Welcome to the new age of advertising

Kathmandu 2It all started in February of this year. Kathmandu took its first big step into mobile video advertising with a 10-week campaign targeting 18- to 30-year-old travel fans on Facebook.

In one of the six featured videos, young adventurers look directly at the viewer from the side of a spitting volcano, a foreign temple, a boat deck, a train hurtling past a modern city. Then a voice asks: If you could only take one trip, what would it be?

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The inspiring visuals and target demographic made mobile video the obvious medium for the message. But it wasnt a natural choice for the ASX-listed outdoor and travel retailer.

We had experimented with video ads previously but this was our first big effort, John Sette, Kathmandus group marketing manager, told Inside Retail Weekly.

Since then, Kathmandu has released dozens of educational, product-focused videos on Facebook and Instagram think packing tutorials and fast-motion films of high-altitude treks. Its currently running a video campaign about camping for the summer season. Mobile videos also feature heavily in Kathmandus marketing plans for its 30th anniversary next year.

So what convinced the retailer, which Sette himself called traditional, to commit to the new ad format so quickly? A simple analysis of its first mobile video advertising campaign.

Kathmandu found the ads generated 8.6 times the amount of revenue as they cost. They also led to a 10-15 per cent increase in signups to the companys loyalty program among the target demographic.

This was right up there with some of our most successful campaigns, Sette said.

Commercial impact was a crucial internal hurdle at Kathmandu, which, once overcome, paved the way for mobile video to gain prominence in the marketing department.

We plan to continue to use Facebook and video as a core part of our campaign programs. Were on a transformation program within our business to adopt digital channels more aggressively than we have in the past, he said.

The rise of smartphones and streaming

Kathmandu is far from alone in this endeavour. Mobile video advertising is fast becoming one of the preferred ways for brands to reach customers. This is driven by two main factors: the increasing amount of time people spend on smartphones, and the increasing amount of time people spend consuming video.

According to the Interactive Advertising Bureaus (IAB) Mobile Ratings report, Australians spend nearly 35 hours per month on average browsing content their smartphones, one hour of which is spent watching video.

Meanwhile, Reuters predicts video will make up 70 per cent of mobile traffic by 2021. Furthermore, research from Google and Ipsos shows that millennials are far less distracted watching video on their smartphones than on any other screen, including TV.

All of this is to say that consumers eyeballs are firmly fixed on the small screens they carry with them. As Facebooks head of retail in Australia and New Zealand Kate Box explained to IRW: Commute time is the new prime time.

And advertising dollars are following this shift. According to the latest figures from IAB, spending on mobile ads, which includes video, other display formats and search, was $543.7 million in Australia for the quarter ending 30 June, up from $139.6 million from the same period last year. Thats a 65.5 per cent year-on-year growth rate.

While every major social media company is angling for a slice of the pie Twitter, Snapchat and Pinterest all now support native video or video ads on their platforms Facebook, and its subsidiary Instagram, along with YouTube, undoubtedly take the lions share.

The problem with mobile video metrics

A few weeks ago, Facebook reported strong quarterly earnings, largely thanks to its mobile advertising business, which represents approximately 84 per cent of total advertising revenue for the third quarter, compared to 78 per cent in the same period last year.

We had another good quarter, Mark Zuckerberg, Facebooks CEO, said in a release to investors and media. Were making progress putting video first across our apps and executing our 10-year technology roadmap.

This is despite recent revelations that Facebook miscalculated a key mobile video metric for two years. By only factoring in views of more than three seconds, the social media giant artificially inflated the average viewing time of mobile video ads by 60-80 per cent, according to documents obtained by the Wall Street Journal.

While Facebook has fixed the metric and has asked a third party to audit its data, it continues to downplay the impact of its mistake.

The average view time hasnt been the most important metric for the marketers we work with, Facebooks head of retail in ANZ Box explained. Ultimately, the measurement that matters is how much more the people who have been exposed to the ad spend in shop.

But as Alita Harvey-Rodriguez, managing director at Milk It Academy, a digital marketing and training consultancy, pointed out, marketers still rely on the average viewing time metric in the content creation stage.

I dont agree that average watch time doesnt matter to an advertiser. As a strategic marketer, it informs your understanding of how much consumers will spend based on how long they watch.

I dont think theres enough transparency around data, but if Facebook gets the data audited by an external party, it will build trust with advertisers, which is a very good step forward.

The emergence of best practices

One sign of videos growing dominance on mobile is the emergence of basic standards.

In IRWs conversations with five experts in mobile video advertising, certain features came up again and again.

Successful ads grab the viewers attention within the first few seconds, either through eye-catching visuals, or a square video frame, which occupies more real estate in the news feed. And because videos autoplay without sound on Facebook, at least savvy retailers use on-screen script or subtitles to good effect.

In addition, video is most effective when its part of a full funnel marketing strategy. For instance, Kathmandu re-targets those who view its mobile video ads with product carousels on Facebook.

Leading retailers are also creating new content more frequently, according to Dan Littlepage, managing director of Australia for 90 Seconds, a global cloud-based video production platform.

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