RTB Market Inefficiency for Emerging Video Formats

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Here’s a simple example of why it helps to be an early RTB adopter. Biddable video inventory is still relatively new, and the market hasn’t yet learned how to price it efficiently. This is especially true for pre-roll video inventory that allows advertisers to serve a companion banner. For those unfamiliar with companion banners, the concept is that a standard 300x250 display unit serves alongside a pre-roll video ad. The 300x250 unit remains on screen after the pre-roll ad is complete, extending the branded message while the primary video content plays. Here’s a screenshot:

The advertising experience is compelling, and performance metrics are quite strong.  Based on a sample of 5 million recent video impressions, it appears that serving pre-roll video with a companion banner yields significantly stronger response rates than serving a pre-roll video alone.  Video completion rates (the percentage of video impressions that were watched for their full duration) were not impacted by the presence or absence of a companion banner.  But click-through rates increased by 21%, and click-to-sale conversion rates increased by 77% when a companion banner was present.  Importantly, the video companion format yields better overall results than serving a pre-roll video ad and a 300x250 display ad separately.  The companion banner format appears to be stronger than the sum of its parts.

The real opportunity, however, is in the cost.  Closing auction prices for video ad units are nearly identical whether or not a companion ad slot is available.  It appears that the market has not yet recognized the incremental value of companion banners.  This could be for a variety of reasons: lack of creative assets, lack of ad serving capabilities, or lack of sophisticated bidding logic.  Whatever the case, there is a significant, though likely temporary, inefficiency in the video marketplace that allows advertisers to buy companion banner inventory for a bargain.

Chris Kane