Two of the biggest trends in digital advertising — programmatic buying and video — are colliding, but programmatic video still faces a slew of challenges.

In theory, programmatic tech offers advertisers both greater specificity and reliability than the old way of doing business. They can advertise to specific audiences, selecting by age, gender, location and device, among other variables. That’s underpinning the many giddy growth forecasts for programmatic video advertising.

US programmatic ad spend

But the reality of programmatic video advertising today is far murkier. There are a raft of challenges facing programmatic video buyers, from fraud and viewability problems to measurement and standardization issues. Here are the main barriers standing in the way of programmatic video:

Rampant fraud
Willful deception is pervasive in the programmatic video ecosystem, even more so than display. Why? The stakes are higher. Programmatic video ads typically fetch far higher prices than banners. Hence more fraud.

In a study of 25 campaigns from 18 brands that bought programmatic video inventory in September, October and November 2014, video advertising platform Clearstream discovered that over 20 percent of impressions sold were “absolutely fraudulent,” said Clearstream CEO Brian Mandelbaum.

That fraud takes two primary forms: bot traffic and domain spoofing. Nefarious software from bad actors with video inventory sends bot traffic to videos, racking up impressions without serving ads to actual humans. Advertisers end up footing the bill for those impressions — even though the bots don’t have disposable income for their latest clothing sales or credit card deals.

With domain spoofing, the underlying impressions and users are real, but there’s some deliberate misrepresentation from inventory holders. They position their inventory as a valuable asset — as pre-roll on a top-tier news site, for example — when in reality the video inventory appears somewhere far less valuable, such as a torrent site. If that inventory is listed at a $2 CPM when the actual inventory is $20 CPM, automated systems set up by brands or their agencies will likely snap up those bad impressions — and advertisers may never know the difference.

“The No. 1 issue in programmatic video is fraud,” said Fahad Khan, CEO of cross-device video platform Tube Centrex. “Fraud is rampant in the long tail of publishers.”

Low viewability
Viewability is a related but different issue. There’s a big gap between a fraudulent impression and a successfully served video ad, viewed in full by a human. More than half of all video ads show up in locations that are not immediately visible to Web users, according to a 2014 study from video ad-serving platform Vindico. Clearstream’s recent study featured similarly problematic results, finding that 55 percent of all spots bought at auction did not match buyers’ specifications.

“Let’s say you‘re buying a home. Maybe you buy it sight unseen. But before you close on that home, you do an inspection,” said Clearstream’s Mandelbaum. “In [real-time bidding] marketplaces, there’s no inspection.”

Video viewability is much harder to achieve than display ad viewability. Unlike display, there’s a whole spectrum for how viewable a video ad is: one user might see two seconds of a 15-second ad before migrating over to their Gmail inbox, another might see the whole ad. But advertisers typically pay the same amount for both impressions.

“In the video marketplace, viewability is a whole Pandora’s box,” said Mandelbaum. “You’re seeing industry averages in the [40 percent range] because consumers are trained to ignore.”

Lack of standards and measurement
The Media Ratings Council defines viewable video ads as those that are more than 50 percent visible on a user’s screen for at least two seconds. But that isn’t sufficient for most advertisers, who desire stricter viewability standards. Yet measurement is inconsistent across platforms, with some measuring viewability at five junctures while an ad is being served and others at more regular intervals. Videos inside secure “iframe” tags are especially difficult to measure.

There are also measurement differences when it comes to devices. Are tablets mobile devices or their own category? Two advertising platforms may not answer that question the same way. What’s a “large” video player? Adap.tv may have a different definition than LiveRail.

These standards don’t exist in the marketplace, confusing advertisers and leading them to buy inventory that might not be right for their campaigns. Supply-side platforms don’t require inventory holders to provide more detailed information because they don’t want to tighten an already limited supply.

Quality inventory shortages
Online video has a shortage of quality inventory. An in-demand asset, video is often still transacted through direct sales, leaving prices high on the high-quality inventory that does make it into programmatic pipes. Advertisers are clamoring for more publishers to put their inventory on exchanges, because they just don’t have enough video to advertise against.

“There’s definitely not nearly enough inventory as there should be,” said Mandelbaum. “A lot of the premium inventory is already being sold out directly through the publishers. … There is plenty of inventory available programmatically, but everybody is clamoring for that best impression, and the advertisers are paying near-premium rates for that scale.”

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