ARCHIVES: This is legacy content from before Marketing Dive acquired Mobile Marketer in early 2017. Some information, such as publication dates, may not have migrated over. Check out the new Marketing Dive site for the latest marketing news.

Fortune 500 brands going all in on mobile video advertising

The popularity of mobile video among consumers is booming, a trend that offers plenty of opportunities for marketers to reach smartphone users with ad formats that experts see as the most effective of all.

The number of American mobile users that watch videos on their devices has increased more than 40 percent year-over-year in both the third and fourth quarters of 2010, ending the year at a grand total of almost 25 million people, according to a new mobile video report from The Nielsen Co. These consumers watched an average of four hours and 20 minutes of mobile video per month in both the third and fourth quarter of 2010,  which equals a 33 percent and 20 percent YOY bump increase in each quarter respectively, per Nielsen.

?If you look at smartphone growth over this same period, it?s about a 35 percent larger audience year-over year, so you could have organic growth in video consumption even with all other factors being equal,? said David Gill, Austin, TX-based vice president of client services, mobile media and marketing at Nielsen.

?That said, all other factors are not equal,? he said. ?Thanks to specialized apps, finding, watching and sharing mobile video has become much easier.

?This is exciting for advertisers, because Nielsen data shows that mobile ad effectiveness measures increase substantially with interactivity and rich media?it?s exciting for publishers because video inventory CPMs are much higher than general display.?

Nielsen attributes this growth in mobile video consumption to the ever-increasing adoption of media-friendly mobile devices such as tablets and smartphones.

In the fourth quarter of 2009 a mere 23 percent of Americans had smartphones. In comparison, smartphone penetration grew to 31 percent by the end of 2010.

Additionally, it has become much easier to find, view and share mobile video with the proliferation of the mobile Web and application usage, Nielsen says in its report.

?I think we are at a point in the evolution of mobile advertising where, for the first time, major content producers and distributors look at the third screen and ask what is so different about this screen versus a TV other than form factor,? Mr. Gill said. ?Tablets are helping to redefine this as well.

?Full commercial load television straight to mobile devices is something that was on the distant horizon two years ago, but now companies are innovating at a blistering pace to keep up with what consumers obviously want to do,? he said.

?That prospect brings real money into our ecosystem and the models will have to evolve and adapt.?

Mobile video boom
Multiple factors are contributing to the growth of mobile video including the availability of more and more full-length episodes, as well as the rapid adoption of Wi-Fi-enabled devices such as tablets and smartphones.

Rhythm NewMedia claims that on its mobile video advertising network, 26.5 percent of users who start viewing an entire 45-minute full-length episode complete the entire episode, while more than 41 percent of users will watch at least half of the episode.

Additionally, about 50 percent of video consumption occurs over Wi-Fi networks. 

?Mobile video advertising is the ideal medium for brand advertisers, as the TV-like experience of sight, sound, motion and emotion has already proven to be both effective and engaging for brand advertisers, said Ujjal Kohli, cofounder/CEO of Rhythm NewMedia, Mountain View, CA.

?As mobile video advertising is a great complement to TV advertising, it opens a huge opportunity for all TV advertisers to extend their reach,? he said.

Mr. Kohli said that in-stream mobile video advertising, where a video ad is stitched directly in front of video content, is extremely effective, having an 88 percent average completion rate across Rhythm?s network.

This completion rate far exceeds equivalent numbers for TV ads and online video ads, per Rhythm NewMedia.

On TV, consumers use DVR, channel-surf and take breaks to skip ads.

Online, consumers multitask and switch screens through video ads.

?On mobile devices, including tablets, the in-streams ads are actually watched ? there is no DVR, no breaks, no channel-surfing and hardly any multitasking,? Mr. Kohli said. ?Full screen in-stream mobile video ads are the most immersive form of advertising available today.

?Mobile video advertising is well beyond the early-adopter phase, as more than 200 Fortune 500 brands advertised on Rhythm?s ad network in 2010 alone,? he said.

Mobile video revolution
The smartphone and tablet form factors and the broader reach of 3G plans at decent price points are driving the mobile video revolution, according to iVdopia.

There are reasonably affordable, ultra-portable mobile devices in market that can literally do everything a PC can do for the average consumer?playing games and music, surfing the Web, accessing email and IMs and Facebook, reading and editing documents?at a fraction of the upfront cost of a computer.

Smartphones are now outselling PCs as of the fourth-quarter 2010, and more than one-quarter of Americans only access the Web through their mobile device.

The poor state of WAP browsing on earlier generations of mobile phones has evolved to HTML5 rendering that enables the true Web experience on the go, per iVdopia.

?The opportunity for brand marketers is two-fold: how do I integrate myself into content that gets distributed via mobile?the online branded entertainment model of content distribution?and also how do I engage consumers on their new, with-me-everywhere 'home screen' via the kinds of brand-friendly TV and digital creatives I'm used to doing?? said Joshua Kruter, New York-based vice president and chief marketing officer of Vdopia Inc.

?Of course, right now, there is one big catch when it comes to brand marketers: you cannot run a highly engaging, video-friendly ad in the same way you can on TV or the PC Web,? he said. ?Flash 10.2 is of course Android-only and glitch-filled, Apple and BlackBerry don't support the plug-ins and every platform requires its own encoder and all the issues that entails.?

This is the big challenge point right now for mobile ads.

Mr. Kruter said that there is only so much pre-roll inventory brands can get?it is very limited due to Flash's limited availability?so marketers left with apps and the headaches SDKs bring, and flat static banners, which do not in any way connect well to the rest of a brand marketer's multimedia campaign, per iVdopia.

?At iVdopia we're currently testing, and will very soon be rolling out, some technologies that will hopefully reconcile this situation and be a true brand-enabler,? Mr. Kruter said. ?We're seeing CTRs hitting 5 percent in our tests, which compared to regular banners is quite significant.

?After all, when you look at the current state of online advertising, more than 55 percent of online video dollars?more than $1.5 billion?comes from in-banner executions, which creates more engagement than pre-roll and thus captures more share of marketers' spend,? he said.

?The players who can make this super bone-simple for brands, and let them leverage their existing TV and digital video assets in a compelling way, will be the ones who capture the prize.?

Glass half-full, half-empty
While many in the industry are bullish about mobile video advertising, challenges remain.

There are two sides to the potential for mobile video advertising.

?The good news is that the advertising industry is focusing a lot of efforts in 2011 on getting Internet video advertising right and much of this work will translate to mobile video advertising in due course,? said Simon Buckingham, CEO of Appitalism, New York.

?The downside is that these trends are likely to translate after a reasonably long time lag to mobile because brands are still very fearful of controlling where their brand will appear on the mobile Internet,? he said.

?Appitalism uses profanity filters to ensure that its site is family-friendly and comfortable for Fortune 500 advertisers, for example, but mobile is still considered to be a big open expanse.?

Final Take