Direct buying dominates online video in Canada: study

CPM remains the mainstay of TV-centric advertisers buying programmatic video, according to Videology

Direct buying dominates online video in Canada, while real-time bidding and pay-per-click only account for 11% of video impressions bought by advertisers, according to a new report from Videology.

An analysis of 112 million impressions bought on the company’s platform in Q1 2014 found that 89% were bought directly from publishers or networks at pre-negotiated CPMs. Only 11% of buys were done using buying methods that allow fluctuating CPMs, such as open and private auctions. The share of fixed rate direct buys grew 4% over Q4 2013.

“While many of the headlines have focused on the use of real-time bidding, reserved buying at a fixed CPM remains the mainstay of TV-centric advertisers buying video in a programmatic fashion,” said Scott Ferber, chairman and CEO of Videology, in a release. “The same advertisers who rely on the guaranteed, time sensitive delivery offered by television are looking for those same guarantees in video.”

Fixed CPM does not necessarily mean TV-like, manually placed bulk buys. Videology’s fixed CPM campaigns are still bought programmatically – but rather than bidding on impressions, buyers use targeting technology to search publisher partners’ inventory, find impressions that fit certain audience criteria like demo and geo, and then buy them at a pre-negotiated rate. Known as programmatic direct, this kind of buying gives advertisers the confidence of a negotiated deal, but still helps them reduce waste by buying only impressions that matter.

The alternative to fixed CPM, dubbed “dynamic CPM” by Videology, refers to forms of programmatic buying aimed at reducing the per-unit cost for the buyer even further, by bidding for unsold inventory in real-time auctions. That way buyers can sometimes get the same impressions that are available through direct, but at much lower prices; over tens of thousands of impressions, this adds up to a lower average CPM.

But the greater efficiency of a dynamic buy often comes at the cost of reliability, since buyers don’t always know which impressions they’ll end up with, how much volume they’ll be able to find that meets their criteria, or when their ads will be delivered. They’re also limited to impressions that are available for auction – publishers often decline to auction off their best inventory even if it goes unsold, fearing that low winning bids will devalue their most lucrative placements.

So a preference for fixed CPM campaigns may mean that buyers are more willing to pony up for the security of deal that delivers an expected volume of quality impressions at an expected price; or it may mean that sellers are hoarding the inventory that buyers really want, and making them sign on for large-volume deals in order to get at it.

CPG, auto most interested in video

Videology’s report also broke down what kinds of video ads are running and where they’re being bought in Canadian media. The sectors most heavily invested in video were CPG and auto. Video, like TV, is believed to perform better for brand advertising than static digital formats like display and search, so it’s no surprise that two of the biggest sectors for brand advertising are looking to video. Together, CPG and auto made up 53% of all video bought.

On the publisher side, much more video is being bought on news sites and video portals than a year ago. Entertainment still dominates, but much less so – it fell from a 96% share of purchased video a year ago to 74% in Q1. This likely reflects news publishers’ ongoing shift into digital video. At this year’s NewFronts, no less than four legacy news and magazine publishers announced they would be launching dedicated video hubs.

The majority of Canadian video buyers did not take advantage of Videology’s advanced targeting options, electing only to target based on broad demographic information. Of those that did use advanced targeting, almost half focused on geotargeting. Behavioural and contextual targeting (which includes retargeting, or sending repeat ads to users who have visited product sites) were used in 43% of advanced buys. Only 1% of buys were targeted by time of day – a strategy that some programmatic specialists promote, but isn’t yet well understood across the industry.

Correction: An earlier version of this article said non-fixed rate buys made up 10% of buys. This has been corrected to 11%.

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