TubeMogul sponsored Forrester Study on video RTB from May '12

1. A Forrester Consulting Thought Leadership Paper Commissioned By TubeMogul
Realizing The RTB Video Opportunity For Brand
Marketers
May 2012

2. Forrester Consulting
Realizing The RTB Video Opportunity For Brand Marketers
Page 1
Table Of Contents
Executive Summary .............................................................................................................................................................. 2
Digital Video Is A Digital Brand Marketer’s Dream Format .............................................................................................. 2
RTB Is Bringing Efficiency And Transparency To Digital Video Buying ......................................................................... 5
RTB Video Is Showing Success For Brand Marketers When Measured Smartly .............................................................. 7
RTB-Enabled Video Use Will See Growth Among Brand Marketers................................................................................ 8
But A Mix Of Real And Misconceived Obstacles Is Hindering Adoption ......................................................................... 9
Key Recommendations ....................................................................................................................................................... 10
Appendix A: Methodology ................................................................................................................................................. 11
Appendix B: Supplemental Material .................................................................................................................................. 11
Appendix C: Endnotes ........................................................................................................................................................ 11
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Realizing The RTB Video Opportunity For Brand Marketers
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Executive Summary
In April 2012, TubeMogul commissioned Forrester Consulting to evaluate the brand marketing opportunity provided
by real-time bidding (RTB)-enabled video and compare it to other forms of broad-based video buying, such as through
ad networks. In conducting interviews with 11 RTB video buyers, Forrester found strong support for RTB video as an
effective and efficient brand-building mechanism, but also evidence that the ecosystem is still quite nascent.
This report examines the current state of RTB-enabled video, outlines barriers, both real and misperceived, that should
be overcome to increase continued growth and adoption in this space, and makes recommendations for how brand
marketers should move forward in pursuing RTB-enabled video.
Key Findings
Forrester’s study yielded five key findings:
• Digital video is the bridge needed to bring brand marketing dollars online in a meaningful way.
• RTB-enabled video is on the rise as savvy buyers recognize the benefits over more traditional network-
based buying models.
• Brand marketers who measure smartly are seeing performance improve with RTB video.
• There are both real and misperceived obstacles that are affecting continued growth and adoption of RTB
video.
• Education is needed for brand marketers to see the value in RTB as a mechanism for more effective digital
video buying, management and optimization, and for publishers still hesitant to lean into this new model.
Digital Video Is A Digital Brand Marketer’s Dream Format
In an ecosystem long dominated by the lowly display banner (anyone remember the good old days of the 468x60?), the
emergence of digital video advertising formats over the last several years has been a game changer for brand marketers
— long reticent to commit significant dollars to a channel whose efficacy as a brand building mechanism they doubted.
Those same marketers are finally putting their money where their mouth is, with digital video advertising expected to
reach $5.4 billion by 2016, a 250% increase over 2011 video expenditure, and representing 5% of traditional TV
spending (see Figure 1).1
• Brands recognize that consumers’ time and attention is shifting to digital video consumption. Even the
most traditional marketers are beginning to recognize what we in digital have known for years: Consumer
behavior is changing when it comes to how, where, and when they consume both content and advertising. In fact,
consumers are now watching an average of 21 hours of digital video per month across a range of connected
devices.
Three key reasons explain video’s appeal to brand marketers:
2
Said one trading desk executive, “What’s happening in video mirrors a lot of what’s happening with
online behavior in general: People are spending more and more time with the stuff. For marketers, understanding

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Realizing The RTB Video Opportunity For Brand Marketers
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“We’ve been looking at video for years as the bridge to offline dollars.
Traditional marketers will get it. When convergence happens, when people don’t
think “traditional” vs. “digital” dollars - it’s just about getting my message out
there – then video is ripe to take those dollars.”
- Independent trading desk executive
consumer behavior online is increasingly important. What are people doing? How are they behaving? What
happens during their lunch break? Video is a huge part of that. If you’re a brand, you need to be there.”
• Video feels an awful lot like TV, something brand marketers understand. Change is hard — it’s human
nature to stick with what’s “known” — and for marketers whose careers have been built on a TV-based
advertising model, adoption of new (and often intimidating) digital formats and tactics can be tough. For that
reason, digital video is, in many ways, the perfect entry point to help marketers bridge the gap between the “old”
way and the new. As one independent trading desk executive explained it, “Brand marketers see digital video as
the closest thing to TV. It’s got sight, sound, and motion — they understand how that affects people. It’s not a
stretch for brand advertisers who can think to themselves, “10MM people watched my ad from start to finish.
And when you compare video CPMs to TV it’s a no-brainer.”
• Video’s rich format can boost branding messages. Digital video also appeals to brand marketers in its ability
to go above and beyond “static” display in communicating brand messages, making it a medium that brand
marketers pay attention to. As one digital director of an agency explained: “What you can communicate with
sight, sound, and motion is more than with a static banner. You can convey emotion, which is easier when
conveying a complex message to audiences.” And video looks even better when you couple its dynamic message
with the promise of more captive eyeballs in a less cluttered environment — said one VP of a digital media
agency, “Banner blindness scares brand advertisers. Digital video tends to be interstitial — you can’t scroll away
from it; can’t skip it; you have to watch the pre-roll to get the content.”

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Realizing The RTB Video Opportunity For Brand Marketers
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Figure 1
Digital Video’s Effectiveness Is Only Expected To Increase

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Realizing The RTB Video Opportunity For Brand Marketers
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“RTB is a paradigm shift – you can buy data and media separately and put them
together. [This] opens up a world of analysis and creative and planning (you can
find new targets and put new creative in front of them). It’s a foundational
evolution that sets a new standard for buying.”
– Digital Director, Advertising Agency
Figure 2
Digital Video Expenditure Will Reach $5.4 Billion by 2016
RTB Is Bringing Efficiency And Transparency To Digital Video Buying
The meteoric rise of real-time bidding (RTB) — managed through liquid marketplaces like ad exchanges, supply-side
platforms, and demand-side platforms (DSPs) that provide the tech and smarts to buyers to manage real-time inventory
transactions — is reshaping the very foundations of media buying.3
While the last several years have been dominated
by activity in display — video, mobile, and social inventory represent the next frontiers of RTB. Savvy digital buyers
have quickly recognized that they could couple video’s potential as a branding medium with the enhanced
transparency, targeting, and optimization enabled through RTB-based buying and management, and are embracing
RTB video. Buyers we spoke to pointed to many specific benefits of RTB-based video buying, including:

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Realizing The RTB Video Opportunity For Brand Marketers
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• Increased granularity. The traditional ad network model of packaging and selling impressions in bundles of
1,000, and charging a flat CPM for all of them, limited buyers’ ability to accurately evaluate the anticipated value
of any given impression in the bundle — thereby limiting learnings and increasing the likelihood of wasted
spend. Said one holding company trading desk executive, “RTB is the fuel that allows us to evaluate each
impression granularly. We can use our own data to evaluate impressions and get the right person at the right
time.”
• Deeper transparency. Looking under the covers to understand the inner workings of their digital media buys
has never been something that buyers have had the power to do — rather, they were forced to rely on their media
partners to report out on everything from the sites where their ads might run to the optimization being performed
on those buys to make them perform as needed. Direct media management through DSPs has completely
changed that paradigm. Said one independent trading desk executive, “It’s having the ability for the buyer to be
closer to the impression, to understand the costs of things, to know that things are actually happening behind the
scenes. In my experience, ad networks do better the more you call and complain — performance spikes when
you call them up and ream them out. Now we’re able to be the ones keeping an eye on things.”
• Greater fluidity. The days of annual, quarterly, or even monthly insertion orders, where buyers and sellers alike
adopt a “set it and forget it” approach to media management and optimization, are waning. In its place, thanks to
the rise of RTB and the DSPs needed to manage it, the more search-like model — where media optimization is
constant and budget is fluidly shifted across a portfolio of placements — is increasingly being embraced. As one
buyer told us, “It’s having the ability to track what you’re buying as close to real time as possible, rather than
signing on for a monthlong commitment. This marketplace allows you to pull levers and move budget around
fluidly in response to what you’re seeing.”
• Improved efficiency. The dramatic — and ever increasing — complexity of online media buying created
significant opportunity for middle men to swoop in and rescue frazzled buyers by taking the reins on
management of media programs, and along with that take significant margins. Buying digital video inventory
more directly through a DSP, versus through a video ad network for example, can bring significant cost savings.
Said one premium publisher who sources RTB video inventory on behalf of advertising clients, “The video
market is so tight right now — even CPMs on remnant inventory are really high. But the difference between
network and RTB inventory can be $13-$14 versus $9-$10, which is substantial.”
• Direct control. Day-to-day management and optimization of media programs has traditionally fallen to media
partners, like ad networks, who’ve been the ones sitting in the driver’s seat. Programmatic buying through a DSP,
whether it’s display, video, or any other RTB-enabled medium, puts buyers themselves in the driver’s seat, which
finally gives them the direct control needed to run programs as they see fit. Said that same publisher, “[You have]
much more control with RTB than with a network. You can be extremely finicky, whereas on the ad network
side, it’s a black box. When you ask for a site list from a network, you get a ‘representative list.’ With RTB, you
really can get as deep as you want into the inventory — it’s a big benefit.”

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“It’s about being able to target at scale: right person, right place, right time.
[Now] we have the technology and power to do that faster, better, smarter and at
much larger scale.”
- VP, Audience Platform
Figure 3
Buying Through Exchanges, DSPs, And Other RTB-Enabled Mechanisms Offers Myriad Benefits To Buyers
Source: “The Future Of Digital Media Buying,” Forrester Research, Inc., September 21, 2011
RTB Video Is Showing Success For Brand Marketers When Measured Smartly
RTB-enabled video’s benefits are already being realized by brand marketers today. In fact, the majority of people we
spoke with have used RTB-enabled video to accomplish branding objectives, and they’ve reported improved results,
both in reaching their target audience and showing measurable lift across a range of success metrics.
• RTB-enabled video helps brand advertisers reach their optimal audience. All interviewees stated that RTB
is valuable for brand advertisers — with the most frequently cited reason being leveraging the technology to
reach the right audience. As the director at a digital media agency explained it, the benefit of RTB-enabled video
as a branding tactic is “being able to better use data, pay appropriate value for consumers, deeper segmentation,
targeting, and control.” And brand marketers are taking advantage of these benefits. One VP at an audience
platform noted they implemented RTB-enabled video to finely target audiences for a client’s political advertising
campaign: “We know there are moms in this ZIP code who are concerned about [a specific issue], so we can
target them with a clear message.”

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Realizing The RTB Video Opportunity For Brand Marketers
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“We are using brand effectiveness studies [conducted through partners]. [We]
can get enough intelligence throughout the campaign to not have to wait till the
end of it to make optimization decisions. That’s the RTB benefit – you get fast
insights and can be very nimble.”
-VP, Digital Media Agency
“We’ve made an effort to get clients addicted to [RTB buying]. From a
performance point of view certainly, it’s hard for them to go back: ‘Do you want
to give up those performance metrics we’ve been earning?’ It’s hard to predict
the future, but right now there’s no better alternative to get this performance for
their business.
-Executive, Trading Desk
“Video RTB has a huge future because all these market factors are pointing to it:
Rise of video consumption, rise of digital budgets, and RTB is just too good of an
idea for it not to be how things go....the genie is out of the bottle.”
– VP, Digital Media Agency
• Interaction metrics and branding studies prove effectiveness. Marketers are able to prove the ROI of these
campaigns as well, with most people we spoke with relying on interaction metrics and branding studies to help
measure the value. One executive of a trading desk explained that they provide information about how users
interact with the video back to clients: “We use the 12-13 engagement metrics defined by the IAB: play, audio
mute, pause, how far you get, and so on.”4
value was on TV. Budgets were smaller, but dollar for GRP, we did a great job of reaching the audience.”
Brand effectiveness studies measuring brand awareness and
favorability can also help marketers make the case — as one large entertainment client of a digital media agency
did when they conducted offline phone and online brand studies, and as a result realized a tripled investment
from the client who continues to renew. One marketer actually chose to assess the efficiency of TV spend relative
to video, according to the trading desk executive whose team managed the digital portion: The client opted to run
the same brand-centric video unit on TV and online. The result? “We came in 20% below what the equivalent
RTB-Enabled Video Use Will See Growth Among Brand Marketers
While we see some marketers starting to use RTB-enabled video today, the market is expected to grow over the next
few years. In fact, everyone we spoke with stated that they see a growth in the RTB video market among brand
advertisers in the coming years. This growth will be primarily driven by the same factors that are putting it on the map
today: branding value, increasing video consumption among consumers, and growing digital budgets. Marketers
hoping to catch these shifting consumer eyeballs will need to boost their digital video investment, and they have to be
smarter about their buys — turning to RTB-enabled video to help get the job done. As one trading desk executive said,
“RTB is absolutely central to the future of media buying, certainly in digital buying, without question.”

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Realizing The RTB Video Opportunity For Brand Marketers
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“People think digital video is the Wild West. This is misleading. The rise of RTB has
helped here: buying through a platform allows you a choke-point – it lets you layer in
brand-safety rules and evaluate impressions one by one.”
– Holding company trading desk executive
But A Mix Of Real And Misconceived Obstacles Is Hindering Adoption
Despite its promising future, the reality today is that in spite of the many advantages buyers see in RTB video, the
ecosystem is still emerging. Many marketers are still largely unaware of the role and value of RTB as a new buying
paradigm, let alone the RTB video opportunity. As a result, we found that there’s an even mix of “real” problems and
good old-fashioned misperceptions impacting RTB video adoption and growth.
• Inventory availability is adequate for some, lacking for others. Forrester got a range of answers when asking
about inventory availability. These responses ranged from, “It’s completely fine for my needs” to “It’s a major
challenge that I wish would resolve itself.” The reality is that video inventory, unlike display inventory, is finite
and demand is high. The problem is only amplified when buyers put constraints, such as audience overlays or
tight brand parameters, on their RTB video buys. Regardless, a consistent refrain that we heard from savvy RTB
video buyers was, “I wish there was more inventory. I’d buy it!” Said one premium publisher, “All 30 of our
clients want to do video. But when they talk about the audience they want, we run into major limitations. We just
don’t have the reach when the data overlay is applied.”
• Inventory quality concerns remain, whether or not they’re fully warranted. Another familiar refrain we
heard was, “There are issues with inventory quality.” But interestingly, it was a real mix between people who
found that to be a genuine concern and those who believe it was nothing more than a misperception. Certainly,
they noted that it’s a fear many marketers have. One trading desk professional explained, “There’s a market
dichotomy in video — there’s publisher direct, or “premium” where demand outpaces supply and prices are high
and increasing, then there’s the secondary market, where the inventory is more of a mix. But there is still an
inclination toward thinking it’s all still junk. Progressive clients who’ve embraced RTB overall are less
concerned. But in speaking to traditional people, TV people — they’re totally freaked out by it.” One thing all
buyers we spoke to agree on: It’s about being proactive and involved in your RTB video programs as well as
vetting inventory both directly and regularly.
• Measurement challenges continue to plague buyers despite significant development here. The biggest
complaint, by far, that we heard again and again in speaking to RTB video buyers is that their clients are still
struggling with how to measure video despite major developments (e.g., real-time brand surveys, a wide range of
reportable engagement metrics). It’s worth noting that this is not unique to RTB, but to video in general, which
impacts industry growth overall. Said one trading desk executive, “There is a big gap around measurement for
marketers to understand the value of video. It’s out there; someone just has to crack it. What’s causing this is all
the classic stuff — agencies are organized in silos, there’s politics, buyers don’t know each other’s channels —
they’re Greeks and Romans. But it’s going to happen. The consumer’s behavior will force us all to change.”

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• The technology needed is there, but it takes more than pressing an “easy button” to make it work. As
much as the technology ecosystem has evolved over the last several years, there’s plenty of work to be done
before we realize the dream of perfectly seamless, fluid, real-time multichannel buying and optimization.5
KEY RECOMMENDATIONS
The
reality on the ground today is that many programmatic buyers are finding themselves patching solutions together
if they want to buy both RTB-enabled display and video as effectively as possible. One holding company trading
desk practitioner explained it this way: “As an industry, we think you can take the same model that we know in
display and replicate it into video. You just take a DSP, whichever is working, plug into all the exchanges, flip a
switch and you’re good to go. The DSPs all say they can do video. But it’s not quite there yet. Today, we’re
using a video DSP and a display DSP [to manage our programmatic buying portfolio].”
As both the RTB ecosystem and marketers continue to mature, Forrester believes that RTB video can become a fundamental
component of brand marketers’ media mix in the long term — if both buyers and sellers continue to lean into the
opportunity. To help ensure a healthy, vibrant ecosystem and maximize their own return through RTB video over time,
marketers must take some immediate steps, including:
• Getting educated. The average brand marketer may see one or two video line items on their agency’s media plan,
and not have much understanding of what those line items represent. Marketers must start asking questions of
their partners — be they agencies, vendors, or technologies — to really get a handle on how their money is spent,
and if it’s being managed in the optimal way. This may require some tough conversations, but if they are treated in
the spirit of deeper partnership and better shared strategic vision, the outcome should be worth any possible pain.
If partners DON’T have good, defensible answers to explain the media decisions they’re making on marketers’
behalf, marketers must be prepared to walk away and identify new partners who CAN provide the right guidance
and execution.
• Encouraging publishing partners to RTB-enable their inventory. The continued growth and development of
the RTB ecosystem is not in the hands of the buy side alone. Media sellers MUST be willing to lean in to RTB as well
for there to be a healthy long-term marketplace. Marketers and their media buying partners must actively engage
their strategic sell-side partners in conversations about the role and value of RTB for both parties. Treating media
sellers as adversaries, or simply choosing to ignore their part in the future of digital media buying, will get us
nowhere.
• Testing RTB-enabled video buying methods. Though the market is still nascent today, marketers should start
testing the waters to see if the added granularity, transparency, and real-time nature of RTB video can improve their
digital marketing performance. To get started, lean on your partners to determine how much budget should be
allocated to perform a meaningful test. Then be sure that you have a solid measurement plan in place to track
success. To do this, determine which metrics map best to your current business objectives (for example do you
need to know how long a user spent watching your ad? Or that you achieved an increase in awareness, favorability,
or purchase intent?), clearly communicate these to partners, and be sure appropriate tracking is in place to capture
the necessary data.

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Realizing The RTB Video Opportunity For Brand Marketers
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Appendix A: Methodology
In this study, Forrester interviewed 11 organizations in the US to evaluate the perspectives of ad agencies, publishers,
and DSPs in the RTB digital video market. Participants included decision-makers with sufficient insight into the
current trends in the market including specific knowledge of pricing and inventory trends. Questions provided to the
participants asked about factors driving spend, the quantity and quality of current inventory, differences between
display and video RTB, metrics used to optimize campaign performance, and the major players in the market.
Appendix B: Supplemental Material
Related Forrester Research
“The Future Of Digital Media Buying,” Forrester Research, Inc., September 21, 2011
Appendix C: Endnotes
1
Marketers must consider the broader implications of increased convergence across “traditional” and “digital”
channels. For more information on how to begin tackling the question of converged TV/digital video buying and
measurement, see the January 5, 2012, “Why Marketers Must Integrate TV And Video Strategies [60349]” report.
2
According to Nielsen’s Q1 2011 report, the average US person age 2 and older watches nearly 40 hours of linear or
time-shifted TV per week, while according to Comscore’s October 2011 data, nearly 184 million people in the US
watched an average of 21.2 hours of digital video. Source: “New Stats: 184 Million US Internet Users Watched Digital
video Content in October,” Blogworld, November 28, 2011 (http://www.blogworld.com/2011/11/28/new-stats-184-
million-u-s-internet-users-watched-online-video-content-in-october/).
3
To learn more about the rapid changes happening in the media buying ecosystem and to learn what steps you need to
take to be prepared for success in this new buying world, see the September 21, 2011, “The Future Of Digital Media
Buying [58354]” report.
4
For more information about the digital video in-stream ad metric definitions from the IAB, please visit the IAB
website. Source: “Digital Video In-Stream Ad Metrics Definitions,” Interactive Advertising Bureau
(http://www.iab.net/dv_metrics_definitions).
5
Terence Kawaja’s series of LumaScapes, visual maps of the technology ecosystems in display, video, search, mobile
and social, have come to represent both the dramatic growth and significant complexity in the digital ad tech space. The
LumaScapes can be viewed at the Luma Partners website (http://www.lumapartners.com/resource-center/lumascapes-
2/).