Yahoo’s latest mobile ad play not only reveals the company’s business goals, it also shows where they think the industry is headed in the next few years.

Yahoo and Video Ads

Last year, Yahoo’s acquisition of the mobile ad company Flurry confirmed the search engine’s plan to focus on mobile. This acquisition, designed to resurrect Yahoo’s ailing ad program, allowed advertisers to buy mobile video ads. Subsequently, Yahoo announced that it was the “largest provider of video ad inventory in the industry.”

Along with other major players in the tech world, from Facebook to Twitter, Yahoo clearly plans to capitalize on the growing digital video advertising sector. And with Flurry’s services and inventory in tow, Yahoo went on to acquire BrightRoll in November.

Clearly, Yahoo is banking on the continued growth of video advertising to help it retain its competitive edge in the coming years. The CEO of Yahoo, Marissa Mayer, stated that video is “display 2.0.” And many agree that video may replace display advertising, even on mobile devices.

In fact, Yahoo believes so strongly in video that it is investing in original video, such as scripted sitcoms. Though it’s still too early to tell if Yahoo will be able to make any headway into the world of video, comScore reports that Yahoo Screen’s audience rose 5% in the year leading up to September, 2014.

When asked whether Yahoo was a media company or a tech company, she replied that the distinction didn’t matter.

Mobile Video and the Consumer

It’s widely acknowledged and understood that people prefer to consume video content, so it’s only logical that Yahoo and other major tech companies leap into the video arena.

People want short and mobile…and the numbers show it. Nearly 40% of YouTube views comes from mobile, nearly half of consumers state that video is the most “appealing” form of media, and 3 out of 4 customers claimed that video was their preferred method of learning about brands.

This also explains why Mayer replied that the distinction between a tech company and a media company was irrelevant. If the competition is for eyeballs, then tech companies will need to do their best to adapt to the shifting online landscape.

For many tech giants, this means investing in all types of video, from advertising to long-form, original video content. Since many of these companies are becoming multiple-service providers, the goal for the largest companies will be to retain eyeballs so that customers will stay on board to experience the rest of the company’s services.

However, for the vast majority of companies out there, the biggest opportunity lies in mobile video advertising…

Mobile Video Advertising in 2015

This coming year, mobile video advertising may become the hot news topic. Yahoo’s acquisition of video advertising companies is echoed by Facebook’s acquisition of LiveRail, an online video advertising platform.

These types of acquisitions and obvious forward-thinking strategies can give us some hints of what to expect.

First of all, expect heavy investments in mobile video advertising. As mobile video ad targeting and measurement catches up with the mobile consumer’s eyeballs, the investment dollars will follow…but so will the cost of advertising.

Ad spend itself, naturally, will begin to consume larger portions of budgets. And with sophisticated targeting – in the form of device ID mapping, geo-targeting, and so forth – it will justify the expenditure.

Secondly, programmatic will become even more mainstream and begin to guarantee results. Though adoption has been slow, the savings and profit potentials offered by programmatic are finally winning over the bulk of the industry. Real-time video exchanges will probably explode in popularity.

With higher costs, of course, come higher risks. To reassure advertisers, ad platforms will probably begin offering guaranteed completion rates, clickthrough rates, and targeting metrics.

Thirdly, mobile ad spend will focus on apps. The vast majority of people’s smartphone time is spent in apps, not on the web. Some even theorize that a new linking system will be devised to connect apps in the same way that hyperlinks connect websites.

Mobile video ad spend, therefore, will gravitate towards in-app ads. This is why Yahoo’s acquisition of Flurry, with its app-centric capabilities, makes so much sense.

Also, overall tighter granularity will increase the relevance and personalization of video advertising. As user targeting and back-end programmatic algorithms become more efficient, the resulting ad campaigns will also become more personalized. Video advertising itself – typically thought of in relation to the one-way, passive TV set – will begin to become personalized based on context.

New tracking capabilities and new data from a variety of sources – such as wearable technology – will enable advertisers to develop video campaigns just as tailored as current display campaigns. Retargeted display ads will transition to retargeted video ads. Though we won’t see advances for some time yet, this technology will then transition to “pretargeted” video ads…that is, predictive video advertising.

Advertising What Advertisers Can Learn from Yahoo’s Mobile Ad Play