*This post was written by our CTO, Kevin O’Reilly
As Bob Dylan said, “the times they are a changing.” But in terms of TV, I’d say, “the times they are a transitioning”…
Over the past two years, video plays on mobile phones and tablets are up 170% from 17% – yes, 17%. According to one study, mobile video plays increased by 35% in Q415, which accounted for 46% of all plays.
Yes, the consumption of mobile video is clearly on the rise, but let’s take a look at the bigger picture.
Mobile Quality and Length Issues
A recent eMarketer survey found that 25% of respondents watched TV daily on their smartphones, while more than 53% only tried it once, twice or never. Yahoo asked U.S. Internet users what they disliked about viewing mobile videos: screen size (67%), battery time (50%) and quality issues like buffering, sound and resolution (24%-33%) were listed as top challenges.
The latter issues will lessen over time as bandwidth and compression advances continue. However, screen size will remain a challenge for quality video viewing. While mobile represents almost 50% of all video consumption, 69% of that content was under 10 minutes long.
Larger screens continue to get the lion’s share of video views for content longer than 10 minutes. In fact, that format makes up 74% of all video watched on connected TVs (CTVs). Tablet use for content between 10-and-30 minutes grew to 21% (the most of any device for content of that length), but its growth rate is much slower than mobile and CTVs.
Marketers Taking Notice
U.S. video spend is estimated to be $9.5B in 2016 and $11.4B in 2017. Programmatic is driving this increase, accounting for 56% of all digital spend this year. It’s clear that digital video spend and programmatic growth are intrinsically linked.
This is important because the dynamic is different with TV. First, programmatic TV is consider to be premium content, with CPMs averaging between $50-$100 (and significantly more in high-income segments). Second, programmatic inventory is severely constrained to 5%-10% of all available TV inventory, which will constrain price-efficient adoption of TV programmatic in the foreseeable future.
Again, this is important because TV still remains the dominant channel for video delivery, with spend estimated to be $71B in 2016 and $72B in 2017.
What the Future Holds: Complementary Video Strategies ?
For the immediate future, these trends strongly suggest that, for marketers, it’s about complementary video strategies vs. replacement strategies. The most effective plan is one that reaches audiences at effective CPM targets, and manages campaign delivery to the next most efficient method of reach.
At the heart of this type of strategy is understanding the impact each part (TV, mobile, digital, programmatic, guaranteed, etc.) has on the desired outcomes and ensuring that they are accurately measured and attributed.