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IAB: Digital video advertising KPIs shift, with business outcomes on top

IAB: Digital video advertising KPIs shift, with business outcomes on top

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Dive Brief:

  • Advertisers increasingly prioritize business outcomes like sales or store visits as key performance indicators (KPIs) for digital video campaigns, according to the second part of an Interactive Advertising Bureau (IAB) report assessing channel trends.
  • A growing focus on business outcomes breaks with video’s historic use as a vehicle for reach. However, the IAB found measurement tools for performance advertising in video are lacking, with two-thirds of buyers encountering frustrations in this area.   
  • The adoption of alternative measurement currencies outside of panel-based ratings continues to take hold, with 89% of advertisers either testing or transacting with a new guard of solutions vendors. These experiments come as the IAB expects the largest digital video channels to see increased investment this year.   

Dive Insight:

Marketing’s shift into a performance-driven mindset, where ads can be more directly tied to sales and other consumer actions, is taking firmer hold in the digital video arena. Reach and frequency, long the channel’s leading KPIs, have slipped down the rung as business outcomes rise to the top. That realignment is apparent in social video, where 64% of buyers now chiefly value business outcomes, as well as in online video (58% of buyers said the same) and the burgeoning connected TV market (54% of buyers). The IAB assembled its findings with help from quantitative surveys from Advertiser Perceptions.

Recent dealmaking underpins how digital video platforms are interested in better realizing their performance potential. The spring upfronts media-buying season saw several partnerships struck between CTV players and retail media networks like Walmart Connect. CTV is also skewing more programmatic, as three-quarters of ads are now bought through methods like real-time bidding, private marketplaces and ad networks.

These trends come as advertisers are dumping more dollars into digital video amid an acceleration in cord-cutting. In the first part of its report, released in May, the IAB forecast ad spending across online video, social video and CTV would rise 16% year on year in 2024 to reach $63 billion, with social video in the lead spot. Investments are also being spread widely among content types, with short-form and vertical video — formats made ubiquitous thanks to TikTok — making up the largest share.

Digital video’s pivot to performance isn’t without its growing pains. Two-thirds of buyers experience measurement issues with the channel. Granularity seems to be particularly challenging to realize, as small advertisers targeting niche audiences versus broad reach were “significantly more likely” to hit snags related to viewability and accessing sell-side data, according to the IAB. 

“As the saying goes, ‘with great power comes great responsibility’,” said David Cohen, CEO of the IAB, in a statement attached to the research. “With the continued impressive growth of digital video comes demands for better measurement, viewability, standardized data, and placement transparency. The video ecosystem must fully commit to innovation, especially in measurement.”

As their benchmarks for success change, the majority of ad buyers are either in talks or actively testing the waters with alternative currencies to the gross rating points model associated with legacy measurement firms like Nielsen. Around 28% of buyers are already transacting with alternative currencies, valuing offerings that can provide multiscreen attribution and real-time reporting, per the IAB.

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