’s on the way up, the key elements to consider are technology, fill rate, and pricing models.
Video Ad Serving Technology
Technology-wise, there are dozens of platforms available to publishers to get their mobile video inventory into market, but choosing the right ones is not as simple as picking a name off a list. According to an April 2014 IAB survey, 15 percent of respondents selling mobile video inventory do so via some type of private exchange, 15 percent do so via an open exchange/RTB system, but only 7 percent claim to use one exclusive partner. Publishers must usually partner with multiple vendors to maximize their fill rates, but must choose them wisely, and ensure that they are prioritized in order of highest fill rates to lowest. Mobile ad networks, especially at this stage of industry development, vary widely in their ability to optimize inventory, and video inventory can be more difficult to fill than display. For instance, the fill rates of some networks are vastly superior to others. In a recent study of video ad networks, AerServ found extreme variances with network fill rates ranging from 5 percent to 75 percent, with many in between. With fill rate being such a crucial metric, how can a publisher maintain a consistent fill rate with such varied ad network performance?
This is where a waterfall, or daisy chain comes into play. Also affecting optimization is the ability of your chosen platform to “waterfall” each partner or network based on ads returned per request, meaning that the platform automatically moves through the prioritized list of networks in the effort to fill inventory rather than leaving it unfilled if the first network does not return an ad. In some cases the ads do not exist to fill open inventory; in others it is a cross-matching issue with the development platform or SDK, but either way, the impression is wasted if the platform cannot automatically move to the next in the list. Some platforms do not yet offer this capability, but it is in a publisher’s best interest to work with one that does, as it significantly impacts fill rates and revenue.
Changing Standards
The fill rate for your top buyer goes from 65% to 0% overnight. What happened?! The majority of video advertising buyers require data to be passed through with each ad request through macros, which is then used for campaign targeting. Parameters that help identify the user viewing the ad like lat/long or IP address, advertiser/device ID, app store URL, Do Not Track setting, the device OS and model information, and more. All of this information is used for campaign targeting. Unfortunately, there are few standards for how this information is passed through to the ad server, and if a change happens, your fill rate could suffer. Something as innocuous as a 1 passed through instead of a 0 could have a big impact on your mobile video revenue. It is important to be precise with each video ad network, and ensure your platform handles these details properly.
Pricing Model
Publishers and advertisers alike are excited about mobile video and the promise of higher revenue than the lowly banner. It is important that publishers are aware of the various pricing models for video ads, and take them into consideration when choosing a video ad network to work with. Some will tout average CPMs of X or Y, yet it won’t be their true pricing model.
The truth is that there are many video ad networks that pay on either a Cost per Completed View or a Cost per Install model. In the former, the publisher is only paid for the ad if the user watches 100% of the video ad, which is typically 15 to 30 seconds. This can work well for rewarded video if the user is forced, or incentivized to watch the video. But what about standard game or content apps that don’t force users to watch video ads? If half of your app users close, or skip, the video before it ends, 50% of your revenue is immediately gone. In the latter, the publisher is only paid for the ad if the user installs and opens the app being promoted in the video. This can obviously have a detrimental impact on total ad revenue potential as the user has to take multiple actions before the publisher earns any revenue.
True Fill Rate?
When working with video ad networks, it’s also important to consider if and how they calculate fill rate and
eCPM (effective CPM) and how that might impact your bottom line as well. Some don’t report on total ad requests or fill rate; rather they calculate eCPM based on impressions served. However, eCPM should be based on opportunities to serve an impression rather than the impressions themselves, otherwise those opportunities (and the money spent on them) have been wasted. For these networks, third party tracking is crucial to ascertain their true fill rate and performance.
Publishers are of course well aware of the shift toward mobile, as it has been the largest force shaping the future of the space, and publishers have had to revamp their content and advertising offerings to meet the demands of a mobile consumer base. But not everyone can be Conde Nast, with the ability to afford entire armies of technologists and arsenals of digital media platforms at their disposal. In order to optimize the return on their inventory, most publishers have to be nimble and adaptable, and take a smart, streamlined approach to getting their inventory in front of the right advertisers and maximizing their partners’ results. With the right technology and business and pricing models in place, however, publishers have the opportunity to be at the forefront of the next (highly lucrative) wave of digital media.