Five Themes of the FreeWheel VMR: Q4 and Year-End Insights: 2016
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Ying Wang
By Ying Wang,
Director, Advisory Services,
FreeWheel

The FreeWheel Video Monetization Report: Q4 2016 (VMR) launched on March 21st.

The VMR takes a full-year look at 2016 as a whole, as well as quarter-specific trends, through the lens of general trends and themes that speak to the value of premium content and environments. For the 24th consecutive quarter, the upward trends in video continue, with no sign of slowing down. While our data highlights the opportunity in premium video, it also shines a light on just how complex managing a digital video business is today.

Publishers are operating businesses that feature increasingly diverse content formats, with live streaming becoming a more dominant component. Viewers have rapidly shifted viewing from desktop to Over-the-Top (OTT) & Set-Top Box Video On Demand (STB VOD) environments, where technology and measurement challenges make it difficult to capitalize on all of the growth. Publishers now have access to more monetization channels and distribution models, but must carefully balance the additional reach from 3rd party channels with the lack of transparency and control. All the while, they are being challenged re-examine the value proposition of their overall ad experience in a world flooded with ad-free alternatives.

To reflect on this past year, we identified five key themes that serve as the underlying stimuli of the continued evolution of the premium video economy. These trends, and the impact they have on the wider media ecosystem, are brought to life via a “Year In Video” timeline supported by our unparalleled data set of over 200 billion video views in 2016.  Here’s a preview of our analysis:

The Primacy of Video

As technology enables viewing across more platforms, more publishers are leveraging video content as a way to capture consumers’ attention. For the full year 2016, we recorded a 24% year-over-year growth in ad views and 26% growth in content views. While live content helped carry that growth with an annual growth of 36%, short- and long-form on demand content weren’t far behind with annual increases of 22%. This consistent growth in premium video caught the attention of traditionally more text and display-focused media business, many who have pivoted their business to prioritize video in the past year.

Tent-Pole Events

Big events are driving significant consumption and provide leading indicators of platform and content trends. In 2016, events like the Summer Olympics in Rio and The U.S. Election helped drive discovery and monetization of digital sports and news content. With the Rio games in late summer, authentication return to its peak of 72% in Q3 and remain at similar highs into Q4. In Q4, news accounted for 13% of ad views, the highest share we’ve seen for that category since Q3 2015, and grew at 58%. While tent-poles are by no means the only growth drivers, the critical number of viewers they amass can drive engagement patterns for months to come.

User Experience

On the topic of engagement, high-quality video experiences on OTT platforms and STB VOD are leading viewers back to the TV set. Desktops and laptops have been losing viewing share since Q4 2014, as more viewers are taking advantage of expanded STB VOD and OTT capabilities on the big screen in their living room. STB VOD and OTT have been the largest disruptors in the market, evolving from just 9% combined share in Q4 2014 to 41% in Q4 2016. Over the same time period, publishers have taken a more conservative approach to adjusting ad loads as ad blocking and poor user experience have become concerns that keep every digital advertising exec up at night. Our data indicates that the average number of ads per mid-roll break in on-demand content inched up from 3.7 ads in Q4 2015 to 4.0 in Q4 2016, while the number of ads in live ad breaks declined from 6.2 to 4.6.

Accountability

Not all video is created equal. As video becomes more ubiquitous, Advertisers are paying more attention to where their ads appear and seek out brand-safe content. For example, premium video over-indexes in CPG, a category where brand safety is highly important, relative to broader digital advertising investment. Publishers are also becoming more discerning in how they distribute their content outside their own properties. Share of syndicated views dropped from 15% in Q4 2015 to 12% in Q4 2016, driven by the steady decline of monetization through long-tail sites and syndication networks.

Automation

As demand increases for more data-informed, automated buys, premium publishers are increasingly turning to programmatic sales channels, yet remain selective in their decisions to do so. Since Q4 2014, the proportion of ad views coming from automated models has more than doubled for Programmers, from 3% to 7%, and tripled for Digital Pure-Plays, from 9% to 27%. With Programmers in particular, the overall percentage remains small – however, as protected marketplaces grow in the coming year, we expect more data-informed deals to happen through automated channels via private marketplaces.

For our complete analysis, access our unrivaled insights of the VMR: Q4 2016 by downloading a copy.

In addition to surfacing these industry-leading insights, FreeWheel’s Advisory Services team helps premium content publishers grow profitably by navigating the complexities of operating a digital video business. For questions about the report or how the Advisory Services team can help your business, please don’t hesitate to contact us. We look forward to starting a conversation.

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