Video Landscape Report

IAB Digital Video Center of Excellence

Dec 2018, 5th Edition

Table of Contents
Introduction 3

Background 4

Executive Summary 5

Landscape 7

Growth Opportunities 19

Challenges & Solutions 38

Emerging Trends 49

IAB Call to Action 52

IAB Resources 53

Closing Thoughts 54

2
Introduction

In early 2018 at the IAB Annual Leadership Meeting, IAB announced a paradigm-shifting thesis to capture,
explain and understand an “enduring shift in the way the consumer economy operates”, a shift from a
century old “indirect brand economy” to a “direct brand economy” characterized by data-driven, digitally
native, and customer experience-obsessed upstart brands with direct connections to consumers. They are
disrupting the legacy business model of marketing and driving the growth of a new consumer economy.

All digital publishers, media companies, technology and data solution providers in the ecosystem have an
important role to play in building the “attention stack” that both direct and indirect brands can leverage to
scale their growth and/or empower their digital transformation. Video, with the ongoing convergence
between traditional TV and digital video, has become an integral and powerful part of this attention stack
for all 21st century brands in the new direct brand economy.

However, the constant change and confluence of technological innovations and consumer behavior shifts
also cast new questions around video - What does video mean? What will it become? How is video used
to reach, engage, and drive attention and action? It is absolutely imperative to understand the complex and
evolving ecosystem of video advertising to guide both buy-side and sell-side perspectives and decisioning.

3
Background

▪ IAB Digital Video Center of Excellence created this video landscape report after reviewing and compiling
existing industry research reports and publications, as well as consulting with more than a dozen industry
practitioners and subject matter experts including broadcast, cable, ad tech, digital pure plays, agencies,
and brands.

▪ The key objective of this report is to provide perspectives on the state of the video advertising ecosystem. It
will also serve as a modular tool to simplify video and educate the advertising marketplace about the growth
and value of video in reaching and engaging consumers.

▪ Given the complexity of the entire video landscape, this report is going to anchor around the confluence of
consumer consumption and technology in an advertising-supported video ecosystem to provide a clear
understanding of the current state of video to a buy-side audience.

▪ The December report is the fifth edition (initially released in October 2016).

4
Executive Summary – State of Video

▪ The video ecosystem has never been more complicated and exciting. We have seen an unprecedented
number of content creation sources, distribution platforms, and consumption channels, and as a result,
more video viewing time in total. While traditional TV still dominates ad revenue, digital video ―
especially mobile video―is the fastest-growing video type by consumption. All of these developments
and touchpoints have provided more opportunities for 21st century brands and marketers to directly
connect and engage with consumers.

▪ Looking across the video platforms and channels, traditional and new opportunities to reach and
engage consumers abound in this rapidly evolving video ecosystem. This report looks into a number of
opportunities including programmatic video, addressable TV, connected TV/OTT, virtual reality (VR),
augmented reality (AR), vertical video, stories, live streaming video, esports, Original Digital Video,
branded video, interactive/shoppable video, and 6 second ads.

5
Executive Summary – State of Video

▪ While opportunities to reach and engage viewers have increased through a myriad of video
touchpoints, we continue to see challenges across traditional TV and digital video platforms due to
consumers’ behavior shifts and emergence of new technologies, especially advanced audience data
and automation. In this report, we discuss challenges as well as on-going efforts and opportunities to
address them. The key challenges include audience fragmentation, creating scalable creative, content
discovery, advertising experience, ad fraud, and cross-platform measurement.

▪ The interplay of technology and consumer behavior is driving current and emerging trends that push
and shape this evolving video landscape. The industry needs to have a deeper understanding of the
shift in consumer dynamics and technology to better leverage these trends. IAB will continue to play a
pivotal role in shaping the future of video advertising in the 21st century brand economy and has
outlined key pillars and initiatives to keep driving the industry forward.

6
 Landscape

The video ecosystem has never been more complicated

and exciting―we have seen an increased number of
content creation sources, delivery and consumption
channels, and platforms, and as a result, more video
viewing time in total. While traditional TV still dominates
ad revenue, digital video― especially mobile video―is
the fastest-growing video type by consumption.

7
The changing faces of video in a complex ecosystem

The term video is perceived through varying yet overlapping frameworks and lenses.

Video Type Distribution Viewing

Ad Unit Transaction Type
Mechanism Device/Platform
360
Augmented Reality In-stream Addressable
Cable Desktop
Live streaming Interactive Cross Screen
IP-based Digital OOH
Long form Out-stream Data Driven Linear
Original digital video Over the air/Broadcast Gaming console
Overlay Direct
Short form Satellite Messaging app
Picture in Picture Linear
User-generated content Mobile
Vertical video
Shoppable OTT
OTT/Connected TV
Virtual reality Vertical Video Programmatic
Social

8
Video delivery and consumption is more crowded than ever

Streaming Smart Game Platforms Ad Streaming

MVPDs vMPVDs
Devices TVs Consoles & Delivery Networks Services

SVOD

Ad Supported

And more…

9
 Video viewing accounts for the biggest share of daily media
time spent; digital video viewing time increases year-over-year
▪ According to Cisco, IP video traffic will be 82% of all consumer
internet traffic by 2021, up from 73% in 2016.

▪ While TV still takes the majority share of total viewing time,

digital video’s share has increased over time.

▪ Connected TVs experienced 15% quarter-to-quarter growth

from Q4 2017 to Q1 2018

10
Source: Nielsen Total Audience Report Q1 2018
Mobile video is taking a greater share of total digital video
consumption and it continues to grow
▪ Mobile video consumption has been on the rise and will likely continue to rise with 5G planned for a global launch in 2020.

11 Source: eMarketer September 2018. Ooyala Global Video Index, Q2 2018.

TV ad spend remains dominant, though digital video is exhibiting a fast
revenue growth rate whereas TV ad spend has peaked

12
Nearly 60% of marketer’s digital advertising budgets are
allocated to digital video
▪ Advertisers will spend more than $10 million, on average, on their brand’s digital/mobile video advertising
in 2018.

13 Source: IAB Video Ad Spend Study 2018.

Mobile video is the primary driver of digital video ad revenue growth and
outpaced desktop video revenue for the first time in 2017
▪ Growth of digital video revenue on smartphones and tablets continued, reaching $6.2 billion in FY 2017, a 53%
rise from FY 2016.
▪ For the first time, mobile video overtook desktop video revenue and comprised 52% of all video ad spend in 2017.

Historical Digital Video Revenues, % of Video Revenue by Format

Full Year ($ billions)
2016 2017
$6.2
$5.7
$4.9

$4.0
45% 48%

55% 52%

FY 2016 FY 2017
Mobile Desktop Mobile Desktop
Mobile Desktop

14 Source: IAB Internet Advertising Revenue Report, FY 2017

The buying community feels optimistic about investing in
digital and mobile video
▪ 1 in 2 are planning to increase spend on mobile and digital video advertising in next 12 months.

In the next 12 months, would you expect the spend on the following to increase, decrease or maintain the same?

15 Source: IAB Video Ad Spend Study 2018.

Buyers are also optimistic regarding Advanced TV products

▪ Data informed and highly addressable products on the big screen are leading the pack

16 Source: Videology Ad Perceptions Survey April 2018

When accounting for vMVPDs, the number of Pay TV
subscribers has actually increased YOY
(in Millions) 2Q 2017 2Q 2018 YOY Change

Pay TV Subscribers 93.33 93.79 0.5%

Legacy Pay TV Subscribers 90.26 87.05 -3.6%

Cable Subscribers 47.42 46.35 -2.3%
Satellite Subscribers 32.33 30.64 -5.2%
IPTV Subscribers 10.51 10.07 -4.2%

vMVPDs Subscribers 3.07 6.74 119.3%

Sling TV 1.86 2.34 25.9%
DirecTV Now 0.49 1.81 268.4%
Hulu Live TV 0.17 0.96 478.8%
PlayStation Vue 0.47 0.75 59.5%
YouTube TV 0.09 0.41 371.3%
fuboTV - 0.33 n/a
Philo - 0.15 n/a
Source: Company Reports, Strategy Analytics Estimates, 2Q 2018
Numbers in italics are based upon Strategy Analytics estimates

17 Source: comScore State of OTT June 2018

Both traditional TV networks and digitally-first publishers are
going direct to consumers via OTT offerings

▪ Citing the ongoing unbundling of cable TV packages

in the coming years, the latest report from The
Diffusion Group predicts that all “major” TV networks
will introduce standalone direct-to-consumer (DTC)
OTT services by 2022.This will drive total DTC
subscriptions close to 50 million by 2022.

▪ The Roku Channel Store contain OTT apps from

more than 5,000 publishers

19
Source: The Future of Direct-to-Consumer Video Services - Analysis & Forecasts, 2018-2028, The Diffusion Group, 2018
 Growth Opportunities

Looking across the video platforms and channels―

traditional and new―opportunities to reach and engage
consumers abound in this rapidly evolving video
ecosystem. The report looks into a number of
opportunities: Addressable TV, Programmatic Video,
Connected TV/OTT, Virtual Reality, Augmented Reality,
Vertical Video, Stories, Original Digital Video, esports,
branded video, interactive video, and 6 second video.

19
Cross-platform video buying including both TV and digital
video experiences significant YOY increase
▪ 40% of advertisers’ 2018 budget will be spent on cross platform (TV + digital video) buys.

20 Source: IAB Video Ad Spend Study 2018

 Programmatic spending is dominant within digital video, but
accounts for only a small portion of OTT
▪ Automation in video buying accounted for 81% of digital video spend in 2018, but OTT remains mostly direct.
▪ 86% of OTT/CTV inventory is still purchased direct
▪ Of those premium video deals that do get transacted programmatically, only 7% occur in the ‘open exchange’.

Digital Video Programmatic Spending OTT/CTV Programmatic Breakdown

21
Source: FreeWheel Video Monetization Report Q2’18
Addressable TV scales up to 64 million households, nearly half
of all pay TV households

22 Source: IAB Advanced TV Targeting Primer, IAB Nov 2018

Addressable TV ad spend will exceed $3 billion by 2020 due to
well-recognized benefits
▪ Marketers recognize the benefits of addressable TV such as targeting precision, media plan
optimization, audience discovery, and incremental reach

23 Source: Videology/Advertiser Perceptions Advanced TV Trends, April 2018

Reach continues to grow within the OTT/CTV universe driven
by adoption of Smart TVs and Streaming Devices
IAB has defined OTT and CTV as follows:
▪ Over the Top Device - A device that can connect to a TV (or functionality within the TV itself) to facilitate the delivery
of internet based video content (Roku, Apple TV, Smart TV’s, game consoles, etc.)
▪ Over the Top Video - Video content transported from a video provider to a connected device over the internet
outside the closed networks of telecom and cable providers
▪ Connected TV – A television set that is connected to the Internet via OTT devices, Blu-ray players and gaming
consoles or has built-in Internet capabilities (i.e., a Smart Television) and is able to access a variety of long-form and
short-form web-based content.

24
 Over half of OTT/CTV viewership occurs on the big screen

▪ Roku has the biggest share of OTT/CTV viewership at 41%, driven by device ownership and Smart TV integrations
▪ Gaming consoles still account for 23% of CTV streaming hours
▪ Per FreeWheel’s latest monetization report, OTT commands the largest ad view share of any device type at 41%

Share of Viewing Hours by Device Share of Connected TV Viewing Hours by Device (Q3 2018)
60% Other
56% Xbox
Apple TV 3%
11%
10%
50%
45%
Google Chromecast
5%
40%

30% 27%
25%
21% Amazon Fire TV
20% 18%
14%
Roku
10% 41%
7%
5%

0%
PC Mobile/Tablet Connected TV Other Playstation
12%
Q3 2017 Q3 2018

25 Source: FreeWheel Video Monetization Report Q2’18 and Conviva’s State of the TV Streaming Industry Q3 2018
Consumers watching OTT are watching ad-supported OTT providing marketers
the opportunity to gain incremental reach with an attractive audience

- 73% of adults who watch streaming U.S. Gen Watch ASV Watch TV Only
video say they watch ad supported Pop OTT Most SVOD OTT Viewers
Most
OTT (ASV OTT) video and 45% say
they watch ASV OTT the most out of Male 49% 60% 46% 44%
all streaming video. Female 51% 40% 54% 56%
18-34 30% 44% 42% 10%

- ASV OTT viewers spend less time 35-54 33% 37% 36% 28%
watching cable than SVOD viewers – 55+ 36% 18% 21% 61%
providing marketers an incremental White/Caucasian 64% 58% 60% 72%
reach. Black/African American 12% 15% 11% 11%

Hispanic 16% 14% 23% 11%

- The audience that is watching ASV
OTT is an attractive audience for Asian/Other 8% 12% 6% 7%
marketers as they are younger, $75K+ Income 28% 34% 34% 21%
diverse, affluent, and have children Married 50% 49% 51% 51%
in the household. Kids in Household 41% 51% 51% 26%

26 Sources: IAB Ad Receptivity and the Ad-Supported OTT video Viewer, Oct 2018
The media industry continues to experiment with immersive media
forms like VR as a way to capture consumer attention

▪ There will be 36.9 million users of VR by the end of

2018. While that number is growing, user adoption has
been slower than expected. Adoption could increase
with the release of standalone headsets that require no
mobile phone or PC like Oculus Go.

▪ Publishers like The New York Times, CBS, and Hulu are
investing in VR as a way to capture consumer attention.
This content can be watched via apps on compatible VR
devices like PlayStation VR, Oculus Go, Google
Daydream, etc.

▪ IAB released an Augmented and Virtual Reality

Glossary to provide additional clarity and guidance
across the industry.

27
Source: eMarketer, March 2018; Tech and Media Outlook 2018, Activate, 2018, NextVR
 Augmented Reality (AR) is growing - the technology is likely in
your pocket right now
▪ In 2017, both Apple and Google released operating system support for the creation of AR apps on their mobile platforms.
ARtillery Intelligence estimates that by the end of 2018 there will be 1.2 billion Android and iOS devices worldwide that are
compatible with Google ARCore and AppleAR Kit.
▪ AR provides marketers a window into an attractive audience that skews female, young, and affluent.
▪ According to a 2018 BCG study, marketing executives expect to drive bottom of the funnel objectives with AR campaigns - 36%
stated that generating incremental sales will be a primary objective of AR marketing in the next 24 months.

Source: Snapchat

28
Source: ARtillery, blog from 7/25/18 and “Intelligence Briefing: Mobile AR Usage and Consumer Attitudes, 3/15/18, BCG Marketing Executive Benchmarking Study, January 2018
 New formats including vertical video are increasingly embraced
by content creators, publishers, and brands
Episode of PhoneSwap, Original Program for Hyundai Vertical Video Add on YouTube
Snap produced by Vertical Networks (Source: (Source: Mashable.com)
Nytimes.com)
▪ In response to growing consumption of video in
vertical orientation, the industry is embracing vertical
video. For example:
▪ Elizabeth Murdoch founded Vertical Networks a
content studio geared towards mobile first,
vertical video.
▪ In September 2018, YouTube launched vertical
video ads for the first time.

▪ Over half of the advertisers (61%) that were

interviewed for the IAB 2018 NewFronts Video Ad
Spend study stated they purchased vertical video ads
in 2017.

▪ IAB published a Vertical Video Advertising Best

Practices guide offering marketers tips and
suggestions for how to develop device and platform-
specific vertical video creative.

29 Source: IAB Video Ad Spend Study 2018

As consumers are embracing short and long-form “story” formats,
publishers and brands have incentive to create vertical video
▪ Since early 2016, story creation and consumption (which is inherently vertically oriented) has
increased 842% -- with over 970 million social accounts now using the feature daily across
Instagram, WhatsApp, Snapchat, and Messenger.
▪ As consumers are spending more and more time one their mobile phones, platforms see the
opportunity and are pushing into longer form “story” vertical video creation like Instagram with IGTV.

Source: Business Insider, How to use IGTV, the new

Instagram app for watching and creating long-form
videos
30
Source: Block Party, Beyond the News Feed: Why Stories are Becoming the New Face of Social Media, 2018
Live streaming video is now mainstream across the world

▪ According to IAB’s Live Video Streaming study, 70% of consumers globally are streaming digital video content at least
once a day and 47% of those consumers are streaming more live video than they did a year ago.

▪ In 2018, we still see a big focus on live streaming with Twitter announcing new partnerships with ESPN to do
“SportsCenter Live”, Amazon continuing to live-stream NFL Thursday night football, and several major events like the FIFA
World Cup and Winter Olympics also contributed to live streaming viewership this year.

▪ The majority of global consumers (52%) are watching free live streaming video content with ads and the IAB study
revealed that 64% of those consumers took action after seeing an ad during a live video stream (i.e. brand recall,
clickthrough, and site visits).

31
Source: IAB, Live Video Streaming – A Global Perspective, June 2018
 The rapid expansion of esports presents a viable advertising
opportunity targeting a desirable audience
• Definition: Esports is organized competitive video gaming.
• The audience for esports is growing and is an attractive target for marketers.
• According to NewZoo, the global esports audience reached 380.2 million in 2018 and is expected to reach 557 million in 2021.
• The esports audience is attractive for marketers as its young, diverse, and affluent.
• Esports is expanding beyond just digital distribution into linear TV and real-world stadiums. It is also building localized communities
and fan bases through franchised leagues like Activision Blizzard’s Overwatch League.
• IAB released “Marketer’s Guide to Esports: How Get in the Game” to highlight how marketers can get involved in this opportunity.

Receptiveness to Future Esports Developments - % who say the following would make them like esports more

32
Source: NewZoo, 2018 Global Esports Market Report; GlobalWebIndex, Trends 19, The Trends to know for 2019, Image - Overwatchleague.com, Robert Paul for Blizzard Entertainment
Annual spend on Original Digital Video advertising continues to
climb

▪ Original Digital Video (ODV) is

defined as professionally
produced digital video content
for digital delivery and
consumption.

▪ In the context of video

advertising, the IAB Video Ad
Spend report refers to ad-
supported original digital video.

▪ In 2018, Original Digital Video is

estimated to account for 47% of
total digital video budget.
Agencies have significantly
increased their ODV investment

33 Source: IAB Video Ad Spend Study 2018.

Branded entertainment and video is gaining traction from marketers
who are utilizing it to avoid common digital advertising pitfalls
▪ PQ Media estimates that the global branded entertainment revenues grew at twice the rate of overall advertising/marketing to surpass $100
billion (includes product placement, consumer experiential marketing, consumer content marketing).
▪ Video is an integral piece of branded entertainment. According to a Trusted Media Brands study, 37% of total marketers and agency
respondents believe branded video and pre/mid/post roll are equally important to their video strategy and one-third will increase investment in
branded video.
▪ Branded video is becoming important on OTT as highlighted by recent data from the Branded Entertainment Network (BEN) that shows that
100% of Amazon's original programming contains brand integrations, while 91% of Hulu originals and 74% of Netflix originals incorporate them.

34
Source: PQ Media’s Global Branded Entertainment Marketing Forecast 2018; Trusted Media Brands (TMB) Digital Video Outlook, Jan 2018; Branded Entertainment Network, 2018
 Interactive & shoppable videos deliver audiences to the bottom
of the funnel by bringing the store to viewers
BrightLine Interactive/Shoppable Video Ad Example with Hulu and Fandango:

▪ Definition: Digital video creative served on TICKET PURCHASE

Connected TV/OTT, mobile and desktop that can
take user input to perform enhanced actions
through elements beyond the standard video
playback controls such as different calls-to-action,
registration forms, poll/surveys, links, etc. FULL-SCREEN MOVIE SEARCH

• An IAB study called “The Interactive Ad Effect”

showed that “calls to action” (CTA) for mobile
interactive video work. Those CTAs grabbed the
consumer’s attention and when consumers did
interact with the CTA, they reported higher brand
ratings afterwards.

• Respondents in the study also thought it was

convenient to be able to buy directly from an ad –
showing the potential for shoppable ads
particularly if the ad is retargeted for something
the consumer is interested in purchasing.

SECOND SCREEN CHECKOUT

35 Source: IAB Video Glossary 2016 & creative example from BrightLine, 2018, https://vimeo.com/257157956/44a423707c;
IAB The Interactive Ad Effect: CTAs in Mobile Video Shoppable Ads, Oct 2018
Research shows that the first 5 seconds of an ad gets the
most attention

36
Source: IAB The Interactive Ad Effect: CTAs in Mobile Video Shoppable Ads, Oct 2018
 As a result, many are experimenting with short form, 6 second
ads but many factors can influence its success
▪ Studies by Teads, FreeWheel, and TVision Insights looked at effectiveness of shorter ads in terms of the
environment they air in as well as the nature of the ad itself

Environment Variables Consumer Variables Creative Variables

• Short Form vs Long • Demographics (age/sex) • Created as short ad vs
Form Content • Heavy vs Light TV cut down of longer ad
• Pod Positioning viewer • Story vs no story
• Length of adjacent • Animation vs film
commercials • Level of humor
• Variety of unit lengths in • Quantity of information
pod
• Use of music
• Sequential alignment
(:06 second ad, followed • Level of branding
by a :30) • Calls to action

37 Source: Teads How to Make 6 second Ads Work Harder, Oct 2018, FreeWheel Six Second Ad Experience May 2018, TVision Insights Navigating Content Chaos 2018
 Challenges & Solutions

While opportunities to reach viewers have increased, we

see challenges across traditional TV and digital video
platforms due to consumers’ behavior shifts and new
technologies. These challenges include audience
fragmentation, creating scalable creative, user
experience, ad avoidance, fraud and cross-platform
measurement.

38
Media consumption is fragmented with more ways to access entertainment,
news, and content than ever before
The Media Universe - P18+ Weekly Reach
The entire media landscape
is fragmented and the same
holds true when we look at
the video ecosystem. On an
average week, there are:

▪ 218M people with

live/time shifted TV

▪ 144 using video focused

app/web on a
smartphone

▪ 124 using TV connected

devices

▪ 65M using video focused

app/web on a tablet

39 Source: Nielsen Total Audience Report, 2018

The explosive growth in quantity and sources of content also
contributes to audience fragmentation
▪ According to FX Network Research, the
number of scripted original series across
broadcast, cable, and online services has
been on a steady increase since 2009

▪ The top three SVOD platforms alone have

over 50,000 titles combined for
consumers to choose from

40 Source: Ampere Analysis: Navigating Content Chaos 2018

The consumer ad experience is a challenge but giving consumers
more control can help

▪ In a 2017 FreeWheel report, 52%

of marketers and agencies
thought creating a better ad
experience for users/consumers
was the biggest challenge in the
video industry.

▪ Companies are experimenting

with strategies to give consumers
more control over their ad
experience. For example, Hulu
and true[X] are utilizing
interactive ads and Hulu has a
model where consumers can
select what ad they watch.

41 Source: Advancing the Ad Experience, FreeWheel Council for Premium Video, 2017; FreeWheel, Engaging the Viewer – Designing a Winning Ad Experience, 2018
 Creating affordable, scalable creative is a challenge that self-
serve solutions may help solve
▪ Creative is an important piece of any campaign and according to Nielsen, is responsible for up to 47% of the sales lift attributed to advertising.
▪ A leading creative succinctly expressed the creative challenge, “One of our clients wants to craft an overarching story and then slice it up to
personalize for different consumer segments. The struggle is how to make that interesting and do it at scale.”’
▪ The industry is experimenting with self-serve solutions to help solve these issues. Innovid launched “OTT Composer” - a self-service tool that
allows clients to create interactive ads for CTV.

Percent Sales Contribution by Advertising Element Innovid’s “OTT Composer”

42
Source: Nielsen Catalina Solutions, 5 Keys to Advertising Effectiveness, Oct 2017; Innovid: https://www.innovid.com/solutions/ott-composer/
With so many options available to consumers, discovery of
content has become a challenge
▪ As of Q4 2017, TiVo reports that the majority (64%) of consumers say they always or sometimes get frustrated when
trying to find something to watch on TV.
▪ Consumers are increasingly discovering content via advertising on social media and digital platforms
▪ The on-demand nature of most streaming services can be seen as a reason for this.
▪ Example: Xumo’s switch from VOD to Linear-like streaming model led to 10x increase in time-spent viewing
▪ Example: vMPVD’s share of streaming time dominates over publisher’s more VOD focused apps

Xumo’s Linear-Like Interface % of OTT Viewing Hours

Publisher Direct vs vMVPD
100%
90%
80%
70% 56%

60% 81%
50%
40%
30%
20% 44%

10% 19%
0%
Q3 2017 Q3 2018

Publisher vMVPD

43 Source: TiVo Mar 2018; Content Discovery, Nielsen 2018 Survey, Conviva’s State of TV Streaming Q3 2018
Consumer behavior of ad blocking/avoidance, enabled by
technology, is another challenge
▪ Although ad avoidance or ad skipping is not completely new to video, technology has granted more power
and control to audiences to enable ad blocking as a direct response to poor user experiences with digital
advertising.

▪ Ad blocking in the US is more common on laptop and desktops than smartphone devices.

▪ US ad blockers tend to skew younger between the ages of 18 and 34.

44 Source: eMarketer, August 2018 Note: internet users of any age who access the internet at least once per month via any device (including a mobile device) that has an ad blocker enabled Methodology: Estimates are based on the analysis of various elements
related to the ad spending market, including macro-level economic conditions; historical trends; estimates from other research firms; company releases; data from benchmark sources; consumer media consumption trends; and consumer device usage trends.
Video advertising fraud still exists but is on decline and ads.txt
has proven to be valuable in the fight against fraud
▪ With the growing video ad spend, premium video with higher CPMs has become the target of fraudsters.

▪ Video advertising benchmarks published by Extreme Reach show that fraudulent video advertising traffic has trended down overall
versus 2017. In Q3 2018, GIVT maintained a decreased level of 3.78%.

▪ The drop is likely the result of increased pressure for accountability from advertisers, increased vigilance among ad tech vendors, and
increased adoption of ads.txt which is designed to prohibit domain spoofing. According to Pixalate, as of September 2018, 73% of
websites worldwide have implemented ads.txt.

General Invalid Traffic (GIVT) Filtered Rate

Q3 2017 to Q3 2018

45
Source: Extreme Reach Q3 2018 Video Benchmarks; Pixalate “Q2 2018 Ads.txt Trends Report”, 9/12/18
Cross-screen measurement remains the top challenge to video
and TV advertising

▪ In the 2018 Videology State of Video report, 51% of

brand and agency buyers cite consistent cross-screen
measurement as a main challenge to video and TV
advertising.

▪ Metrics and measurement of linear TV and online video

are vastly different. Without comparable metrics, it’s
hard for media buyers and planners to assess the
relative value of cross-platform ad inventories.

▪ Companies are increasingly relying on platforms that

integrate and unify disparate data and measurement
sources into one interface

▪ Outcome based analysis (attribution) is increasing in

capabilities across all screens—providing marketer’s
with ROI and conversion based metrics that can be
easily compared across screens

46 Source: Videology The State of Video, Jan 2018.

Voice assistance is a new and popular approach to addressing
video content discovery
▪ Just under 20% of the US population report owning a smart speaker in 2018. Consumer adoption is projected to grow
over the coming years.

▪ TiVo research finds that consumers who own devices that allow for voice control are watching more video—
particularly in the daytime hours

47 Source: Ampere Analysis: Navigating Content Chaos 2018

Blockchain offers the potential to strengthen accountability in digital advertising

While it’s not a single solution to take away all the problems of digital advertising, blockchain’s role as a
decentralized ledger does offer potential to increase transparency between buyers and sellers, providing a shared,
auditable record of digital ad spend.
▪ Since every node on a network contains a copy of the blockchain, and every copy contains the full history of all recorded transactions, buyers
and sellers see potential to improve inventory quality control, transactional security and financial transparency. Advertising use cases include:
- Whitelisting: Maintain list of trusted publishers/distributors
- Reconciliation: Independently verify and reconcile camping data
- Identity Management: Decentralize identity management
- Security: Consensus-based architecture creates barrier for fraudsters to misrepresent inventory within blockchain network

Case example: Recently campaign management platform

Mediaocean partnered with IBM in the use of blockchain
in campaigns for advertisers including Kellogg, Kimberly-
Clark, Pfizer, and Unilever. Blockchain was used to record
all media transactions in a “secure, immutable,
standardized and comprehensive manner.”
48 Source: IAB “Blockchain for Video Advertising: A Market Snapshot of Publisher and Buyer Use Cases, Feb 2018; PR Newswire, “Mediaocean and IBM Partner to Integrate
Blockchain Across the Media Ecosystem”
 Emerging Trends

The confluence of consumer behavior and technology is

driving current and emerging trends that push and shape
this evolving video landscape. The industry needs to
have deeper understanding of the shift in consumer
dynamics and technology proliferation to better leverage
the trends that may have a significant impact on video
advertising’s future.

49
Changing video consumption, creation and distribution
landscape will drive new advertising opportunities

On-demand, anytime, anywhere consumption is here

to stay, blurring boundaries between TV and digital video.

Creation and distribution of content is being disrupted,

lowering the cost of entry and enabling new, non-
traditional players to compete.

Rapid, massive media and technology consolidation

and partnerships will further blur the boundaries.

Data is playing a pivotal role in audience buying, targeting, and

measurement. New technologies like blockchain are also
being explored to address key media supply chain issues.

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Empowered by technology and choice, consumers are in
control, demanding quality content and advertising experiences

The bar for content quality is getting higher and higher.

Audiences are wielding control over the success and
failure of any piece of content.

Creative quality and device/platform-specific

experiences are critical to success in an increasingly
cross-platform, programmatic marketplace.

Striking a balance between user experience and

value to advertisers will be a continuous effort.

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IAB Call To Action

IAB Digital Video Center of Excellence will continue to educate the marketplace on the changing video
advertising landscape to help unlock video’s full potential. We have taken the initiative to focus on the
following industry-wide opportunities and challenges:
▪ Creative Innovation: Assemble and analyze learnings to explore what works best in video ads from a branding
and engagement perspective.

▪ Data Driven Video: Showcase best practices that help publishers, marketers, and agencies on how to successfully
implement a data-driven video strategy.

▪ Cross-Platform Measurement: Collaborate with industry experts to evaluate how best to balance both short-term
and long-term success metrics. Facilitate buyer/seller alignment in the planning process as to how success will be
measured and what data can be shared between both parties.

▪ Digital Video and TV Convergence: Address the lack of industry standard definitions across Advanced TV (OTT,
Connected TV, FEP, etc...) Simplify the opportunities available in a fragmented marketplace and identify which
opportunities work best, depending on the marketer’s advertising objectives.

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 IAB Resources

In addition to this video landscape report, below are additional IAB Digital Video Center resources to
understand the video ecosystem:
Mainstreaming OTT and Advanced TV Educating the Digital Video Marketplace
▪ Advanced TV Attribution Guide ▪ Digital Video Glossary
▪ Ad Receptivity and the Ad-Supported OTT Video Viewer ▪ Digital Video Viewers and Brand Connection
▪ Advanced TV Targeting Primer ▪ Guide to Digital Video Advertising
▪ Changing TV Experience Study ▪ IAB 2018 Video Ad Spend Study
▪ Over The Top (OTT) Video: An Overview ▪ IAB Cross-Platform Video Planner/Buyer Training
▪ The OTT Co-Viewing Experience ▪ Keeping Up on Cross-Platform Video Measurement
▪ Long Form Video T’s & C’s
▪ Personal Prime Time
▪ Video Content Discovery Study

Emerging Formats, Platforms, and Protocols Tech Standards

▪ Augmented and Virtual Reality Glossary ▪ IFA for OTT
▪ Blockchain for Video Advertising White Paper ▪ Open Measurement SDK
▪ Building 21st Century Brands: Video Creative Innovation ▪ Simplifying Video Ad Delivery - Blog Post
▪ Live Video Streaming – A Global Perspective ▪ VAST 4.1
▪ Marketer’s Guide to Esports: How to Get in the Game ▪ VMAP
▪ The Interactive Ad Effect: CTAs in Mobile Video Shoppable Ads
▪ Vertical Video Advertising Best Practices
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Closing Thoughts

The combination of sight, sound, and motion that underlies video storytelling has unique advantages in
creating enduring two-way relationships with consumers that 21st century brands desire to reach and
engage.

Convergence of traditional TV and digital video consumption is growing rapidly, impacting advertising
planning, selling, and buying. This confluence of consumer behavior and technology will continue to propel
the industry to adopt a more holistic understanding of the consumer that recognizes the differences by
consumption, platform, content type, and audience segment.

The video advertising ecosystem, as an integral part of the “attention stack” will enable 21st century brands
to create, plan, and execute video campaigns that reach consumers directly wherever they are and engage
them interactively with greater relevance. The Direct Brand Economy will continue to thrive on the promise of
a converged future of traditional TV and digital video.

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 Thank You

Please address any questions or comments:

• [email protected]
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