The surprising growth story in online digital video

Credit: IAB

A new study published this week by the Interactive Advertising Bureau (IAB) reports that almost 60% of marketer budgets are currently allocated toward original digital video (ODV), which is defined as video made specifically for digital programming. Spend on content for the medium is projected to rise by 68% between 2016 and the end of 2018 and is happening everywhere — publications, platforms, and branded content. Over 80% of marketers consider video content vital for advertising, and 9 in 10 advertisers saying video is critical to brand awareness and growth.

This is no surprise to most marketers. What is surprising however is where a lot of this growth is coming from — Netflix, Amazon, and Hulu Live — and the role that video advertising is now playing for Twitter and YouTube TV.

As Mark Zuckerberg predicted in 2016, more and more of what people consume online is video, especially on social platforms. This week Twitter beat earnings expectations by $60m and growth expectations by over 4 million monthly users  — largely driven by growth in video on the platform.

YouTube has also began offering premium video ads on their live TV platform. This is due in large part to a shift in watcher behavior as more people report watching YouTube at home on their TV screens.

Meanwhile, the kings of long-form video content, Netflix, Amazon, and Hulu, are now all moving towards distribution of shorter form video content. They’re cautiously experimenting with new formats and content lengths, to see how viewers respond to content that doesn’t fit the standard 22 or 42 minute show format. Content producers and brands are hoping that they find success where platforms like Facebook Watch and Go90 have failed, finding new demand for both repurposed and new investments in premium short form video content.

Making online digital video perform

Another IAB study released this week on original digital video and direct brands shows that certain ODV consumers have higher awareness, familiarity, engagement and purchase intent. Who are these extremely valuable consumers? Millennials and Gen Xers who are tech-savvy and hyper aware they’re being marketed to. More than half of them are “likely to seek out and be open to new brands they don’t know, and be receptive to direct communications with them. They are also more optimistic about advertisements, believing they can be beneficial and fun.”

As advertisers shift more and more of the focus (and budget) towards online video to capture this and other valuable audiences, they face some new challenges, the biggest of which is performance measurement.

The problem starts with a lack of standards in essential performance metrics. A view on Facebook is not the same thing as a view on YouTube, which makes apples to apples performance comparisons extremely challenging. The standards that do exist leave much to be desired: In a study published this week by the CMO Council, a mere 3% of marketers agreed with the Media Rating Council's standards for measuring video viewability.

As a format, video tends to be multi-platform and multi-channel. Advertisers usually run their video assets across numerous social and owned platforms. Some programs are run purely through their own channels, while others involve publisher partners or influencers. With their content fragmented across all of these placements, it can be cumbersome to measure and track performance.

Additionally, unlike articles, video typically is consumed on-platform and doesn’t have a click-through to the underlying content. This makes traditional web attribution even more challenging.

Both the increasing levels of video consumption and the decreasing amount of video that is run as traditional ad-supported media is accelerating the need to prove ROI. Marketers know they need video — and increasingly know they need to solve for measurement problems sooner rather than later.

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The rise of the "T-shaped agency"

Credit: Buffer

There’s been a lot of discussion recently around agency in-housing. As the content marketing climate shifts, big brands like NASCAR and P&G are now turning to in-house marketers and creative teams to grow their brands and bottom lines.There’s a lot of evidence that this isn’t actually about budgets or a natural pendulum swinging back from mid-2000s agency growth or any other economic factor. This is actually about the changes that are happening in digital marketing and the advertising ecosystem as a whole.

As the digital landscape is growing and evolving, the ecosystem is becoming unbelievably, exponentially complex — this week the 2018 edition of Scott Brinker’s MarTech landscape was released covering a staggering 6,829 different marketing / adtech technologies.

With that complexity arises an interesting dichotomy between specialists and generalists. In marketing over the last few years, the concept of “T-shaped marketer” who has basic knowledge over a broad set of digital marketing skills, but has specialized knowledge in one topic, has been considered an ideal hiring profile. This is because the complexity of the digital ecosystem means it’s impossible to be an expert in all areas (and sometimes beyond single channel), yet it’s also critical to know how each part of the marketing puzzle fits into the larger big-picture strategy. At the same time, specialists retain their credibility and authority in being experts in their field.

The same dichotomy is happening at the macro level — call it the rise of the “T-Shaped Agency.” Just this week, a report came out sharing that CMOs are now rejecting the AOR model, as they realize that just like individual marketers, most agencies are effectively specialists in a handful of areas, and a lot of lower value, repetitive work can be effectively in-housed while finding best of breed capabilities may require even more agency partners than before.

Adapting to new agency realities

A lot of agencies have been making moves to stay on top of evolving trends. Just last week it was announced that Ogilvy will open a 900-person martech center as an internal “center of excellence.” This will allow Ogilvy teams to understand how they need to adjust their marketing efforts to fit into the digital technology ecosystem and maximize the value they deliver for their clients.

Foursquare, the consumer check-in app and data provider, has realized that location-centric mobile advertising ad creation is a specialist capability, and decided to build an in-house agency to create ads for brands.

The most profound example of platform growth and the increasing complexity of a digital ecosystem growth can be found at Amazon. With a 60% growth in advertising revenue, Amazon now plans to bring on hundreds of staffers to its own in-house agency to accelerate ad adoption. This initiative is much like the early explosions in advertising on Adwords and Facebook. Within the next 2 years, Amazon is predicted to be a $20 billion advertising business.

What marketers need to think about

Marketers involved in content creation and distribution need to make sure they’re thinking about the entire landscape, and who the right mix and match of strategy and execution partners should be on any given campaign or even channel.

Though some data would suggest that some complacent agencies with AOR relationships should start worrying about their future, the reality is that much of marketing is returning to it’s roots where each area is a specialist craft.  Re-alignment of capabilities and complexity means new types of “centers of excellence” internally, different agency relationships externally, and a lot more of doing a few things well vs trying to do everything good enough.

One of the biggest CMO challenges over the next 12-18 months will be managing all of these shifts and the data infrastructure behind them.

 More surprises in media monetization

Credit: thelondoneconomic.com

We’ve previously discussed how publishers are building a new mix of monetization capabilities centered around new forms of ad revenue like branded content, subscriptions, membership, ecommerce, and experiences, vs. just depending on Facebook virality and traditional premium banner placements.A lot of traditional media brands were left behind by newer insurgent properties in the hunt for Facebook eyeballs — however the recent changes in the ecosystem are re-arranging the leaderboard.

For The Guardian, some long-term investments and a tough decision around implementing a paywall are finally starting to pay off. Though they had a total loss of £38m last year, UK-based publisher now reports it is on track to break even this year, driven by a mix of subscriptions, memberships, and contributions.

Mic on the other hand, a millennial-focused digital publication, says its current success lies in pulling back on distribution. The publisher, Cory Haik, has explained that they are now focused on a “deliberate distribution” model, where each content release is very intentional. Rather than being reactive to trends and reliant on poor traffic and monetization initiatives, the publication is now selective about what they release and where they release it.

New distribution opportunities and challenges

Mozilla is now introducing sponsored content to new tabs via Pocket with Firefox’s new version rolling out next week. This will put publications in front of new audiences based on user behaviors, similar to Chrome’s Instant Articles which are now the 4th biggest source of referral traffic on the internet.

As Facebook works to recover from the recent Cambridge Analytica fallout, some additional changes on the platform may make content distribution and targeting a bit more difficult. Mark Zuckerberg opened the F8 conference announcing that a new “Clear History” feature will be available soon to users. This will allow users to see the web browsing history tracked by Facebook analytics and delete all cookies and browsing history.

So, What Comes Next?

The Guardian’s turnaround, along with the many other traditional brands who have made the technological and business model investments to build out their own monetization mix, highlights an interesting twist to the publisher battle for attention.

These more traditional brands have a significant asset with existing brand equity. Startup publishers that either build new brands quickly (like The Skimm) or have significant unique assets (like The Players Tribune) have been able to break out as well and look to be building significant market share.  

It’s not so easy anymore to either dismiss old school brands as unable to keep up, or scoff at newer startups as just being able to win by hacking a distribution channel — each publishing winner is going to do so in their own unique way.

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Curated and published by Adam Orshan, Amber Brooks, and Matt Levin in New York City.

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