In last year’s AOL State of the Video Industry report Australian media buyers indicated that lack of inventory was a significant issue. This year we see how this trend has influenced the way video is being bought and sold.
For a start, it means a larger proportion of buyers deal directly with publishers. 71% of buyers involved in video say at least some of their campaigns are bought this way, compared to half of US buyers and just 38% in the UK.
It seems likely that buyers are trying to secure inventory before it is made available in the open market, or through private marketplaces. The early bird gets the worm. The larger agency groups seem to be using their buying power to scoop up this inventory, using their trading desk to place the content.
I am sure publishers have mixed feelings about this. Openly traded inventory could provide higher yields given the demand/supply mismatch, on the other hand direct deals allow them to count the revenue upfront and gives them more clarity into their pacing to yearly targets. More inventory is the key, but it’s not a problem that can be fixed overnight.
Fortunately, as a market, we are as committed as anywhere when it comes to the use of programmatic trading, thanks to a rapid catch-up over recent years – a trend which is set to continue. Three quarters of publishers responding to this year’s survey say that more of their video ad inventory will be sold programmatically next year.
A lack of premium inventory might also, in part, be responsible for the emerging adoption of branded video content. I say ‘in part’ because branded content is not just an Australian phenomenon. We are seeing brands engage in branded video content to go beyond pre-roll and inspire customers to buy into their brand’s identity as part of their lifestyle. Brands such as Nike, GoPro and Red Bull have done this so well that their content has taken on a life (and revenue steam) of its own.
This trend for brands wanting to own content is something we're seeing highlighted in all major markets where we conduct AOL State of the Video Industry reports - the US, the UK and here. For those brands not creating content themselves, they're clearly looking to publishers to create it.
A common challenge all publishers face across the globe is cost – but it’s a bigger problem here.
Australian brands will face similar production charges to companies overseas, but reach fewer viewers, due to our population size. Hence six out of 10 buyers of branded video see cost as a major concern, compared to less than half of all US and UK buyers.
Of course, creating the content is only part of the story. What do you do with it? Almost all Australian publishers who offer branded content placed it on their own sites. That compares with just 57% in the UK. It seems over there – and in the US – publishers are far more likely to use social media and form strategic partnerships with top properties to broaden the reach of branded content.
Focusing just on publishers’ own sites means brands will struggle to gain the scale needed to improve ROI. This is reflected in the changing user viewing behaviour. Users no longer browse a handful of sites; social media has expanded the spectrum of sites visited by a single consumer as they chase content, not mastheads.
Broadening reach through video distribution networks is part of the answer. There needs to be more focus on how to take the content to the user, rather than trying to bring users to the content. Only one in 10 publishers said they use this type of strategy for branded content, compared to 43% in the UK. Branded content distribution networks are relatively new to the Australian market, but are rapidly gaining traction. For example, AOL launched Be On in Australia earlier this year. Off the back of the award winning Volvo Trucks “Van Dame Epic Split” video delivered through this distribution network, we're seeing brands sit up and take note of what's possible for great content in the earned media space.
In next year's report I would expect to see evidence of content and the advertising that surrounds it coming together in a much more sophisticated way. This combined with using the rich data to inform the creative and messaging will ensure that the industry can consistently deliver on the 'right message to the right person in the right place at the right time' promise that's been touted for some time now. This will in turn go some way to addressing the growing resistance to advertising we're seeing as the viewer starts to see brand's messaging delivered to them in a way that's more correlative to their media consumption and consumer behaviour.
Mitch Waters
Managing director
AOL International AU/NZ