Is Video the Future of Mobile Advertising?

You might say that mobile advertising is basically the same as online advertising, but realistically the reach is much greater. A report by Forrester Research stated that by the end of 2008, the world had something like a billion active PCs and that this number was expected to double by 2015.

While this sounds as though PCs have a large reach, the number of mobile phones is projected to be near the human population. In the end, this shows that mobile advertising offers much greater gains and benefits compared to online advertising.

Due to the steady increase in the number of mobile devices in the world, the market for mobile advertising is not simply growing, it is exploding and expected to overtake all other digital ad platforms. With this in mind, it makes sense that marketers and advertisers are taking big steps to incorporate the power of the platform into their strategies.

Mobile video advertising has grown steadily over the years. In 2014, the spending on mobile video advertising doubled to $1.5 billion, up from $720 million the previous year.

By 2018, the  amount that is spent on mobile video advertising is expected to come in around $6 billion. The increase in spending most likely coming from the steady increase in the number of mobile devices and the improvement in broadband coverage.

The landmark year for this sector came in 2014 when companies discovered mobile video advertising was an effective way to reach, engage and acquire a more diverse audience. Some argue that video is more impactful and user-friendly than any other type of advertising, which is why app developers now integrate video ads into their apps to provide content-relevant in-app experiences.

Think about this: people use their mobile phones to publish videos on social media, but these same phones are being used to watch billions of videos a day. Video hosting sites, such as SnapChat, Facebook and YouTube, are seeing double or triple the number of views over the past year.

As businesses who once depended on Facebook to display their ads begin to look elsewhere as the cost of Facebook ads has skyrocketed, they will start looking other places to find cost effective ways of targeting the  same demographics.

This means if a business wants to get their marketing message out, they are going to want to go where users are spending most of their time. Buying ads that run before, during or after a video which has relevant content to target the right people as become less elusive and easier to do.

One of the main constraints of this type of advertising is the user’s ability to skip through an ad without finishing it which ultimately limits engagement. A second aspect of this challenge is how small the screen is on a mobile device causing businesses to seek new and more engaging formats to help keep the user from skipping the ad.

There are several new trends emerging in the mobile video sector, one being reward-based videos. Also known as incentivized videos, this is when a user watches a video to get some kind of reward, for example getting extra lives in a game they play online.

Since the users feel like they are getting something for their time and there is a clear opt-in experience, it gives the user more control and choice around when and if they want to interact with video ads.

Vertical video formats, also another emerging trend, are more natural for smartphones, meaning that the user does not have to turn their screen to get the full-screen experience. What once was stuck in a “letterbox” shape in the middle of the screen can now be formatted to use the entire screen, making the ad look more appealing and harder to overlook.

In addition to vertical video formats and reward-based videos, the mini-game ads, where a user plays a game within an interactive ad, are also being developed. Companies, such as Zynga, have tested putting games or quizzes in the “black space” around a letterbox video and have found engagement rates to be considerably higher than a simple standard video.

All of these formats may be gaining traction; however, they still have not reached their full potential. In part, this has to do with the considerable amount of collaboration that has to happen between publishers, ad networks and agencies to take something of this magnitude to be successful.

While reward video utilizes existing video formats, not all advertisers want to associate themselves with a reward and vertical video and mini-game formats would require software development kits to adopt new standards to support this.

Even with the current constraints, the future of mobile video advertising is extremely bright, coming with the promise of better customer engagement and a higher return on investment. Through the use of mobile devices, businesses are able to offer a deeper level of personalization, allowing for a win-win situation with both marketers and the audience.