Diving:
- Advertisers are increasingly prioritizing business outcomes, such as sales or store visits, as key performance indicators (KPIs) for digital video campaigns, according to the second part of a report from the Advertising Bureau Interactive (IAB) that evaluates channel trends.
- An increasing focus on business outcomes is breaking with the historical use of video as an outreach vehicle. However, the IAB found that measurement tools for video performance advertising are lacking, with two-thirds of buyers experiencing frustration in this area.
- Adoption of alternative measurement currencies outside of panel-based ratings continues to take hold, with 89% of advertisers either testing or transacting with a new gatekeeper of solution providers. These experiments come as the IAB expects the largest digital video channels to see increased investment this year.
Diving Perspective:
Marketing’s shift to a performance-based mindset, where ads can be tied more directly to sales and other consumer actions, is taking on more power in the digital video arena. Reach and frequency, long the channel’s main KPIs, have fallen by the wayside as business results rise to the top. This realignment is evident in social video, where 64% of buyers now primarily value business outcomes, as well as online video (58% of buyers said the same) and the burgeoning connected TV market (54% of buyers). The IAB gathered its findings using quantitative surveys from Advertiser Insights.
Recent transactions support how digital video platforms are interested in better realizing their performance potential. The spring media buying season saw several partnerships struck between CTV players and retail media networks such as Walmart Connect. CTV is also declining more programmatically, as three-quarters of ads are now bought through methods such as real-time bidding, private marketplaces and ad networks.
These trends come as advertisers pour more dollars into digital video amid an acceleration in cord-cutting. In the first part of its report, released in May, the IAB estimated that ad spending on online video, social video and CTV will grow 16% year-over-year in 2024 to reach $63 billion, with video social first. Investments are also widely spread across content types, with short and vertical videos — formats made ubiquitous by TikTok — accounting for the largest share.
Digital video’s pivot to performance is not without growing pains. Two-thirds of buyers experience measurement issues with the channel. Granularity appears to be particularly difficult to achieve, as small advertisers targeting niche audiences versus broad reach were “significantly more likely” to experience problems with viewability and access to sell-side data, according to the IAB.
“As the saying goes, ‘with great power comes great responsibility,'” David Cohen, CEO of the IAB, said in a statement attached to the research. “With the continued impressive growth of digital video comes demands for better measurement, viewability, standardized data and placement transparency. The video ecosystem needs to fully commit to innovation, especially in measurement.”
As their benchmarks for success shift, most ad buyers are either in discussion or actively testing the waters with alternative currencies to the raw rating point model associated with legacy measurement firms like Nielsen. About 28% of shoppers already transact with altcoins, evaluating offers that can offer multi-screen attribution and real-time reporting, according to the IAB.
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