Automated advertising: TubeMogul report shows massive growth in Kiwi programmatic market

Founded in 2006, TubeMogul provides a programmatic platform that allows advertisers to purchase video advertising spots across devices via real-time bidding. In 2011, the company opened a global office in Sydney, with the aim to tap into the Australian and Kiwi markets.

Since arriving, TubeMogul has tracked the growth of programmatic ad buying in both markets, and the results show that the industry is growing very quickly.

According to the company’s Q4 results, New Zealand’s programmatic video advertising market grew nearly three-fold the fourth quarter of 2014, with video ads available for real-time buying jumping 210 percent to 260 million auctions, from 90 million in the third quarter.          

“Automated buying in New Zealand is advancing rapidly, underpinned by the desire of brand advertisers to drive transparency and efficiency in their ad spend,” said TubeMogul Australia and New Zealand managing director Sam Smith in a release.

The data for the report is derived from digital video campaigns executed on the TubeMogul platform from October 2013 through December 2014, spanning millions of mobile and pre-roll video ad views.

The data presented on each graph is represented in four different categories: comScore, which refers to the Top 100 refers to sites with the highest unique monthly video traffic as measured by comScore; ‘tier 1′ sites, which are brand name sites that are globally or nationally recognisable; ‘tier 2’ sites, which are also popular but less reconisable than their ‘tier 1’ counterparts; and ‘tier 3’ sites, which are are characterized by user-generated content and are generally aimed at local or niche markets.

In real-time bidding, the demand for an ad will drive up the price of it – the more advertisers bidding for a slot in a certain category, the higher the price.

For this reason, the CPM (cost per thousand views) also provides a strong indication of the demand and growth for the industry. 

The pre-roll CPM value for desktop-based video ad streams rose by 35 percent, moving from $16.49 in the third quarter to $22.24 in Q4. In the top tier for advertising, CPMs increased by 34 percent. 

As illustrated in the recent results published by the IABNZ, the mobile sub-category is the fastest growing when comes to online ad spend.

Over the course of the last year, mobile ad spend has more than doubled, moving from $5.6 million in 2013 to $12.21 in 2014—and international trends point to further growth in the coming years.

“New Zealand is poised to become a meaningful and vibrant programmatic video advertising market this year as agencies scale their efforts,” says Smith.

The growth of the mobile ad market has been mirrored in programmatic sales, which have seen mobile video ad inventory increase year-on-year by 37 percent. 

There was however a dip in inventory from the previous quarter, and this led to greater demand for the available spots, leading to an increase in CPM prices. An increase in inventory toward the end of the quarter saw the prices drop again to end on $21.83.

In contrast to the ratings- or quarterly results-based approaches employed in traditional channels, programmatic buying essentially allows advertisers to purchase a specific audience—and this has led many of the traditional channels to start looking into the viability of adopting a similar approach.

In response to the interest from the industry, TubeMogul unveiled a platform last year in the United States that would enable automated buying of TV ads. So what does programmatic TV buying mean for advertisers?

As Digiday explains, programmatic buying of television ads would change the game quite substantially: 

“Programmatic TV advertising is the data-driven automation of audience-based advertising transactions. It inverts the industry standard, in which marketers rely on show ratings to determine desirable audiences for their ads. Instead, with programmatic tech, marketers use audience data to pipe advertising to optimal places … It means more specificity. Rather than relying on ratings for specific shows or channels, marketers can use programmatic tech to reach a more specific subset of consumers, like men with a $50,000 income who own an Android device. They don’t care if that ad shows up on X Factor or the X Games, as long as the target audience is watching.”

To achieve this specificity, TubeMogul collaborates with various research partners that provide granular insights on audiences.  

A release from the company explains: “TubeMogul incorporates data from Nielsen and others, recommending media mixes that index highly toward specific audiences.Targeting is available by: age, gender, income level, ethnicity, educational level, children in household, home ownership status, automobile preferences, pet ownership and more.”

Interestingly, Time Magazine and The Economist are also using programmatic to plug some of the holes that have seen ad revenue leak out of the print industry.

And while programmatic is still in its infancy in New Zealand, its rapid growth in the digital domain could very well see it applied in other channels in the near future.

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