Why rewarded video could be the next programmatic frontier
Editor's note: The following is a guest post from Maggie Mesa, VP of mobile business development at programmatic ad tech company OpenX.
Success in digital media is all about understanding macro trends. Huge paradigm shifts seemingly happen every 18-24 months, and the most successful companies, whether that's publishers, brands, agencies, tech partners or others, see them coming and react accordingly.
In mobile advertising, there are two macro trends currently going on — one that's somewhat developed and the other in its infancy. The first macro trend is the shift to programmatic. Programmatic is not a new concept for mobile, but considering programmatic originated in the world of desktop and is considered by some to be best-suited for that world, it may surprise people to see how big a role mobile plays in the programmatic ecosystem. In fact, eMarketer predicts that by 2019, 80% of all programmatic ad dollars will go to mobile platforms.
The second macro trend occurring is rewarded video. This one is in more of an early stage. Various players in the mobile ecosystem are digging deeper in their understanding and implementation of rewarded video than others, but those involved are seeing huge year-over-year growth. Large companies like Facebook officially became involved for the first time in 2017. Industry guru Mary Meeker even touched on rewarded video last year in her annual internet trends report, including a slide that showed it was by far the most consumer-friendly of all mobile ad formats.
Surprisingly, these two macro trends have yet to really intersect in a meaningful way, but as the industry leans into both programmatic and rewarded, the possibility isn't far off.
The education period
As these two macro trends have risen to prominence, there's been a bit of an education period. It's taken some time to get brands on board with rewarded video. Some brands were hesitant to invest in it because it felt less organic than other types of paid media, and the strong connection between rewarded and gaming was also a concern for some brands. These hurdles have largely been overcome over the past few years.
Brand advertisers and their agencies are quickly seeing the value of gaming, and on top of that, rewarded video is expanding to new verticals outside of gaming. Brands also can't argue with the results many are seeing. The opt-in nature of rewarded video leads to metrics like completion rates that significantly outperform industry benchmarks.
The shift to programmatic has also required some education. Gaming and other mobile-first publishers that didn't have established desktop businesses needed some questions answered about why they should turn to programmatic and how it could help their bottom line. Even for publishers with established desktop properties, it quickly became clear that trying to transfer a desktop programmatic model directly to mobile was not the best approach.
The good news now is that the education has largely concluded. The conversations occurring today around both rewarded and programmatic are less about selling the concept and much more about proper execution.
Why the two trends blend well
As the advertising industry increasingly prioritizes quality, consumer-friendly ad formats like rewarded video are a great indicator of where the industry could be headed. If an estimated 80% of all programmatic dollars are going to mobile in a few years, it's a safe bet to say that rewarded video will make up a healthy piece of that pie.
When thinking about why programmatic is so appealing to advertisers, one of the main things is being able to pinpoint exactly who an ad goes to using data. With opt-in, rewarded video, this will bring a new type of data to advertisers that's unlike anything they've accessed before, and it's a natural fit to use this data to help inform future programmatic buys.
Using data to better target ads was a macro trend from the past decade that changed the advertising space. The publishers, advertisers and vendors that figured it out early on are the ones thriving today, and it's very likely that in a few years, we'll be looking at this intersection of programmatic and rewarded video in the same way.