Digital

Video
2012
Canada Video Advertising Report
September 2012

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

INTRODUCTION

Video's Rapid Trajectory

Now is the time for Canadian advertisers to leverage the impact of sight, sound and motion in their digital campaigns. All signs indicate that digital video will continue its remarkable trajectory in Canada, enabling advertisers to reach a greater number of consumers using this highly effective medium. More than 91 percent of the countrys online population 25 million people regularly watch videos online1. Total online video viewership is up 58 percent year over year with consumers in all age groups watching more videos and for more time2. Consumers also continue to adopt mobile at a fast clip, driving digital video consumption across multiple screens. In 2012, 48 percent of Canadian cellphone users own a smartphone (an increase of 46 percent from 2011) and tablet ownership has quadrupled year over year, now up to 20 percent3. For advertisers the message is clear: digital video is an excellent vehicle to engage the Canadian consumer. In fact, it is projected that advertisers will increase spending this year for online video advertising by 43 percent to top $74 million4. Comparatively, mobile ad spending in Canada for the display and video advertising category is estimated to have risen to $51 million in 20125. Since 2010, BrightRoll has surveyed the digital video industry to enable advertisers to navigate the landscape and gain a better understanding of the opportunities and challenges that video advertising presents. Annual BrightRoll Video Advertising Reports are now available for the US, Canada, UK and Germany. This is the second year that BrightRoll teamed up with IAB Canada to feature continuously evolving insights from Canadas leading advertising professionals. This years report is based on responses from more than 100 executives at top advertising agencies across Canada. Their combined feedback provides unique perspectives into this fertile advertising market.

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

TRENDING

Digital Video Wins Hearts & Budgets in Canada

Key demographics are showing triple-digit growth in digital video consumption, giving Canadian advertisers plenty of incentive to include online and mobile video advertising in their media mix. Canadians, ages 18 to 24, now watch 111 percent more hours of online video than they did in 2011, while those ages 25 to 34 watch 125 percent more hours. Consumers under age 18 and those ages 35 to 44 increased the number of hours they spent watching videos by an impressive 79 percent2. Such widespread viewing of online video as well as the reported rapid mobile adoption has prompted Canadian advertisers to re-evaluate their attitude toward the medium and the role it plays in their media plans. In fact, 45 percent of respondents report that half or more of their RFPs over the past 12 months included a digital video ad component, representing an increase of 10 percent from 2011.

1: What % of your RFPs included a digital video ad component in the last year?
Proportion of respondents that reported half or more of their RFPs included a digital video ad component over the past 12 months

2011

41%

respondents say digital

video is equal to or more effective than TV

BrightRoll Canada Video Advertising Report: September 2012 | www.brightroll.com | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

10%
45%

2012

More than two-thirds of

Nielsen has reported that online video ads outperform traditional television ads in recall, branding, messaging and likeability, and many Canada advertisers are beginning to agree6. When asked how digital video compares to TV, social media, search advertising, direct response and display in terms of effectiveness, Canadian advertisers give the medium its strongest endorsement to date. More than two-thirds of respondents say digital video is equal to or more effective than TV and an overwhelming 82 percent also agree with this statement when compared to display online.

2: Compared to the following channels, is (digital) video equally or more effective?

more less
Yes No

82%
Display

73%
Social Media

68%
TV

47%
Direct Response

39%
Search Advertising

Uncertain

GROWTH

In a Multi-Screen World, Pre-roll is King

Pre-roll continues to remain Canadian advertisers ad unit of choice across all video platforms for the second year in a row. Regardless of screen, pre-roll dominates with 96 percent of agency respondents using pre-roll in online campaigns, 26 percent using pre-roll in mobile campaigns, and 30 percent using pre-roll in tablet campaigns, the latter representing a three-fold increase from the 2011 survey. 3: What types of digital ad units have you used in your media plans for online, mobile and tablet within the last 12 months? (select all that apply)

ONLINE
100% 80% 60% 40% 20%
Pre-roll Companion ads In-banner video (non expanding) User initiated expand to full screen Overlay video ads (pre-, mid-, post-roll clickable) Mid-roll Overlay video ads (transparent text, clickable) Post-roll

While the adoption of pre-roll for online video ads is outpacing other channels, the following chart shows that respondents are also using the format more than any other on mobile and tablet.

MOBILE
30% 25% 20% 15% 10% 5%

TABLET
Pre-roll Companion ads In-banner video (non expanding) User initiated expand to full screen Overlay video ads (pre-, mid-, post-roll clickable) Mid-roll Overlay video ads (transparent text, clickable) Post-roll

Looking ahead, Canadian advertisers will continue to adopt pre-roll in earnest. Respondents from this years survey predict an even greater rise in pre-roll use with 50 percent anticipating use of pre-roll on mobile, and 56 percent foreseeing use of pre-roll on tablet devices over the next year. Below is a breakout of question three that highlights growing pre-roll use in 2011 and 2012 media plans for mobile and tablet devices. Utilization of pre-roll in media plans for mobile and tablet devices
60% 40% 20%
Last 12 months Next 12 months

Mobile Pre-roll

Tablet Pre-roll

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

FORECAST

Cohesive Digital Video Campaigns

To many Canadian advertisers, video is video. Increasingly, advertisers envision cohesive digital video campaigns that deliver the same user experience to consumers who go from their PCs at the office, to their smartphones or tablets on their commute, and increasingly to their connected TVs at home. This big-picture approach to video campaigns has numerous ramifications. To begin, more Canadian advertisers are buying media across all four screens, which may lead to the expectation that a single set of creative should suffice for all platforms. In fact, the desire to re-use creative jumped from just 6 percent in 2011 to 22 percent in 2012. Above all else, Canadian advertisers value effective, multi-screen targeting capabilities of digital video, though as discussed in the next section, targeting priorities are beginning to shift.

4: Which aspect of digital video do your clients view as most valuable?

45% 40% 35% 30% 25% 20% 15% 10% 5%

Targeting capabilities

Ability to re-use creative

Reach

Price relative to TV

Ad unit format

Other

BrightRoll Canada Video Advertising Report: September 2012 | www.brightroll.com | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

TA R G E T I N G

Right Ad, Right Viewer

A significant advantage of online video is that it offers a similar consumer experience with superior targeting capabilities as compared to traditional TV. Therefore, the value of targeting and measurement tools for online video is that they enable advertisers to gain a better understanding of their audience and to ensure ads have a better opportunity to be seen by those most likely to be impacted. While targeting remains important to advertisers, there are subtle shifts in the types of targeting advertisers find most valuable. For instance, targeting by audience jumped from one of the least important forms of targeting in 2011 (8 percent) to the second most important in 2012 (20 percent). Now in first place, behavioral targeting has surpassed demographic targeting, which experienced a dramatic decline in importance from 2011 to 2012.

5: What form of targeting do you find most valuable for digital video advertising?
35% 30% 25% 20% 15% 10% 5%

2011 2012

Behavioral

Audience

Demographic

Contextual

Geographical

*Audience targeting refers to any combination of or any specific type of targeting such as demographic, behavioral, geographical and/or contextual.

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

MEASUREMENT

The Advertiser's Measurement Wish List

Agencies desire metrics that provide a deeper understanding, for the advertiser, of campaign impact on audience behavior. Translation of GRP to online video proved to be the top area of interest for additional research, as ranked by more than a quarter of respondents. The proportion of respondents who want more research on the impact of video ads on offline purchase behavior (24 percent) and change in purchase intent or brand lift (22 percent) also proved to be strong areas of interest. Given Canadian advertisers emerging preference for cohesive, multi-screen video ad campaigns, the high level of interest in unified metrics across screens is logical. Although respondents rank research on GRPs and GRP translation as their top area of interest for additional research, GRP is still deemed as their least important success metric. This shows that while advertisers understand the benefits of GRP measurement, they dont yet have adequate tools to actually use it in planning and measuring campaigns. The industry should move toward synchronizing how GRPs are calculated and applying them across all screens.

6: Which area of digital video advertising would you most like to see additional research on?
30% 25% 20% 15% 10% 5%

Translation of GRP to online video buying

Impact on o ine purchase behavior

Change in purchase intent or brand lift

Performance vs television advertising

Brand e ectiveness

Audience proling

7: What is the most important success metric for your video campaign?
25% 20% 15% 10% 5%

Conversion

Brand lift

Sales impact

Views

CTR

Other

GRP

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

OUTLOOK

Video Advertising in Canada

Looking forward, there is still plenty of room for growth of digital video as agencies look to a variety of factors to drive increased video ad spending. As Canadian advertisers start to view TV and digital video as complementary media, its only natural to want to understand how traditional metrics from TV can be applied across all video platforms. Respondents see research around GRPs compared to TV as the most encouraging driver for increasing online video ad spending by advertisers, jumping to 65 percent in 2012 from 55 percent in 2011. Research on ROI ranked second in importance, followed very closely by a desire for lower media costs, which showed the most dramatic growth of any measure over last year. Interestingly, when asked in a separate question about the leading factor limiting the growth of digital video advertising, respondents agree (28 percent) it is the lack of digital metrics comparable to TV. This new factor, although not included in last years survey, still outweighs the primary concern of the high price of video in 2011.

8: Which of the following do you think would most encourage advertisers to increase online video spending?
80% 70% 60% 50% 40% 30% 20% 10%

2011 2012

GRP research

Research on ROI

Lower media costs

Campaign measurement

Rights agreements

Case studies education

Campaign planning

Agencies see research around GRPs compared to TV as the most encouraging driver for increasing online video ad spending

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

CHANG I N G PAR ADIG M

Preferred Inventory Channels

Canadian advertisers differ from their US counterparts when it comes to selecting sources for their digital video inventory. When asked to rate their preferred channels, Canadian respondents selected broadcasters over ad networks, while Americans favor ad networks. These data may suggest a couple of different scenarios about the preferences of Canadian video buyers. They may prefer the potential of integrated buys that broadcasters can provide (access to Top-10 shows), or they may not have experienced ad network capabilities (advanced targeting capabilities, such as targeting by audience or user behavior, at greater scale). However, it is encouraging that broadcasters and ad networks are the clear inventory choice for advertisers, with two-thirds preferring to buy video from either of these two sources.

broadcasters and ad networks are

9: Who are you most inclined to buy video inventory from?

1.9%
6.9% 7.6% 3.8%

Ad exchange
7.6%

Ad network Agency trading desk Demand-side platform

the clear inventory choice for advertisers,

27.5%

34.3%

Broadcaster

CANADA
4.6%

USA

Publisher
41%

Portal

preferring to buy

video from either

of these two sources.

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

with two-thirds

49.6%

6.7%
0%

6.7% 1.9%

CONCLUSION

Growth of the Video Advertising Industry

Canadas affluence of digital video viewing audiences serves as a catalyst for change in the countrys digital video landscape. As BrightRoll and IAB Canada have discovered in conducting this report for the last two years, a growing number of advertisers in Canada are including the medium in their RFPs. An astounding 68 percent believe digital video is equal to or better than TV in terms of effectiveness. Additionally, mobile, tablet and connected TV screens are now much more prevalent within the Canadian population. This four-screen reality is changing how advertisers look at video as well as the aspects that are most important to them, including measurement and targeting. However, there is much work to be done in terms of how digital video is measured so that agencies and advertisers can be better equipped to validate their recommendations to move budgets online, and equally assess pricing and success across all advertising channels, including TV. Specifically: Agencies want metrics and measurements that allow them to compare TV with digital video. The desire for comparable metrics is driven by a need to make easier and smarter media purchasing decisions. The tools for measuring video are progressing, but there is a need for more education on how to implement these tools across platforms. There is still significant confusion in the market in terms of setting industry standard metrics for ROI effectiveness across the four screens, as well as traditional TV. The perception that video prices are high continues to be a sensitive issue for all media even as advertisers recognize the value that digital video offers when compared to other digital media and traditional TV. As Canadas appetite for digital video advertising continues to grow, BrightRoll and IAB Canada are committed to providing the industry with critical insights that allow marketers to make sound decisions when it comes to investing in this format.

BrightRoll Canada Video Advertising Report: September 2012 | www.brightroll.com | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.

C O N TA C T I N F O R M AT I O N David Bellemare, Managing Director, Canada, BrightRoll 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 Phone: +1 416.847.1852 dbellemare@brightroll.com Chris Williams, President, IAB Canada 2 Carlton St., Suite 820 Toronto, ON M5B 1J3 Phone: +1 416.598.3400 (ext. 26) Fax: +1 416.598.3500 cwilliams@iabcanada.com GRAPHS & CHARTS 1: What % of your RFPs included a digital video ad component in the last year? P2 2: Compared to the following channels, is (digital) video equally or more effective? P2 3: What type of digital ad units have you used in your media plans within the last 12 months? P3 4: Which aspect of digital video do your clients view as most valuable? P4 5: What form of targeting do you find most valuable for digital video advertising? P5 6: Which area of digital video advertising would you most like to see additional research on? P6 7: What is the most important success metric for your video campaign? P6 8: Which of the following do you think would most encourage advertisers to increase online video ad spending? P7 9: Who are you most inclined to buy video inventory from? P8 CITING & SOURCES 1 comScore Video Metrix 2012 2 comScore Canada Digital Future in Focus 2012 - http://www.comscore.com/Press_Events/Presentations_Whitepapers/2012/2012_ Canada_Digital_Future_in_Focus 3 CWTA - http://cwta.ca/wordpress/wp-content/uploads/2011/08/CWTA-2012ConsumerAttitudes.pdf 4 Magnaglobal Advertising Forecast 2011 5 eMarketer: Mobile Set to Reshape Canada's Marketing Landscape - http://www.emarketer.com/Article.aspx?id=1009099&R=1009099 6 Nielsen IAG + Microsoft Advertising Video Effectiveness Report - http://www.iabcanada.com/wp-content/uploads/2011/09/ NielsenIAG_MicrosoftAdvertising_VideoEffectivenessReport_2011.pdf ABOUT BRIGHTROLL BrightRoll is the worlds leading provider of digital video advertising solutions. The company has access to billions of monthly digital video impressions across the globe through its network and exchange (BRX). The company enables advertisers to execute smart digital video advertising across the web and mobile landscape. Proprietary buying technology, combined with full site disclosure and flexible targeting provides BrightRoll network and exchange customers with the reach, frequency and scalability needed to achieve campaign goals. The company provides publishers with access to the industrys largest video marketplace to maximize monetization of their inventory. BrightRoll is a privately held, venture-backed company headquartered in San Francisco, California.

BrightRoll Canada Video Advertising Report: September 2012 | brightroll.com/canada | +1 416.847.1852 | 100 King Street West, Suite 5600 Toronto, ON M5X 1C9 | Copyright 2012 BrightRoll, Inc.