The year 2014 and beyond have been pegged as the year when mobile, video and programmatic will become the most prominent advertising tools. The former has already proven itself as the rapidly growing section within digital. Video content and advertising also saw an increase in 2014 and is expected to reach explosive growth in 2015. The last is still nascent in India but we saw an increase in interest in RTB and programmatic trading in 2014 by some of the more tech-savvy advertisers and publishers. Bringing all three together, Vdopia, in 2014, took a giant stride forward in establishing its name as a major programmatic platform for mobile video advertising with the launch of Chocolate; a platform for trading of video ads.
We caught up with Preetesh Chouhan, SVP (APAC) of Vdopia and got him to talk about how Chocolate fits into the Vdopia strategy and what is the road ahead for digital advertising. Excerpts.
How does Chocolate fit into the overall business strategy for Vdopia?
With more video consumption on mobile devices and brands following the eyeballs we are seeing a significant growth in mobile ad spend by brands. In addition to shifts in TV dollars to digital, Chocolate is rightly positioned to capitalize on macro trends including moves into programmatic and the emergence of mobile native advertising.
Currently, how much of online ad revenues are towards video ads and by how much do you expect this to grow in the coming months?
According to eMarketer, India has now become the fastest growing smartphone market in the world. Around the same time, as awareness about power of video advertising picks up, we are witnessing a lot of interest from advertisers globally, as they rightly identify the position of multi-screen video advertising in the purchase funnel and make it an integral part their marketing strategies. This is evident in the latest ‘Digital Advertising India’ report released by IAMAI and IMRB, predicting 56% growth in video advertising in 2015. We have seen more than 90% annual growth in video ad spends in India between Q3, 2013 and Q3, 2014.
One thing that has been spoken about programmatic is that it will make the buying and selling of inventory fairer but we see a lot of publishers holding back premium inventory from programmatic platforms or just selling remnant inventory. How big an issue is this and what is the solution?
Programmatic started evolving back in 2009 in the US, however, it has become the buzzword recently in the past one year. One of the key concerns for non-adoption of programmatic was lack of premium inventory but as the industry understanding about this technology has evolved over the last few months, we are seeing more and more premium publishers moving to programmatic platform. One of the key reasons behind this move is the fact that it not only offers automation but more transparency, accountability and scalability compared to traditional I/O based systems. We are confident programmatic will be at the forefront of mobile advertising for next few years and more than 60% of advertising will happen through programmatic in next 5 years.
How does your video ad platform take into account bad network connectivity on mobile while streaming the ad?
To be honest I think there is a big misconception that the digital industry in India is suffering from bad connectivity. Our digital video ads are being watched by the entire country, irrespective of region, network, medium, platform or OS. For instance 43% of all video ads served by Vdopia in India were viewed in Tier 2 and 3 cities in 2014. This is made possible by our proprietary VDO technology, which intelligently identifies network speed and renders the video ad accordingly.
Big players like Facebook, Yahoo and Microsoft have been getting bullish about the programmatic and, especially, video advertising. What does this mean for Vdopia?
I believe for an ecosystem to grow and reach its full potential, it is important to be supported by big players. This holds true in programmatic and video ad industry too. When companies like Yahoo and Facebook enter the market, the confidence of brands in the medium is boosted and they tend to invest more, which help all the players to grow together. In coming years, India will witness a drastic shift in the way we do digital advertising, from I/O based manual system to fully automated robust programmatic advertising system.
Do you foresee ad spends on digital/mobile video ads overtaking TV spending? What is the dynamic between ad spends on these two mediums that you foresee?
If we look towards the west, TV and digital have already started merging together via programmatic video advertising. We have this platform through with advertisers can buy both TV and digital impressions and compare the performance of both via the same scale of GRP. This is helping global CMO measure the value-add of both digital and TV with the same yardstick, all made possible via a groundbreaking technology called programmatic. Today 12% of entire TV spend in US have turned programmatic; imagine what 2018 will be like.
The Asia Pacific region, on the other hand, is fast catching up as more and more brands are learning about programmatic and are willing to experiment with it. Of course, technology is not adopted instantly. Throughout history we have a definite curve of technological adoption with innovators and early adopters leading the race, setting trends for the market and laggards lagging behind, following the market at the very end.
For now, the brands in India have already discovered the potential and place in purchase funnel of both digital and TV, utilizing the respective channels of marketing according to build an integrated marketing strategy. However the line between them is blurring rapidly and the way we use digital is changing. Brands need to understand that the user is not just watching TV anymore. They have a smartphone, tablet and a laptop, on which they are consuming media the entire day. There is no prime time for viewers now, but ‘my time’. Not surprisingly the market has picked this and is fast understanding this new consumer and adoption accordingly. For example, TV channels are rapidly adopting online video to engage their audience, curating online only content, which forms an extension of their TV show, increasing their audience base and engaging them for a longer time.
There is a demand-supply gap in case of display ad units. Is this also the case for video inventory?
Indian publishers have still to open up and embrace programmatic and RTB platforms. How can one change this?
In India, due to the lack of audience insights, most of the digital advertising takes place around a fixed set of digital properties. Most of the smaller publishers lack the resources to better understand their audience and as a result they are unable to unlock the true potential. Even today, we (Indian market) are still buying and selling blind bulk inventory and this is, too, manually. However this is set to change, with publishers moving away from selling inventory to selling audience.
For example, Chocolate’s integration with best-in-class global solutions like metamarkets, comScore vCE and Nielsen OCR enables the publishers and advertisers to not only better understand the ad impressions, but also validate them. This empowers both small and big publishers with the necessary audience insights and industry validation to maximize their revenues and even command a premium for it, all in real time.
How do you charge advertisers on Chocolate? Is it per completed view? What is the percentage of completed views seen on Chocolate right now?
Vdopia managed services has been offering CPM, CPC and CPCV pricing models. However, our fully automated marketplace, will offer only CPM pricing for advertisers. This CPM price in a programmatic marketplace is not set by a publisher or advertiser, but purely by market forces, although premium publishers have an option to set the floor price for their premium inventory. On an average the campaigns are delivering 60% video completion rate which is way above the industry average.
We have a number of ad networks, exchanges and technology companies in the ecosystem right now. Do you expect the consolidation to continue in the future and would this create tougher competition for you?
Digital advertising industry is much more complex and technology driven than it was a few years ago. On one side we have ATD (agency trading desk) and DSPs (display side platforms) working with the advertisers and on the other side we have Exchanges and SSPs (supply side platforms) aggregating inventory from several publishers. Till now, they used to transact with each.
Now, at the center, we have data and a marketplace. All the players who already exist in the market, namely the publishers, SSP, exchange, DSP, ATD and the brands can directly plug into this marketplace to trade with each other. The question is not whether programmatic will take over the global advertising market or not, but how soon.