YouTube’s 400 million monthly mobile views are monetized with video display ads, which carries significant implications for display advertising networks and developers who use display advertising to monetize their software.

When this YouTube statistic is put into context, it carries strong implications about display advertising, mobile advertising, and monetization. Specifically, we could be seeing video display ads become a crucial new monetization strategy for many software developers and publishers.

What Does the Future Hold for Video Display Ads?

Here are some salient facts that can give us an idea of what’s to come:

  • YouTube is not alone in the video advertising niche. Facebook, the world’s largest social network, began offering silent autoplay video ads in users’ news feeds early in 2014.
  • Tumblr followed suit in October 2014, by announcing it would also roll out autoplay ads.
  • Instagram, likewise, announced in October 2014 that 5 major brands would be allowed to test 15-second autoplay ads.
  • Twitter also introduced video ads in 2014.
  • Studies have shown that landing page videos can increase conversions by 80%.
  • Cisco projects that mobile video will generate over 69% of mobile data traffic by 2018.
  • Business Insider claims that online video advertising is growing many times faster than other digital ad markets.
  • Business Insider also reported that video ads have the highest click-through rates of any digital ad format.

Clearly, people love video and people love mobile.

Advertisers have responded by offering video ads, not just on video sites such as YouTube, but also on social networks and micro-blogging platforms. If all of these companies begin offering video display ads in 2014, what does this suggest for the future of display advertising, particularly for software monetization?

Implications for Software Publishers, Advertisers, and Developers

Technology’s continuing evolution means that not only are we able to watch videos and video ads on mobile devices, we can watch these ads virtually anywhere – not just on video sites such as YouTube. Anyone with an app or a website, for example, can implement video display ads to monetize their site.

There are a few places where software ads typically appear: inside an app’s GUI, in between logical breakpoints in the app workflow, and inside the installer. Essentially, wherever there is contact with the end user, there is an opportunity for display advertising.

And there is no reason why video ads can’t replace the static display advertising we see today.

In fact, video display advertising already exists. Some companies already offer programmatic mobile video advertising to software publishers and developers. Though the market is small, the expected growth could see the mobile video advertising and display advertising networks explode in the next few years.

What changes can we expect to see in the coming years?

Video is effective, so it will only continue to gain market share. People love videos, which is why videos generate higher conversion rates when used as display advertising. As long as these ads continue to work, advertisers will continue to explore their possibilities.

While YouTube has been toying with the idea of having a paid subscription service for some time, so far it hasn’t been successful.

Technology will keep reducing the barrier to video advertising. Clearly, the mobile phones and mobile networks of the past couldn’t have handled video advertising. Mobile phones didn’t have the resolution or the capacity, and networks couldn’t deliver the bandwidth. This is all set to change, however, as both technologies evolve and become more robust.

More display advertising networks will offer video. We will probably see current advertising networks adopt new technology and begin offering video as part of their advertising toolbox. Also, just as countless ad networks sprang up to serve the mobile market, more will likely rise to meet the growing demand for video advertising.

The cost of video advertising will go down and the quality will go up. Competition and a supply explosion will drive down advertising costs. The quality of online advertising will increase for two reasons: that same competition will drive companies to outdo their competitors, and the increase in demand for video ads will increase ad production quality.

Programmatic advertising, which is altering the display advertising landscape, will exert an influence on the video advertising world. As video advertising merges with display advertising, we are already beginning to see shifts towards programmatic video ads. Some of the earliest display advertising networks have already begun to adopt programmatic tools, such as real-time bidding, ad exchanges, and advanced analytics.

 

Facebook, Instagram, Twitter, and other social networks are among the first to experiment with autoplay video ads. But, as we can see from the statistics, this trend will only continue. Video advertising and display advertising will merge, and keep growing into other advertising sectors, from websites to mobile apps and perhaps even wearable technology.

Advertising 40% of YouTube Views are on Mobile – What This Means for Software Monetization and Display Advertising