© 2015 eMarketer Inc.

Programmatic Video: The Dramatic

Rise of Connected TV, Apps and Ad

Spending

Paul Verna

Senior Analyst

May 2015

Made possible by

© 2015 eMarketer Inc.

Agenda:

Definitions

Programmatic video ad spending data

Myth busting

Challenges: inventory quality, fraud, brand safety,

viewability, standardization

M&A activity driven by the shift to programmatic

Next up: over-the-top (OTT), connected TV, linear TV

© 2015 eMarketer Inc.

Definition of terms

Programmatic advertising – an automated,

technology-driven method of buying, selling or fulfilling

ad placements

Real-time bidding (RTB) – the buying and selling of digital

ads through real-time auctions that happen in the time it

takes a page to load

Programmatic direct – direct buys that use some level of

automation

© 2015 eMarketer Inc.

Within

programmatic,

there are two

main

subcategories:

RTB and

programmatic

direct

Source: eMarketer, 2014

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Programmatic

will be

responsible

for more than

50% of US

digital display

ad spending

for the first

time this year

© 2015 eMarketer Inc.

Mobile will overtake desktop as the biggest

programmatic display ad format

Mobile vs.

desktop ratio

will be 56-44 in

2015, up from

44-56 last year

By 2016,

mobile’s share

will approach

70%

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One researcher sees double-digit growth in US

programmatic display through 2018

By then,

$27.7 billion will

be transacted

programmatically

—more than

double the 2015

figure

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US programmatic

video ad spending

will top $2 billion

this year and

approach

$4 billion

next year

By 2016, programmatic

will account for 40% of US

digital video ad spending

© 2015 eMarketer Inc.

The share of US video advertising transacted

programmatically should continue to rise

$0

$2

$4

$6

$8

$10

$12

$14

$16

2013 2014 2015 2016 2017 2018 2019

US Digital Video Ad Spending, 2013-2019, and Programmatic Video Ad Spending, 2013-2016 (billions)

Digital Video Programmatic Video

Source: eMarketer, 2015

© 2015 eMarketer Inc.

Video makes up a small but growing portion of

US programmatic display ad spending

In 2015,

just under 15%

of programmatic

display

investment will

be for video ads,

but by 2016 this

share will

approach 19%

© 2015 eMarketer Inc.

Video and mobile RTB are the main drivers

behind increases in programmatic ad spending

Desktop’s share of the

RTB market will drop as

video and mobile ramp up

© 2015 eMarketer Inc.

Marketers see video and mobile as areas with

the most opportunity for programmatic buying

Video-rich areas

such as TV and

social are also

on marketers’

radars

Marketers are

less keen on

opportunities

in display

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Most US marketers expect to boost

programmatic ad budgets

One-third

will keep

programmatic

budgets the

same, and a

negligible 2%

will decrease

them

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TubeMogul saw big increases in programmatic

direct video ad impressions

Mobile

impressions

also rose

dramatically

YoY in Q1 2015

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There are gaps between buyers and sellers on

how they’re allocating ad budgets and inventory

Sellers are

pushing mobile

and video

inventory, but

buyers continue

to allocate the

biggest portion

of their digital

budgets to

display

© 2015 eMarketer Inc.

Programmatic video will experience more

growth than other ad formats in 2015

These include

mobile display

and lower-funnel

“programmatic

high impact”

© 2015 eMarketer Inc.

Myth #1: Programmatic is for remnant inventory,

while direct is for premium inventory

Technically, programmatic and direct refer to ways of

buying ads, not to the ads themselves

In 2014, 51% of publishers made their premium video

inventory available through programmatic channels *

Joe Pych, CEO of NextMark: “Premium is in the eye of

the beholder.”

* Source: AdapTV “2014 State of the Video Industry” report

© 2015 eMarketer Inc.

Myth #2: Programmatic is for direct response

campaigns, not brand-oriented ones

Econsultancy/Quantcast report:

62% of marketers are running programmatic

campaigns with branding objectives

40% of programmatic spending goes toward branding

campaigns

Advantages of programmatic branding include

increased efficiency, reduced costs, the ability to

optimize in real time, and the opportunity to leverage

first-party data

© 2015 eMarketer Inc.

Myth #2: Programmatic is for direct response

campaigns, not brand-oriented ones

“Programmatic video is not just about

direct response dollars. Brand

marketers like Kraft and Kellogg's

want to use their own first-party

data to add value to their

campaigns.”

— Lauren Wiener, global head of sales and

marketing at Tremor Video

© 2015 eMarketer Inc.

Myth #2: Programmatic is for direct response

campaigns, not brand-oriented ones

“ Programmatic has its roots in display,

where it’s generally focused on

performance and driving down prices.

As it’s moved to video, we've had

more brand-oriented media

coming in, and with a different set of

goals around it.”

— Guy Yalif, VP of global marketing at

BrightRoll

© 2015 eMarketer Inc.

Myth #3: Programmatic saves time by

eliminating unnecessary steps

“We don’t save time, because

[programmatic] has unlocked so much

more from the real-time metrics

standpoint.”

—Christine De Martini, director of global

media and marketing at Electronic Arts

© 2015 eMarketer Inc.

Brands are quickly bringing programmatic video

ad-buying processes in-house

In mid-2014, few US

brands had their own

programmatic video

technology, but 88% said

they planned to obtain

this capability within the

next year

© 2015 eMarketer Inc.

Challenges: nonhuman traffic (NHT)

Study by White Ops and the Association of National

Advertisers (ANA) estimated that global advertisers will

lose $6.3 billion to bots in 2015

Bots accounted for 23% of video impressions, 17% of

programmatic inventory and 11% of display impressions

Over 67% of the bot traffic in the study came from

residential IP addresses

© 2015 eMarketer Inc.

Challenges: viewability

Viewability,

fraud and

verification

rank high among

concerns for

video ad buyers

and sellers

© 2015 eMarketer Inc.

Challenges: viewability

Ad buyers and

sellers are split

over current

standards for

display ad

viewability

© 2015 eMarketer Inc.

Challenges: loss of quality control

84% of US

media buyers in

a Digiday survey

said

programmatic

buying resulted

in “moderate” or

“significant”

loss of quality

control

© 2015 eMarketer Inc.

Challenges: placement transparency

The same study

found that

placement

transparency

was also a

barrier in

moving dollars

from direct to

programmatic

channels

© 2015 eMarketer Inc.

Challenges: most premium video inventory sold

directly

Despite gains in programmatic, publishers still sell most

of their premium inventory through established channels

The multibillion-dollar digital video ad industry was built

on direct relationships between sellers and buyers

It will take more than buzzwords to change this

paradigm

© 2015 eMarketer Inc.

Challenges: standardization

Scalability depends on standardization, which gets more

difficult as ads migrate to new devices and screens

Standardizing audience measurement is an even bigger

challenge

Signs of things to come: Nielsen/Roku, Cablevision/ESPN

© 2015 eMarketer Inc.

Programmatic video underlies recent acquisitions

© 2015 eMarketer Inc.

Programmatic video underlies recent acquisitions

© 2015 eMarketer Inc.

“ … a competitive

programmatic

platform made

AOL more

attractive.”

—Rajeev Goel, CEO

of PubMatic

“It's easy to see the attraction:

consumer and geolocation data

from Verizon, coupled with

programmatic capabilities

and premium inventory from

AOL and Huffington Post.”

—Dominique Delport, global managing

director at Havas Media Group

Programmatic video underlies recent acquisitions

© 2015 eMarketer Inc.

Next up: OTT

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Next up: linear TV

Not much

happening yet,

but expect this

space to heat up

© 2015 eMarketer Inc.

Next up: linear TV

With programmatic TV,

the ability to do pinpoint

targeting is top on the

wish lists of ad buyers

and sellers

© 2015 eMarketer Inc.

Next up: linear TV

Placemedia launched a “programmatic upfront” in

conjunction with The Trade Desk, Tremor Video and

Collective

ESPN made parts of “SportsCenter” inventory available

through real-time auction

TubeMogul rolled out a programmatic TV buying product

Magna Global and Cox created a private marketplace for

TV advertising

© 2015 eMarketer Inc.

Next up: OTT, connected TV, linear TV

“Once there’s a way to be fully

addressable in television and

connect back to that universal

profile that you have, you’re going

to be able to leverage the same

infrastructure to do what you’re doing

online offline. That’s a long-term

roadmap, but that’s where this is all

heading.”

—Lindsay Fordham, director of product

marketing at Rocket Fuel

© 2015 eMarketer Inc.

Takeaways:

Programmatic video is on a growth trajectory

Marketers will continue to increase programmatic

budgets, and many will bring automation in-house

There will be more consolidation among media

companies, MVPDs and ad-tech firms around

programmatic video initiatives

Many challenges stand in the way of more widespread

adoption, but programmatic video will gradually spread

from digital platforms to OTT and linear TV

Melinda McLaughlin

Chief Marketing Officer

mmclaughlin@tremorvideo.com

@MelOnMktg

TremorVideo.com

Thank You!

@MelOnMktgmmclaughlin@tremorvideo.com

TremorVideo.com

© 2015 eMarketer Inc.

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Paul Verna

Programmatic Video: The

Dramatic Rise of Connected TV,

Apps and Ad Spending

The State of US Digital Advertising 2015: Mobile Trumps

Desktop, People Trump Devices

Video Advertising Benchmarks: What Metrics Can (and Can't)

Tell You About the Bigger Picture

2014 Programmatic Advertising Forecast: Digital Display

Spending Broadening Beyond Open Exchanges

Programmatic TV Advertising: Small Investment Today, Big

Opportunity Tomorrow