There’s no doubt about it, digital and especially mobile is the future of advertising. Historically, mobile advertising budgets have lagged behind significantly compared to those for TV, especially considering time spent is almost equal. However, by 2020, US advertising budgets will be around $77 billion for both mobile and TV. What this doesn’t take into account, however, is the advertising format. Of those $77 billion, only $8 billion will go to mobile video ads, a mere 10% of TVs video ad revenue. To answer the title of this article bluntly, the answer is no, not for the foreseeable future at least.
What mobile does right
If this prediction turns out to be accurate, it would seem an unreasonably skewed allocation of budgets because mobile video has grown to be an attractive ad format.
First of all, an increasing amount of people watch video content on their smartphones and tablets, plus the average time per person is increasing as well.
Secondly, watching videos on mobile provides a significantly more intimate experience than on desktop and TV. The screen is literally in your hands. And besides being more intimate, this feature allows videos to become more interactive thanks to the touch screen, too. Brands can include Call-to-Actions in an almost endless variety of ways using rich interactive media. Compared to TV, mobile offers greatly more potential in accurately measuring effectiveness since marketers can simply measure click-through rates.
So what’s the deal here?
Why isn’t mobile video advertising replacing TV ads as the dominant format? Well, a part of the problem is purely technical. For example, none of the competing video formats has won the battle to become the standard. This has advertisers holding back their investments as they’re afraid to bet on the wrong horse. However, the major problem has everything to do with data and metrics. Since we covered metrics in a previous article, we’ll focus on data here.
eMarketer found that 40% of ad agency professionals are unsure whether they are getting good ROI from digital video ads. This is really the essence of the problem. Because who would invest a significant part of their budget into something that is unsure to pay off? The uncertainty is caused by data not being sufficiently or timely available to accurately measure ROI. Especially on mobile, where more and more walled gardens seem to arise, this is a serious issue. Fragmentation prevents advertisers from reaching audiences at a large scale with uniform targeting and performance tracking which, in turn, limit a marketer’s knowledge about what audiences are performing best.
What mobile video advertising needs is audience data that flows unrestrictedly and is agnostic to the countless adtech solutions one can use. (We’ve all seen the intimidating LUMAScapes of the adtech ecosystem, if you haven’t check it out).
Today this data is not accessible enough, especially for large scale advertisers. The nature of mobile operating systems (its apps forming data silos) causes a winner-takes-all environment where a handful of players have meaningful audience data on a large scale. But despite some of these winners’ (for example Facebook, Google) size, advertisers don’t want to be locked into a limited ecosystem.
Advertisers need to be able to target their preferred audiences across the mobile internet, whether it is on mobile web or in-app in order to allow the mobile advertising to thrive as desktop advertising did before, and TV before that. To do so, there needs to be a solid system that provides audience data so that advertisers can segment and target the right person at the right time. For TV, Nielsen and Rentrak provide well established systems to measure what demographics are viewing your ads. However, for mobile these systems are not in place (yet), which is hardly surprising given it’s relatively young age.
The future has only just begun
Therefore, perhaps we’re asking the question whether mobile video will ever overtake TV a bit prematurely, given that the very first TV ad was broadcast in 1941 in the United States. Compare that with the first text ads through SMS in the late 90s and the first mobile ad exchanges popping up as late as 2007 and it’s obvious mobile advertising is still in its infancy.
We’re sure that, despite recent developments regarding data silos, the industry will force its players to get along with each other for the greater good. How mobile video advertising will look like in its final form is up for anyone to guess, especially considering new technologies like VR are entering the playing field now as well.
It’s an exciting time to be in the advertising industry and we’ll continue to make the effort for industry wide connectivity and compatibility.