Millennial Media announced a slew of new video ad formats Wednesday designed to differentiate itself in a market that's increasingly dominated by Google and Facebook.
The new ads allow marketers to customize their in-app mobile video ads with Twitter streams, real-time sport scores, text highlighting certain parts of a video and information about nearby store locations all without directing users out the app and into a mobile web browser.
Millennialhas been doing video ads for years, but the new formats will require custom creative and will come with a premium price tag. Millennial CRO Marcus Startzel said using the features will cost more than standard video inventory but declined to comment on their exact price.
Whatever their cost, it remains unclear if a handful of pricey new video ads will counter projections that Millennial will lose market share and experience experience tepid revenue growth through 2015.
While U.S. mobile display advertising is projected to more than double from 2013 to 2015 -- from $3.38 billion to $7.79 billion, according to eMarketer -- Millennial's market share is expected to decline from 2.8% to 2.5% over that same time period. That's just more than a third of the market share Millennial enjoyed in 2011 when it owned 6.6% of all U.S. mobile display revenue.
iAd, Millennial's most immediate competitor and the largest mobile ad network in the U.S. in terms of display revenue, is expected to see its market share increase from 6.3% this year to 8% in 2015 and its revenue jump from $212.9 million to $622.8 million. eMarketer projects Millennial to earn $94.4 million this year and $192.2 million in 2015.
Selling premium ad products with premium price tags is one strategy to compensate for market share loss, but questions remain as to whether there will be enough spent on mobile video to make Millennial's new products immediately lucrative.
"Consumer adoption of mobile video is clearly gaining momentum, which could accelerate as more premium content becomes available to mobile users. Still, video represents a sliver of the mobile marketplace. We are a ways away from seeing advertisers spend big bucks on mobile video," Clark Fredricksen, VP-communications at eMarketer, said.
Mobile video's long-term revenue potential is similarly dubious as its growth rate is expected to slow with each successive year. Video display constitutes 15.3%, or $518 million, of the U.S. mobile display market, according to eMarketer. That percentage will increase to 17.2% in 2014, 18.7% in 2015, 20.1% in 2016 and 20.6% 2017. Yearly percentage point increases are leveling off then, from 1.9 between 2013 and 2014 to 1.5, 1.4 and 0.5 in subsequent years.
Still, Millennial's new ad products will allow it to charge more for video ad inventory.
Mobile video CPMs range from $10 to as high as $35 depending on app placement and platform, with popular apps and tablet ads commanding higher CPMs, according to two agency executives. While the exact CPMs for Millennial's new video ad features were not revealed, expect them to be more expensive than typical pre-roll ads. The company is also developing a "cost per completed view" pricing model that would only charge for when users watch a video in its entirety.
Mobile ad tech companies have long sought to increase mobile ad prices by contextualizing display with location data and Twitter. While Millennial's new video product utilize these capabilities, Mr. Startzel thinks mobile video's true value is in providing "top of the funnel" brand awareness. With its ad serving software built into 42,000 apps across Android, BlackBerry, iOS and Windows, Mr. Startzel said Millennial has unmatched reach.
"The No. 1 advantage Millennial has relative to iAd is that we are device and platform agnostic," he added.
Apple declined a request to comment.
Dirk Rients, director of mobile at DDB, said mobile video offers companies a unique and unrealized branding opportunity.
"Outside of delivering standard TV creative, brands also need to consider producing unique video content such as mobile-only videos or behind-the-scenes footage."
