Digital video advertising trends show brands attuned to changing user behaviour across all devices

Our latest survey of European advertisers, agencies and publishers shows what some might think is a surprising paradox.  Whilst consumers are moving in droves to mobile, where smaller screens and variable bandwidth make any advertising more challenging, the industry stakeholders we surveyed are betting heavily on digital video, the most sophisticated and complex ad format, with over 90% considering video to be an indispensable part of their overall strategy.  Indeed, digital video is taking its place as an essential brand-building format, including in the mobile environment.  Investment in mobile video is catching up with investment in desktop, as consumer media consumption habits evolve and advertisers aim to reach their audiences at relevant times throughout the day in a mobile, “always-on” environment.

More than 60% of Europeans use a smartphone, though Europe trails behind the US market where smartphone apps apparently account for around half all US digital media consumption, as measured in hours.

Many factors are contributing to the trend toward higher mobile use, including bigger screens, better screen resolution, ubiquitous Internet access at higher bandwidths, and robust competition between mobile handset manufacturers, which means more affordable smartphone models on the market and multiple ecosystems for app developers to build for, resulting in a richer range of service and content options for users.

Advertising, of course, is following users, as the IAB Europe / IHS Global Mobile spend survey released in September showed – mobile advertising growth is continuing to accelerate, with spend increasing by an impressive 68% in 2015 to € 37 billion from € 22 billion in 2014, driven by a mobile-first consumer environment, growth in premium video inventory and better marketing technology and measurement tools.

As the research we announced today shows, the future for digital video advertising looks bright, with over 90% of buyers (advertisers and media agencies) planning to increase their investment in the medium over the next twelve months.  Publishers are similarly bullish about the prospects for increased advertising revenues from digital video over the coming 12 months.  The Huffington Post is now embedding video in 80% of its content, and fully one in three visits to the site apparently results in at least one video view.  Huffington Post owner AOL was quoted in our report as pointing out that video on mobile devices is the preferred media format for millennials – which anyone who, like me, has teenagers at home, can readily confirm.

Looming on the horizon, though, is the threat from ad blocking.  Ad blocking penetration on mobile still lags desktop, but it is growing.  Even if smartphones come out of the box with multiple browsers (Chrome, Safari, Opera, Samsung’s browser, Firefox), users are always free to download an additional app that will interfere with the advertising displayed on websites or apps.  According to PageFair, in March 2016 408 million worldwide mobile users were using a browser that blocks ads by default, meaning that 21% of global smartphone users had an ad blocking browser app installed on their device

IAB Europe believes that publishers should be allowed to ask for compensation for their work, and to choose their own business models, whether advertising-funded, subscription-based, both, or something else.  We also believe that publishers are entitled to take reasonable measures to ensure that their audiences understand the implicit deal that takes place when they view advertising-funded content online – viz., that in exchange for being willing to receive advertising, users don’t have to pay for access to content.

Over the next few months, we will have to ensure the right balance between mobile users’ choice and publishers’ right to compensation if we want to fully benefit from the opportunities offered by the mobile ecosystem.

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