What Is Programmatic Video Advertising And How Does It Work?

Industry Insights
Table of contents

    Today, the way people consume information slowly but surely shifts towards video content. It is expected that in 2022 an average user will spend approximately 6 hours and 48 minutes per week watching videos. That’s a 19% leap compared to the previous year when it only averaged 84 minutes. The change affects not only content consumption but also marketing trends. Since video advertising is entertaining for viewers and beneficial to marketers at the same time, it has become the most attractive ad format. This is reflected in global Connected TV (CTV) ad spend which has all chances to achieve $14 bln every year until 2023.

    Programmatic video advertising is the key that enables automation and customization of media purchases for relevant and efficient CTV advertising. Let’s find out more about it!

    What is programmatic video advertising?

    Programmatic video advertising has a lot in common with media advertising. However, as the name implies, instead of buying and selling ads in real-time, transactions are made with inventory in the format of videos. It involves traffic data management and narrow targeting to enhance the ad’s placement effectiveness. This type of advertising is data-driven, reaching the audiences via numerous channels. After identifying your audience and planning/deciding on your budget, you can go directly to a demand-side platform (DSP) to buy ad space, or start working with an agency to have them purchase space on your behalf.

    How many video ad formats are there? We should emphasize at least  three options of programmatic video ads:

    1. Instream video ads featuring pre-rolls (playing before the video starts), mid-rolls (pop up in the middle of the show), and post-rolls (appearing right at the end).
    2. Outstream video ads: these ads are meant to play automatically whilst web browsing (for instance, during the news article reading).
    3. In-display video ads. This type of ad is designed to fit the rest of the page without interrupting the visitor’s experience just as if it was meant to be there. Unlike the first two formats, in-display ads won’t autoplay. Instead, you’d have to manually click to interact with them.

    How does programmatic video advertising operate?

    The entire cycle is pretty complex as its goal is to reduce human negotiations to zero, resorting to ML and AI. However, it takes an instant to happen. Here’s exactly how a typical video programmatic advertising campaign works so that you understand it better:

    • A person clicks on a link leading to the particular site;
    • A website owner puts that video ad for an auction;
    • An ad owner comes up with bids for the impression;
    • As anyone can guess, the highest bid wins;
    • The advertisement is put on the online platform whose bid wins;
    • The user clicks on the ad and converts.

    The mentioned processes occur with the speed of the light so that the users cannot even notice them.

    Key advantages of programmatic video advertising

    Nowadays people are having less and less tolerance for generic ads that are not relevant to them.

    Programmatic video advertising uses behavioral data to distinguish the right audience for particular creatives. The result is enhanced efficiency of the campaign and higher returns. There is no need for a middleman, which allows advertisers for higher control over who sees their advertisements and with what frequency.

    Anyway, below are the key benefits of programmatic ads:

    • Quickness: Algorithms carry out all the work, without any negotiations.
    • Efficiency: It is widely acknowledged in the CTV community that the programmatic approach demonstrates high effectiveness in ad delivery, showing materials just when they are needed by the selected audience.
    • Transparency and measurement: Brands can set buying parameters, and thanks to real-time access to ad placements and activity data, they can see the immediate results. That means faster reporting and accurate forecasting.
    • Flexibility: In a world of endless choices, the ability to adjust to the constantly changing consumer behavior is critical for brands’ success. Programmatic allows settings change at any point of a campaign.
    • Multi-channelness: running cross-device campaigns can bring you more target audiences and leads.

    Certainly, programmatic technology contributes to video ad campaigns in a big way. And what is even more fascinating – most likely the programmatic industry will soon become more user-friendly.

    Types of placements

    There are three basic types of placements in video programmatic advertising:

    • The first one implies showing ads while the user is online through desktop or mobile web browsers.
    • In-app, which means running on mobile apps specifically.
    • Over-the-top (OTT) devices by streaming video content on a TV or similar device.

    The trend of CTV/OTT advertising: why it’s hot

    2020 will undoubtedly be remembered as a life-changing year for many industries. And the advertising field is no exception. First of all, it’s COVID-19 that has made people look for new entertainment options while staying at home. In addition, there are many dissatisfied paid TV customers looking for more personal and entertaining TV experience with a variety of payment and viewing options. As a result, there’s a serious viewer switch from traditional TV to Connected TV/OTT because of multiple content options, from OTT channels to gaming.

    For advertisers, that means lots of new opportunities they simply cannot miss. Note down some of them:

    • The on-demand content lets them reach new audiences, including cord-cutters and cord-nevers.
    • Precise and powerful targeting capabilities (geo-locations, purchase history, events liked, personal anniversaries, and so on) let brands reach consumers interested in their businesses and encourage them to convert.
    • There are innovative and highly engaging formats to keep the target audience thrilled, for instance, interstitial and rewarded videos or QR ads.
    • Another noteworthy reason why CTV is a great place to land the advertising campaigns is that unlike traditional ads, users here cannot skip ads, close a window, or install some kind of an adblocker.

    Bearing this in mind, today, there are many streaming platforms. Tech behemoths in the streaming industry are Android TV (Google Cast compatible), Apple TV Channels, Amazon Fire TV. All of them provide their users with a vast assortment of ultra-high-definition (4K) and HDR content options. But it’s the most popular CTV platform in the USA that has the biggest variety of “channels” and multiple streaming services to choose from among all of the mainstream set-top boxes. Marketers today may benefit from using advertising platforms for the most popular CTV platform in the USA channel that imply lower budgets, video ad formats, as well as an opportunity to get traffic attribution.

    Key takeaways

    Despite still being young, programmatic video ads have already turned the world of digital advertising upside down. By using behavioral data to reach the right audience at the right time and place, programmatic advertising is much more effective. Its ease, efficiency, and precise analytics have increased profits in all ad verticals.

    In the meantime, we’ve seen the dramatic growth in Connected TV use than before the lockdowns. That’s where viewers are now, and that’s where user attention is likely to be rising. Connected TV is gradually becoming a win-win advertising landscape.