- Digital video consumption reaches a tipping point. Already here in 2012, give-or-take 1 in 2 people consumes video content online; by the end of 2013, the audience for video online will not be significantly different to the audience for video on a television. The total amount of content consumed will still skew toward the TV, but any audience desired by advertisers will be available online.
- Web shows go mainstream, start to deliver real earnings. You’d have to live under a rock not to have noticed Web-delivered entertainment starting to bubble up. Starting with Dr. Horrible’s Sing-Along Blog, it became clear an audience could be created; shows like Sanctuary demonstrated that an effort that started off online could be (profitably) ported back to the silver screen. In 2013, more investment will be made by better-known talent, and the path to entertainment success will start to inevitably pass through the Web.
- Video channels take a run at displacing TV. Not just individual shows, but whole channels will start to threaten traditional OTA offerings. YouTube has made no secret of the millions it’s invested in channels, seeking to attract the brand advertising dollars that are still set aside for TV; and there are plenty of independent operations effectively executing the same core strategy (say, for instance, Funny or Die). 2013 is unlikely to be a time period where online channels create an existential threat to TV channels; but they may create an unsettling sense of near-term turmoil.
- Ad demand continues to outstrip online video inventory. Despite the foregoing bold predictions of attacks from the online content world on the TV world, the likelihood that today’s greatest decelerator will hold firm: There is simply more demand for digital video advertising inventory than there is supply. A swifter pace of user adoption will help, as will a proliferation of new content sources; but realistically, the likelihood is low that 2013 will be the year of balance. Look for innovative ways in which to use the inventory that is available — perhaps we’ll even get past the lightly edited 30-second spot moved online — and for inventory sellers to enjoy continued high margins, at least for the time being.
- Audiences will continue to be choppy for big publishers. Unlike a newspaper or a magazine, a digital publisher can’t sell an edition and then expect the reader to consume everything. In practice what this means is you can’t rely on, say, the sports enthusiast to pay for the Restaurant Critic — online, the visitor looks at only what they want. As a result, audiences can be very inconsistent across a Web property. In the coming year publishers will become adept at adopting strategies to either (1) terminate content that cannot develop its own audience; and/or (2) develop audience for lesser-traveled content. The latter will use new technologies to micro-segment traffic sources to deliver value.
- Big Data delivers result to publishers and advertisers alike, and programmatic ad sales become publishers’ best friend. To date it’s fair to say that advertisers have had the better deal from Big Data, buying inventory at better pricing and squeezing their investments to deliver better outcomes, while publishers see any buying that is programmatic simply squeeze their margins. In 2013, publishers will harness the power of the programmatic ad space to buttress the margins for genuinely premium inventory — and actually see overall eCPMs increase.
- Marketing, sales and operations merge into a hybrid engine, and RTB becomes the model of choice for publishers. To date, publisher teams have been divided into fairly distinct groups: Sales and marketing have tended to focus on the direct-sold, guaranteed inventory, while operations have taken responsibility for filling remnant space through programmatic selling. As the technology for matching programmatic and direct-sold models improves, look for a meeting of the minds — and the organizations — to deliver a singular set of values, and an improved revenue line to the business.
- Mobile grows as a channel, both in terms of apps and of ads. People love to show the “hockey stick growth” charts of the dollars running through mobile, but the absolute dollars spent remain frustratingly low. Look for 2013 to be a true coming-out party for mobile, as brand advertisers solve the puzzle of getting apps onto users’ devices, and ad technology matures sufficiently to drive real ad volumes (in terms both of impressions and dollars), as well as measurable user engagement, through the mobile channel.
- Device fragmentation opens up an opportunity — possibly a necessity — for innovation in advertising approaches and units. As users increasingly consume content across a myriad of different devices (and not one at a time, but rather in a constantly-switching modality), a need will arise for mobile-native ad units. Today’s approach of simply copying the way in which ads sit on regular Web pages seems not to be translating well, and some enterprising agency will eventually decode the mobile genome. Once that happens, the floodgates will open and innovation will not only flood the market, it will turbo-charge the available spend.
- The app becomes a full-scale part of the advertising ecosystem. The app is the classic Trojan horse: deliver enough value to intrigue a user and you can attract them to downloading and interacting with it. An app that, for instance, helps a consumer to plan out, price out and locate an example of the exact automobile they’d like to buy gives the manufacturer a distinct advantage against its mobile-challenged competitors. 2013 will be the year that dedicated service providers start to make significant inroads into advertising spend to deliver customer-friendly, desirable apps for brands.
- As Facebook, Twitter and Google tweak their APIs again, the future of the platform starts to look shaky. Dozens, possibly hundreds, of startups have been funded in the last two years to build software and services that sit on top of other companies’ platforms. They have discovered not only ways to get funded, but also how painful it can be when a company owns the infrastructure on which their software relies — which draws into question whether it makes sense to base a business on the self-interest of a third party. Look to 2013 to be a year of exceptionally low investment in businesses that cannot survive without someone else’s API.
- HTML5 finally replaces Flash, and confusion ensues. Flash never worked on the iDevices; now it isn’t a core part of the Android ecosystem. To say it has been on its way out for a while is to wildly overstate the point: the engineers have been pointing us to HTML5 for a couple of years already. But when the needle tips to predominantly HTML5 to deliver video, chaos will break out, as we come to realize how much good Flash did for us in papering over the difference between Operating Systems, Devices and Browsers. Look for it to be 2014 or later before all is once again calm in the world of cross-device video ad delivery.
- Cross-platform identity platforms emerge. The knock against mobile advertising is the lack of tracking pixel; a user bouncing from browser to browser, machine to machine can be equally hard to track; and the Do Not Track standard that is brewing quickly may render much of this moot. 2013 will mark the year when entrepreneurs come close to solving the problem of creating and tracking an identity across devices, software and modality. It may end up costing publishers big, but the ability to track users more effectively will easily be paid for by the additional dollars advertisers are willing to pay for this sort of certainty.
This post by Simon Jones, senior vice president of marketing at Alphabird.