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A Forrester Consulting Thought Leadership Paper Commissioned By TubeMogul

Realizing The RTB Video Opportunity For BrandMarketers

May 2012

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Table Of Contents

Executive Summary .............................................................................................................................................................. 2Digital Video Is A Digital Brand Marketers Dream Format .............................................................................................. 2RTB Is Bringing Efficiency And Transparency To Digital Video Buying ......................................................................... 5RTB Video Is Showing Success For Brand Marketers When Measured Smartly .............................................................. 7RTB-Enabled Video Use Will See Growth Among Brand Marketers ................................................................................ 8But A Mix Of Real And Misconceived Obstacles Is Hindering Adoption ......................................................................... 9Key Recommendations ....................................................................................................................................................... 10Appendix A: Methodology ................................................................................................................................................. 11Appendix B: Supplemental Material .................................................................................................................................. 11Appendix C: Endnotes ........................................................................................................................................................ 11

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Executive Summary

In April 2012, TubeMogul commissioned Forrester Consulting to evaluate the brand marketing opportunity provided

by real-time bidding (RTB)-enabled video and compare it to other forms of broad-based video buying, such as through

ad networks. In conducting interviews with 11 RTB video buyers, Forrester found strong support for RTB video as an

effective and efficient brand-building mechanism, but also evidence that the ecosystem is still quite nascent.

This report examines the current state of RTB-enabled video, outlines barriers, both real and misperceived, that should

be overcome to increase continued growth and adoption in this space, and makes recommendations for how brand

marketers should move forward in pursuing RTB-enabled video.

Key FindingsForresters study yielded five key findings:

Digital video is the bridge needed to bring brand marketing dollars online in a meaningful way. RTB-enabled video is on the rise as savvy buyers recognize the benefits over more traditional network-

based buying models.

Brand marketers who measure smartly are seeing performance improve with RTB video. There are both real and misperceived obstacles that are affecting continued growth and adoption of RTB

video.

Education is needed for brand marketers to see the value in RTB as a mechanism for more effective digitalvideo buying, management and optimization, and for publishers still hesitant to lean into this new model.

Digital Video Is A Digital Brand Marketers Dream Format

In an ecosystem long dominated by the lowly display banner (anyone remember the good old days of the 468x60?), the

emergence of digital video advertising formats over the last several years has been a game changer for brand marketers

long reticent to commit significant dollars to a channel whose efficacy as a brand building mechanism they doubted.

Those same marketers are finally putting their money where their mouth is, with digital video advertising expected to

reach $5.4 billion by 2016, a 250% increase over 2011 video expenditure, and representing 5% of traditional TV

spending (see Figure 1).1

Brands recognize that consumers time and attention is shifting to digital video consumption. Even themost traditional marketers are beginning to recognize what we in digital have known for years: Consumer

behavior is changing when it comes to how, where, and when they consume both content and advertising.In fact,

consumers are now watching an average of 21 hours of digital video per month across a range of connected

devices.

Three key reasons explain videos appeal to brand marketers:

2 Said one trading desk executive, Whats happening in video mirrors a lot of whats happening with

online behavior in general: People are spending more and more time with the stuff. For marketers, understanding

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Weve been looking at video for years as the bridge to offline dollars.

Traditional marketers will get it. When convergence happens, when people dont

think traditional vs. digital dollars - its just about getting my message outthere then video is ripe to take those dollars.

- Independent trading desk executive

consumer behavior online is increasingly important. What are people doing? How are they behaving? What

happens during their lunch break? Video is a huge part of that. If youre a brand, you need to be there.

Video feels an awful lot like TV, something brand marketers understand. Change is hard its humannature to stick with whats known and for marketers whose careers have been built on a TV-based

advertising model, adoption of new (and often intimidating) digital formats and tactics can be tough. For that

reason, digital video is, in many ways, the perfect entry point to help marketers bridge the gap between the old

way and the new. As one independent trading desk executive explained it, Brand marketers see digital video as

the closest thing to TV. Its got sight, sound, and motion they understand how that affects people. Its not a

stretch for brand advertisers who can think to themselves, 10MM people watched my ad from start to finish.

And when you compare video CPMs to TV its a no-brainer.

Videos rich format can boost branding messages. Digital video also appeals to brand marketers in its abilityto go above and beyond static display in communicating brand messages, making it a medium that brand

marketers pay attention to. As one digital director of an agency explained: What you can communicate with

sight, sound, and motion is more than with a static banner. You can convey emotion, which is easier when

conveying a complex message to audiences. And video looks even better when you couple its dynamic message

with the promise of more captive eyeballs in a less cluttered environment said one VP of a digital mediaagency, Banner blindness scares brand advertisers. Digital video tends to be interstitial you cant scroll away

from it; cant skip it; you have to watch the pre-roll to get the content.

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Figure 1

Digital Videos Effectiveness Is Only Expected To Increase

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RTB is a paradigm shift you can buy data and media separately and put themtogether. [This] opens up a world of analysis and creative and planning (you can

find new targets and put new creative in front of them). Its a foundational

evolution that sets a new standard for buying.

Digital Director, Advertising Agency

Figure 2

Digital Video Expenditure Will Reach $5.4 Billion by 2016

RTB Is Bringing Efficiency And Transparency To Digital Video Buying

The meteoric rise of real-time bidding (RTB) managed through liquid marketplaces like ad exchanges, supply-side

platforms, and demand-side platforms (DSPs) that provide the tech and smarts to buyers to manage real-time inventory

transactions is reshaping the very foundations of media buying. 3

While the last several years have been dominated

by activity in display video, mobile, and social inventory represent the next frontiers of RTB. Savvy digital buyers

have quickly recognized that they could couple videos potential as a branding medium with the enhanced

transparency, targeting, and optimization enabled through RTB-based buying and management, and are embracing

RTB video. Buyers we spoke to pointed to many specific benefits of RTB-based video buying, including:

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Increased granularity. The traditional ad network model of packaging and selling impressions in bundles of1,000, and charging a flat CPM for all of them, limited buyers ability to accurately evaluate the anticipated value

of any given impression in the bundle thereby limiting learnings and increasing the likelihood of wasted

spend. Said one holding company trading desk executive, RTB is the fuel that allows us to evaluate each

impression granularly. We can use our own data to evaluate impressions and get the right person at the right

time.

Deeper transparency. Looking under the covers to understand the inner workings of their digital media buyshas never been something that buyers have had the power to do rather, they were forced to rely on their media

partners to report out on everything from the sites where their ads mightrun to the optimization being performed

on those buys to make them perform as needed. Direct media management through DSPs has completely

changed that paradigm. Said one independent trading desk executive, Its having the ability for the buyer to be

closer to the impression, to understand the costs of things, to know that things are actually happening behind the

scenes. In my experience, ad networks do better the more you call and complain performance spikes when

you call them up and ream them out. Now were able to be the ones keeping an eye on things.

Greater fluidity. The days of annual, quarterly, or even monthly insertion orders, where buyers and sellers alikeadopt a set it and forget it approach to media management and optimization, are waning. In its place, thanks to

the rise of RTB and the DSPs needed to manage it, the more search-like model where media optimization is

constant and budget is fluidly shifted across a portfolio of placements is increasingly being embraced. As one

buyer told us, Its having the ability to track what youre buying as close to real time as possible, rather than

signing on for a monthlong commitment. This marketplace allows you to pull levers and move budget around

fluidly in response to what youre seeing.

Improved efficiency. The dramatic and ever increasing complexity of online media buying createdsignificant opportunity for middle men to swoop in and rescue frazzled buyers by taking the reins on

management of media programs, and along with that take significant margins. Buying digital video inventorymore directly through a DSP, versus through a video ad network for example, can bring significant cost savings.

Said one premium publisher who sources RTB video inventory on behalf of advertising clients, The video

market is so tight right now even CPMs on remnant inventory are really high. But the difference between

network and RTB inventory can be $13-$14 versus $9-$10, which is substantial.

Direct control. Day-to-day management and optimization of media programs has traditionally fallen to mediapartners, like ad networks, whove been the ones sitting in the drivers seat. Programmatic buying through a DSP,

whether its display, video, or any other RTB-enabled medium, puts buyers themselves in the drivers seat, which

finally gives them the direct control needed to run programs as they see fit. Said that same publisher, [You have]

much more control with RTB than with a network. You can be extremely finicky, whereas on the ad network

side, its a black box. When you ask for a site list from a network, you get a representative list. With RTB, youreally can get as deep as you want into the inventory its a big benefit.

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Its about being able to target at scale: right person, right place, right time.

[Now] we have the technology and power to do that faster, better, smarter and at

much larger scale.

- VP, Audience Platform

Figure 3

Buying Through Exchanges, DSPs, And Other RTB-Enabled Mechanisms Offers Myriad Benefits To Buyers

Source: The Future Of Digital Media Buying, Forrester Research, Inc., September 21, 2011

RTB Video Is Showing Success For Brand Marketers When Measured SmartlyRTB-enabled videos benefits are already being realized by brand marketers today. In fact, the majority of people we

spoke with have used RTB-enabled video to accomplish branding objectives, and theyve reported improved results,

both in reaching their target audience and showing measurable lift across a range of success metrics.

RTB-enabled video helps brand advertisers reach their optimal audience. All interviewees stated that RTBis valuable for brand advertisers with the most frequently cited reason being leveraging the technology to

reach the right audience. As the director at a digital media agency explained it, the benefit of RTB-enabled video

as a branding tactic is being able to better use data, pay appropriate value for consumers, deeper segmentation,

targeting, and control. And brand marketers are taking advantage of these benefits. One VP at an audience

platform noted they implemented RTB-enabled video to finely target audiences for a clients political advertising

campaign: We know there are moms in this ZIP code who are concerned about [a specific issue], so we can

target them with a clear message.

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The technology needed is there, but it takes more than pressing an easy button to make it work. Asmuch as the technology ecosystem has evolved over the last several years, theres plenty of work to be done

before we realize the dream of perfectly seamless, fluid, real-time multichannel buying and optimization.5

KEY RECOMMENDATIONS

The

reality on the ground today is that many programmatic buyers are finding themselves patching solutions together

if they want to buy both RTB-enabled display and video as effectively as possible. One holding company trading

desk practitioner explained it this way: As an industry, we think you can take the same model that we know in

display and replicate it into video. You just take a DSP, whichever is working, plug into all the exchanges, flip a

switch and youre good to go. The DSPs all say they can do video. But its not quite there yet. Today, were

using a video DSP and a display DSP [to manage our programmatic buying portfolio].

As both the RTB ecosystem and marketers continue to mature, Forrester believes that RTB video can become a fundamental

component of brand marketers media mix in the long term if both buyers and sellers continue to lean into theopportunity. To help ensure a healthy, vibrant ecosystem and maximize their own return through RTB video over time,

marketers must take some immediate steps, including:

Getting educated. The average brand marketer may see one or two video line items on their agencys media plan,and not have much understanding of what those line items represent. Marketers must start asking questions of

their partners be they agencies, vendors, or technologies to really get a handle on how their money is spent,

and if its being managed in the optimal way. This may require some tough conversations, but if they are treated in

the spirit of deeper partnership and better shared strategic vision, the outcome should be worth any possible pain.

If partners DONT have good, defensible answers to explain the media decisions theyre making on marketers

behalf, marketers must be prepared to walk away and identify new partners who CAN provide the right guidance

and execution.

Encouraging publishing partners to RTB-enable their inventory. The continued growth and development ofthe RTB ecosystem is not in the hands of the buy side alone. Media sellers MUST be willing to lean in to RTB as well

for there to be a healthy long-term marketplace. Marketers and their media buying partners must actively engage

their strategic sell-side partners in conversations about the role and value of RTB for both parties. Treating media

sellers as adversaries, or simply choosing to ignore their part in the future of digital media buying, will get us

nowhere.

Testing RTB-enabled video buying methods. Though the market is still nascent today, marketers should starttesting the waters to see if the added granularity, transparency, and real-time nature of RTB video can improve their

digital marketing performance. To get started, lean on your partners to determine how much budget should be

allocated to perform a meaningful test. Then be sure that you have a solid measurement plan in place to track

success. To do this, determine which metrics map best to your current business objectives (for example do you

need to know how long a user spent watching your ad? Or that you achieved an increase in awareness, favorability,

or purchase intent?), clearly communicate these to partners, and be sure appropriate tracking is in place to capture

the necessary data.

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Appendix A: Methodology

In this study, Forrester interviewed 11 organizations in the US to evaluate the perspectives of ad agencies, publishers,

and DSPs in the RTB digital video market. Participants included decision-makers with sufficient insight into the

current trends in the market including specific knowledge of pricing and inventory trends. Questions provided to the

participants asked about factors driving spend, the quantity and quality of current inventory, differences between

display and video RTB, metrics used to optimize campaign performance, and the major players in the market.

Appendix B: Supplemental Material

Related Forrester ResearchThe Future Of Digital Media Buying, Forrester Research, Inc., September 21, 2011

Appendix C: Endnotes

1 Marketers must consider the broader implications of increased convergence across traditional and digital

channels. For more information on how to begin tackling the question of converged TV/digital video buying and

measurement, see the January 5, 2012, Why Marketers Must Integrate TV And Video Strategies [60349] report.

2 According to Nielsens Q1 2011 report, the average US person age 2 and older watches nearly 40 hours of linear or

time-shifted TV per week, while according to Comscores October 2011 data, nearly 184 million people in the USwatched an average of 21.2 hours of digital video. Source: New Stats: 184 Million US Internet Users Watched Digital

video Content in October, Blogworld, November 28, 2011 (http://www.blogworld.com/2011/11/28/new-stats-184-

million-u-s-internet-users-watched-online-video-content-in-october/).

3 To learn more about the rapid changes happening in the media buying ecosystem and to learn what steps you need to

take to be prepared for success in this new buying world, see the September 21, 2011, The Future Of Digital Media

Buying [58354] report.

4 For more information about the digital video in-stream ad metric definitions from the IAB, please visit the IAB

website. Source: Digital Video In-Stream Ad Metrics Definitions, Interactive Advertising Bureau

(http://www.iab.net/dv_metrics_definitions).

5 Terence Kawajas series of LumaScapes, visual maps of the technology ecosystems in display, video, search, mobile

and social, have come to represent both the dramatic growth and significant complexity in the digital ad tech space. The

LumaScapes can be viewed at the Luma Partners website (http://www.lumapartners.com/resource-center/lumascapes-

2/).