YouTube problems: how video ads work in a programmatic world

YouTube heavyweights CGP Grey recently released a video explaining how the video ad buying process works on the platform.

The video explains, in layman’s terms, the auction process for real time ad buying. Why sometimes you are served an ad. Why sometimes you are not. Who is bidding on these ads. When the high bid is not always the bid taken. How video ad content is chosen. On and on.

And while this process is explained specifically for YouTube, it gives you a good idea of how similar video ad exchanges operate. With all the talk about YouTube, programmatic advertising, and brand safety, I thought it would be good to discuss how it all works.

RTB

If you’re not selling and flighting your video ad inventory directly, you or your online video provider is probably using some sort of programmatic advertising strategy, which most likely includes at least some aspect of real-time bidding (RTB). Programmatic video has grown heavily since 2014.

Video ad exchanges such as SpotX or DoubleClick are constantly working to get the most accurate, and highest revenue earning advertisements on videos. They will look at URL whitelists, location, categories and demographics to ensure the highest CPM.

As a content publisher based in Austin, Texas, you may see a different video advertisement than a user on your site in Minneapolis, Min. As an advertiser, you may see your ads targeted to millennials in the Pacific Northwest.

Issues with RTB

The only problem is this real time bidding and flighting of advertisements can lead to a delay in ad serving, driving down the amount of monetized video views. Your ads could also show up next to content you don’t want your brand associated with.

Digiday broke down some of the current issues of header bidding on video. There’s a long way to go to perfect the process, but right now a lot of money is being spent on this advertising inventory, so it’s important to understand how it operates.