ad blocker and device fragmentation - digital marketing challenges by mark blair

®

THE PERFECT STORM: How Ad Blockers and Device Fragmentation Drive the Need for Server-Side Ad Insertion

©2015 Brightcove, Inc. All Rights Reserved. 1

INTRODUCTION

Currently, an estimated 1.6 billion people globally watch online video on connected devices.1 In the U.S., nearly 7 in 8 Americans watch online video, with more than half doing so daily.2 And 61% of consumers globally watch TV and video on their smartphones, an increase of 71% since 2012.3

Most importantly, publishers are increasingly able to monetize that viewing. Video ad views on smartphones grew 107% from Q2 2014 to Q2 2015. Ad views on OTT devices were up 194% in the same time period.4 And yet, just as these trends show a path toward profitable growth for a turbulent and transforming media ecosystem, two key challenges threaten to slow that growth:

First, the past two years has seen an alarming uptick in consumer ad blocking. Ad blocking browser extensions and mobile apps are being installed by a large and rapidly growing number of consumers which threatens publishers’ ability to generate revenue.

Second, the proliferation of smartphones, tablets, connected TVs, game consoles, and stand-alone devices has made it costly (or technically infeasible) for publishers to build and maintain client-side players that can deliver high quality, ad-supported video on all platforms.

For publishers facing these challenges, this white paper provides an in-depth look at the impact of ad blockers and a fresh look at the level of fragmentation in the video device market. It outlines how server-side ad insertion provides a definitive solution for both obstacles by rendering ad blockers useless to deliver a seamless, TV-like experience across all connected devices.

Finally, it illustrates how Brightcove Lift™, a next-generation optimization solution, combines server-side ad insertion (SSAI) with the industry-leading HTML5 player to help publishers drive dramatic increases in ad deliverability and revenue.

2015 has been a remarkable year for digital video. Countless groundbreaking services have been launched across tens of millions of devices. Ad-based, authenticated, and premium business models are thriving, but could be performing even better.


AD BLOCKERS: TODAY’S PROBLEM, TOMORROW’S CRISIS

Ad blockers threaten a critical revenue source for online video publishers. By preventing ads from being delivered to a large and growing number of web users, they undermine the economic foundation of digital media businesses.

Consider the following:

• In 2014, nearly 41% of 18- to 34-year-olds reported using ad blocking software in their web browsers, according to the IAB.5

• In 2015, the number of monthly active ad blocker users globally grew 41% to 198 million for the major browser extensions.6

• Reinforcing these two data points, a recently published survey of 748 millennials found that 63% of respondents 18 to 34 years old were using ad blocking software.7

While the majority of today’s ad blockers are found on desktops and laptops, mobile usage is set to grow sharply. In 2014, 24% of ad blocker users had installed the technology on their smartphone – nearly a year before Apple moved to allow content blocking in iOS 9.8 In the days following the

release of iOS 9, ad blockers topped the app store charts. Hundreds of ad blocking apps have been released since then. A recent analysis of App Annie data reveals

that 319 apps with the term “ad blocker” in the title or description were released in October alone.9

Some industry analysts have de-emphasized the importance of ad blocking on the mobile web, pointing out that the majority of mobile user minutes are spent within native apps, where ad blockers don’t currently work. This may be a valid observation, however, the total size of the mobile web audience is much larger. A recent comparison of the Top 1000 Apps vs. the Top 1000 Mobile Websites showed that mobile web audiences are 2.5x times larger than Mobile App audiences, and are growing twice as fast.10

• Mobile app audiences average ~3MM unique visitors monthly at the Top 1000 Apps, up 21% year over year.10

THE NUMBER OF MONTHLY ACTIVE AD BLOCKER USERS GLOBALLY GREW 41% TO 198M


• In comparison, mobile web audiences average ~9MM unique visitors monthly at the Top 1000 Mobile Websites, up 42% year over year.10

Thus, the mobile web is essential for publishers looking to build and monetize large audiences and capture their share of the $2.45 billion dollars in mobile video ad revenue that eMarketer projects for 2015. (That number is forecasted to grow 148% to $6.07 billion by 2018.)

Left unaddressed, ad blocking not only reduces near-term revenue for publishers, it also threatens the long-term viability of all media businesses.

0% 5% 10%1 5% 20% 25% 30% 35%

GamesTechnology

ComicsAdult

EntertainmentSportsNews

BusinessLifestyle

LocalFinance

Travel

11


DEVICE FRAGMENTATION & MOBILE WEB PLAYBACK

Media publishers must tackle yet another critical challenge in order to provide advertisers with the broad reach they’ve come to expect from their TV advertising budgets. Simply put, consistent, ad-supported video experiences need to be distributed to the growing diversity of devices and operating systems. To illustrate this point, let’s take a closer look at both mobile and connected TV environments.

While there are only two major operating systems in the mobile market - Android and iOS - both are updated frequently which creates development fragmentation within each platform. For example, Android’s ecosystem of device hardware, software and release management practices has meant that over 24,000 distinct Android devices have been logged so far in 2015, according to mobile data firm Open Signal.12 There are four different Android operating systems that have more than 10% penetration. In all, nine operating systems are still actively in

use on Android devices. Maintaining and updating the plug-ins and players in these environments is expensive and challenging and introduces dependencies on ad serving companies to release updates to their SDKs in a timely fashion. The net result for publishers is that buffering, stalls, errors, and breakage are common occurrences.

With connected TVs and streaming media devices, we see a separate set of dynamics at work. Penetration of U.S. consumers using a connected TV device at least once a month is forecasted to reach 138.8 million in 2015.13 That number is expected to rise to 191.4 million in 2018, representing 71.4% of Internet users.

Today’s landscape most prominently features four different, streaming device brands - Roku, Google Chromecast, Amazon Fire TV, and Apple TV. Each has a market share that cannot be ignored by publishers.

In the U.S., 2014 shipments were dominated by Roku at 34% share, followed by Google Chromecast at 23%, Amazon Fire TV at 16%, and Apple TV at 13% of units shipped, according to Parks

NINE OPERATING SYSTEMS ARE STILL ACTIVELY IN USE ON ANDROID DEVICES


Associates.14 Globally, Apple TV has the lead, with 41% share of 2014 units shipped, followed by Chromecast at 34%, Roku at 13%, and Fire TV growing fast with 8%.15

In Europe and other parts of the world, content owners may support several HbbTV compliant boxes as well. There are 25M devices in 15 countries that comply with this important connected TV standard. More than 100 apps have been deployed, including the Brightcove powered Freeview Plus, which is built on the latest HbbTV 1.5 standard.

Given this fragmented and shifting market for connected devices, successfully distributing content across platforms requires costly development and maintenance of plug-ins, players and apps. For all of these platforms, some form of client-side player development

may be beneficial. Client-side players are useful for building targetable user profiles, collecting more granular analytics, enabling interactive, clickable ads, and more. However, developing a custom plug-in and player for every conceivable device to enable dynamic ad insertion of pre-, mid- and post-roll ads is prohibitively expensive and again may depend on ad serving partners to provide SDKs. Here, too, server-side ad insertion is a game-changer, enabling broad and efficient device coverage.


TWO CHALLENGES, ONE SOLUTION

To understand how server-side ad insertion circumvents ad blockers, let’s review the basics of the IAB-standardized processes by which publishers serve ads to users.

When video is shown to the user:

1) The player triggers a request to the configured ad server based on metadata indicating ad breaks, e.g. pre-roll

2) In the simplest case, the ad server responds with information that includes the location of the ad creative

3) The player plays the ad creative

4) The player returns to the original video content upon completion of the ad

Ad blockers typically store a list of URLs or URL templates that represent known ad servers or the locations of ad creative. This list informs the ad blocker to filter

out specific requests from the player. If the player makes a request to the ad server, but that response is blocked (Step 2), or if the ad creative is blocked (Step 3), the player often skips the ad break and continues with playback of the video content.

In recent years, a new approach has emerged whereby ad insertion occurs on the same cloud servers that deliver the program content, rather than on the client device. This approach is known in the industry as ‘server-side’ ad insertion. At ad breaks, the server in the cloud that provides the content stream interacts with the ad server, retrieves the properly targeted ad from a CDN, and stitches the video ad creative to the content in a single file. After that process, it is then sent to the client for playback as one contiguous stream.

TRADITIONALCLIENT-BASEDAD INSERTION

Ad stream

Content stream

Connected Device

AD PLAYERVIDEO PLAYER

AD DECISION PLUGIN

BRIGHTCOVESERVER-SIDE

AD INSERTION VIDEO PLAYER

A single, stitched content and ad stream

Connected Device

AD DECISIONSYSTEM

ADSOURCE

CONTENTSOURCE

AD DECISIONSYSTEM

ADSOURCE

CONTENTSOURCE


By limiting the communication between client-side players, ad servers, and CDNs, the client can no longer identify content to block, and the ad blocker is thwarted. Publishers that have implemented this approach have immediately benefited from an increase in ad starts to video starts - a key metric that indicates videos are being monetized more effectively.

In addition to defeating ad blockers, server-side ad insertion also makes it unnecessary to develop custom plug-ins to execute pre-, mid-, and post-roll ad logic on the publishers’ client-side video players. Deploying custom plug-ins and players across a steadily growing number of diverging platforms is expensive. Sometimes, it can also be complex, pushing up the cost of maintaining each SDK and/or player and increasing the incidence of errors and breakage. The result of the simplified workflow and stitched stream described above is a better, more consistent TV-like viewing experience across a greater number of platforms, with less buffering and no stalling in-between the program and the ads.

Server-side ad insertion provides the definitive, pragmatic solution for publishers to address the rising concerns of ad blockers and device fragmentation. The momentum behind SSAI is so pronounced

that it is the focus of the new VAST 4.0 spec that is pending with the IAB to continue to align industry support for the

standard that will be bringing more and more video advertising to screens where viewing is skyrocketing. While the SSAI workflow may differ from what content owners do elsewhere on their properties, it is a future-proofing investment that pays for itself. The value they will get from ensuring coverage for devices and platforms not yet known, the flexibility of working with whichever ad servers they consider optimal for their businesses, and having a much needed solution to defeat ad blockers far outweighs any incorporation of new workflows that may be required. SSAI is a long term solution that avoids the escalating game of cat and mouse of countering ad blockers with added client side technology to redirect ad requests. Implementing client side plugins to combat ad blockers doesn’t have any additional benefits in terms of reach and doesn’t ensure a seamless, TV-like experience the way that SSAI does.

SERVER-SIDE AD INSERTION: A FUTURE-PROOFING SOLUTION THAT PAYS FOR ITSELF


THE BRIGHTCOVESOLUTION

Brightcove Lift™ is a powerful new ad optimization solution to defeat ad blockers, increase revenue, and deliver a premium TV-like viewing experience across all connected platforms. Lift combines server-side ad insertion with the industry-leading HTML5 player to enable broadcasters and publishers to drive dramatic increases in ad deliverability and inventory while still supporting client-side interactivity as well as third party reporting and analytics.

Brightcove Lift offers the benefits of server-side ad insertion while still supporting needed client-side functionality, such as handling scrubber blocking, managing mid-roll ad break enforcement, and displaying click-through companion ads. Lift is also integrated with the industry’s leading providers for reporting and analytics.

Vox Media, one of fastest growing media companies and home to premium brands such as The Verge, Vox.com, Eater, and SB Nation, selected Brightcove Lift to optimize the user experience, playback speed, and monetization of their videos on Android devices. By implementing Brightcove Lift to stitch ads directly into the video content via server-side ad insertion, Vox Media removed some of the variables and obstacles of client-side ad calls that commonly impact performance for digital publishers. As a result, the company significantly improved playback consistency and quality, and shortened the time to first frame between ads and video content.

At Vox Media, providing a high quality audience experience is very important to all of our brands. With our previous OVP, we faced severe issues on Android ranging from slow video load times to complete playback failure. As a result, we chose to turn off ad delivery in an attempt to preserve user experience. With Brightcove Lift, we’ve seen significantly improved quality and consistency in the video playback experience across mobile devices which allowed us to re-enable ad delivery.

—Brendan Murphy, Product Manager, Video, at Vox Media.


• CIRCUMVENT AD BLOCKERS By dynamically stitching targeted ads into the content on the server and delivering both as one continuous stream, Brightcove Lift prevents the ad blockers from detecting ads, enabling publishers to achieve desired ad load and revenue across platforms.

• WORK WITH YOUR PARTNERS Brightcove Lift supports any VAST-compliant ad server, leading ad providers such as DFP, Freewheel, SpotX, and LiveRail and enables measurements from the analytics tools publishers already use.

• MAINTAIN CLIENT-SIDE INTERACTIVITY In combination with server-side ad insertion, client-side interactivity allows publishers to deliver interactive features such as scrubber blocking, mid-roll ad break enforcement, click-through tracking, and companion ads.

• DELIVER A TV-LIKE AD-SUPPORTED EXPERIENCE Brightcove Lift enables a seamless viewing experience by minimizing buffering, ad error rates and breakage, and optimizing streams for playback. The result is a linear, broadcast-quality video experience that keeps viewers engaged with the content.

• ENABLE MID-ROLL ADS Server-side ad insertion allows content owners to maximize ad inventory and monetization opportunities by seamlessly delivering mid-roll ads across platforms.

• LEVERAGE THE PERFORMANCE AND CUSTOMIZATION CAPABILITIES OF THE BRIGHTCOVE PLAYER Brightcove’s responsive HTML5 player loads quickly, and is easily customizable with HTML, CSS, and Javascript.

Media companies using Brightcove Lift have seen video ads delivered per video start increase by as much as 50% resulting in significant increases in desktop ad delivery and revenue. These groundbreaking results demonstrate the solution’s ability to mitigate ad blocker technology, maximize ad inventory, and drive meaningful revenue lift.

Brightcove Lift enables media companies to:


Delivering high quality video with monetization to all devices is the #1 job for broadcasters and publishers globally. The most successful teams in the industry know that it’s an ongoing battle to keep up-to-date on the best workflows for delivering high-resolution, non-buffering streams to every device globally.

In this white paper, we’ve covered the innovative approach to ad delivery called server-side ad insertion. It represents a leap forward for publishers that want to deliver a seamless video and ad viewing experience in the face of two key challenges: (1) The rapid rise of ad blockers in desktop and mobile environments; and (2) The highly fragmented device universe which includes smartphones, tablets, smart TVs and TV-connected streaming devices.

With Brightcove Lift, we have intelligently paired this server-side ad insertion approach with our best-in-class client-side HTML5 video player. This approach enables publishers to achieve a hybrid

ad strategy that delivers the best of both worlds in video monetization.

The server-side component enables broadcasters and publishers to circumvent ad blockers, seamlessly insert dynamic ads inside program content, and reach the widest set of devices. This replicates the way that traditional TV ads are inserted in broadcasts today, supporting $181 billion in global ad revenue.16

At the same time, the client-side element of Brightcove Lift provides them with the ability to create better-than-TV experiences, with a fast-loading player that supports rich interactivity when the device can accommodate it.

Deploying this hybrid approach will generate better returns for content businesses since it boosts ad starts and deliverability. Equally important, this new ad architecture positively reinforces the value proposition of free, ad-funded video. And that’s something we can all get behind.

CONCLUSIONRELIABLE VIDEO AD DELIVERY, SEAMLESS, TV-LIKE EXPERIENCE ACROSS MORE DEVICES

To learn more about how Brightcove Lift can help you defeat ad blockers and solve device fragmentation, visit go.brightcove.com/lift


1 “The OTT Playbook,” Parks Associates, June 2015.

2 “US Digital Future in Focus,” comScore, March 2015

3 “Ericsson ConsumerLab TV & Media Report,” Ericsson, September 2015.

4“Video Monetization Report Q2 2015,” FreeWheel, August 2015.

5 “Online Consumers Views and Usage of Ad Blocking Technologies,” IAB Ad Blocking Study, September 2014.

6 “The Cost of Ad Blocking,” PageFair and Adobe 2015 Ad Blocking Report.

7 “Inbound vs. Outbound: Consumer Perspectives on Marketing Effectiveness,” Fractl and Moz, September 1, 2015.

8 IAB Ad Blocking Study, September 2014.

9 Brightcove Analysis conducted on November 2, 2015.

10 “The 2015 U.S. Mobile App Report,” comScore, September 2015.

11 “The Rise of Ad Blocking, Report,” PageFair, August 2013

12 Brightcove analysis of data from Open Signal website, November 2, 2015.

13 eMarketer Research note, June 2014.

14 “Streaming Media Device Landscape,” August 2015.

15 “The Global Smart TV and Streaming Media Device Markets,” Frost & Sullivan, February 2015.

16 “Global Media Report,” McKinsey & Company, 2014.

ENDNOTES