On March 21, our team was proud to launch the FreeWheel Video Monetization Report: Q4 2017 (VMR) with Year-End Insights. This expanded version of the VMR includes not just an in-depth look at the trends shaping the New TV Ecosystem both in the U.S. and in Europe, but also a 2017 Timeline showing the key events that moved the industry forward with an analysis of how the industry changed over the course of the entire year. Read on for a snapshot of our findings, and for the full benefit of our unparalleled data set, download the complete report.
INNOVATION DRIVES GROWTH
In 2017, premium video solidified its reputation with marketers as a brand-safe platform that can deliver engaged audiences at scale. Ad views saw strong double-digit growth across both the U.S. and Europe, even in the face of a rapidly changing and competitive marketplace. Publishers, operators, and the supporting ecosystem enabled more content, across more devices, to a wider audience. They also offered advertisers innovative new solutions. In a live viewing first, Super Bowl LI allowed spot scheduling in conjunction with custom ad insertions for 135 participating affiliates. Across all digital platforms, the national linear ad stream could be mirrored, and affiliate markets received local ad insertions, demonstrating how the linear and digital worlds can be bridged.
Over the course of 2017, data from the VMR highlighted four major trends:
- The big screen sits at the heart of the viewing experience – When combined, over-the-top (OTT) and set-top box video on-demand (STB VOD) grew to represent 50% of all ad view share in the U.S. and 37% in Europe, up from less than 10% in both markets just three years ago. In the U.S., OTT now commands the largest ad view share of any device-type at 31%, revealing the power of ‘the big screen’ to connect with audiences at scale.
- The market moves towards ‘premium syndication’ – The share of syndicated ad views doubled this year and now represent 27% of the U.S. premium video market. Multichannel Video Programming Distributor (MVPD) syndication doubled as viewers took advantage of growing TV Everywhere offerings and virtual MVPD ‘skinny bundles.’ Concurrently, ad view growth on aggregator platforms was flat, as publishers sought to limit use of ‘non-premium’ channels.
- Programmatic growth remains constrained – Automated transactions were responsible for 10% and 21% of ad views in the U.S. and Europe respectively, the same proportions as 2016. While significant, growth was moderated by nascent measurement capabilities across platforms such as OTT, a desire for even greater user experience control, and uncertainty around the role programmatic will play as part of an overall monetization strategy.
- Ad repetition rates fall – The number of full-episode videos with repeat ads declined from 23% to 14% in the U.S. As demand for premium video inventory increases, both in terms of the number and diversity of advertisers, publishers are better able to manage the ad experience given the increased creative mix. This flexibility will become increasingly important in the face of competition from ad-free subscription models.
THE RISE OF INTELLIGENT TV
In 2018, the premium video value proposition will continue to evolve. Publishers will present a far more data-centric vision to advertisers, and the wider ecosystem will seek to enable this. Expect momentum in the following areas:
- TV gets more intelligent– Publishers continue to push to unify their linear and digital inventory to deliver single campaigns, across multiple screens, to their target audience. Looking forward, publishers will combine TV’s ability to efficiently distribute engaging stories to quality audiences at scale with new data, targeting, and attribution capabilities. Bringing together the best attributes of traditional TV with digital capabilities will enable improved campaign performance for agencies and brand marketers, while increasing the value of inventory for the publisher.
- Live viewing growth and innovation – Live video now represents 31% of all ad views in the U.S., up from 5% five years ago. In 2018, the Winter Olympics, FIFA World Cup and other major sporting events will drive huge audiences, along with a network effect where live stream, simulcast, catch-up and clip inventory all expand. A seamless viewer experience across live events also leads to escalating technical complexity, creating real-time challenges for publishers and their technology vendors, which must be met to achieve revenue potential.
- Scaling programmatic models – Programmatic transaction models make it easier for advertisers to source inventory at scale and enable publishers to manage inventory efficiently. Technology vendors will need to invest in infrastructure and service delivery to make programmatic transactions more effective on devices beyond desktop and mobile and seamlessly support ad decisioning for live events.
The FreeWheel VMR: Q4 2017 with Year-End Insights examines trends in the industry and our underlying data for the full year 2017, while exploring some of the ways the industry continues to advance and evolve in the way it delivers value for advertisers, viewers, and publishers.
Special thank you to Hasan Iqbal, Kimberly Goughnour, and Rebecca Rangeley for their authorship and collaboration on this report.