Jan 27 2014
Basis Team

Why is Video Inventory Lacking in Programmatic Channels?


It sometimes feels like the digital buying world is in constant flux. Programmatic (I define programmatic as buyers and sellers connected through technology infrastructure) has been the buzzword for the last two years. According to some reports, 22-25% of display is transacted in programmatic channels today. It may get to 30% by 2017. There’s no question the historical, labor-intensive method of buying media has been disrupted. Today, marketers don’t even need an IO or a relationship with a publisher, as they can log into a system to buy media in an automated fashion. However, programmatic video hasn’t quite evolved the way traditional display advertising has. Why? In a word, scarcity.

RTB (real-time bidding) is a classic example of market economics. An impressions value is defined by the market at a specific point in time. Publishers value scarcity because it implies greater value for the impression. Further, video inventory is naturally less available than display. For instance, a webpage may have four or five display ad slots available, but a video player only has one preroll available (mid-roll and post-roll are generally considered less desirable inventory).  Additionally, publishers don’t want to increase the number of pre-roll spots for fear of alienating a user and harming the user experience.  Since video inventory is naturally (more) scarce, publishers have an easier time monetizing inventory and feel less pressure to participate in auctions where there’s no quality or price guarantees.

The current IO-based, upfront business that guarantees delivery with premium rates is much more attractive to publishers. However, expect this to shift in the future. As more media is transacted in programmatic environments, publishers will need to participate in the arenas the advertisers and agencies want to participate in.

Additionally, while RTB has historically been closely aligned with lower funnel DR tactics, more publishers are making what’s been previously considered premium inventory available in programmatic channels.  Add in private exchanges, which is another brand focused strategy, and there’s growing branding opportunities in programmatic environments.  As this continues to grow and more varied inventory becomes available, video will naturally follow -- not to mention, programmatic television buying may soon be next. Since about 40% of households today have internet-enabled TVs, and historical television buying is not efficient or measureable, this area is ripe for innovation.