5 min read

Video Ads: Why They're Taking Over Advertising

Sarah Wheeler
Sarah Wheeler
Updated on
July 20, 2022

Videos are becoming the dominant online content form, evidenced by Instagram becoming “no longer a photo-sharing app,” TikTok’s 1.2B monthly users, and in advertising, video ad spend increasing an additional 26% to $49.2B in 2022.

Video ads are growing in popularity and in ad spend, and they won’t stop soon. To launch them yourself, you’ll need a capable ad server complete with transcoding functionality, flexible assets, and customizable ad units. In this article, we’ll give you tips for why and how to launch a video ad server quickly.

Why users love video ads

Clearly, the world is accustomed to consuming video content regularly. But why is it such an effective way to advertise? Consumers find video:

  1. An easier way to learn about new products. 72% of viewers prefer learning about products or services through video. Videos are easy, digestible, and help viewers understand and appreciate your product quickly.
  2. A more engaging format. Video posts drive the highest engagement rates on Facebook, and video posts receive double engagement on Instagram.

Though videos are a more engaging, quality learning experience for users, to achieve the results you're looking for, video ads must be high-quality. Low-quality video content and annoying pop-up videos can hinder the user experience. When launching this format, you need to make sure your ads are fast-loading, native to the UX, and add value to the user experience.

Valuable video ad types

So what are video ad types that add value to users? Here are a few examples:

  1. Native video ads: These ads are native to the page, load seamlessly, and integrate within the native content. On TikTok, in between scrolling videos, you’ll see sponsored videos appearing just like the native content.
  2. Sponsored listings: Sponsored listings appear commonly on retail media platforms and online marketplaces like Etsy, Amazon, and eBay. More and more of these listings are becoming dynamic videos, as seen on this platform:
  3. In-stream: If you already have a video-dominated platform with native content, intermixing these videos with video ads is a no-brainer, just like YouTube has done.

Why advertisers love video ads

Not only do video ads provide value to users–advertisers are willing to pay premiums for this kind of content. This is because video ads provide:

  1. First-party data insights. Video ads provide new and unique user insights. Even knowing how long a person viewed a video, or how many times, can help advertisers understand how people are engaging with their content and might convert.
  2. ROI. When polled, 94% of respondents said videos have helped them make a purchase decision at least once. Advertisers know this format is effective and can provide better ROI than standard ads.
  3. User retention. Viewers claim to retain 95% of video content. This might mean users think about advertisers’ products longer, providing long-term value.
  4. Better targeting. When watching a YouTube video on “writing tips,” Grammerly ads pop up. When scrolling through retail websites, sponsored videos appear. Advertisers can target even better with these video ad format.
YouTube example

How to launch a video ad server

There are many ways to launch an ad server that displays video ads, and more and more ad tech companies are launching video ad offerings. Here are a few to choose between:

1. Building your own video ad server from scratch

Here, you’d build out a large tech team and design the ad product from scratch. By building it from the ground up, you have full control over its scope and vision. Facebook, Amazon, and Pinterest took this route.

You might consider building your own ad server if:

  • You want something that you own 100%.
  • You want control over what features are prioritized.
  • You don’t want to pay vendor fees.

You might think twice if:

  • You can’t wait years. Facebook, Amazon, and others took years to build out their ad platforms, which means no revenue in the meantime.
  • You don’t have the engineering resources. Building an ad platform from scratch requires many experienced engineers. This drains your resources and can be costly.

2. Third-party ad server or native ad network

Alternatively, you might consider a third-party ad solution, such as Criteo or CitrusAd for retailers.

You might consider using a third-party ad solution if:

  • You need a fast launch time. Tag-based ad networks can be integrated in less than a day.
  • You need advertiser demand. These networks bring advertisers with them.

You might think twice if:

  • You want truly native video ads. Tag-based integrations and native ad networks require ad unit conformity. This may work for templated sponsored content boxes, but designing ads that fit into your site/app seamlessly is not possible with these solutions. They will always look slightly (or entirely) off.
  • You want control and customization. The advertisers and look of the ads is controlled by the third-party, not by you.
  • You want to avoid the pitfalls of tag-based ads. In the next section we dive further into what these issues are.
  • You don't want to share revenue

3. Ad APIs

The final option is building the ad platform yourself, but using ad APIs to speed up the time to launch, similar to building your communications solution on top of Twilio. With these tools, you integrate via APIs to get instant access to the building blocks you need to design a native ad product, including ad decisioning, tracking, targeting, management, and reporting.

You might consider using ad APIs if:

  • You want a video ad server sooner than later. Using infrastructure APIs can cut down build time by 90%.
  • You don’t want to spend a fortune. Rather than paying engineers, server fees, and other expenses, these solutions charge a set SaaS fee.
  • You want truly native video ads. Server-side ad requests allow you to integrate native ads that appears exactly like organic content.

You might think twice if:

  • You have no advertisers. Ad APIs generally provide the infrastructure, not the demand, so you’ll need existing advertiser relationships.
  • You want to launch a new platform in a few days. Some engineering resources are required, and it’ll likely take a few weeks.

Getting started

Launching a video ad server doesn’t have to be complex, and doesn’t require endless time and resources. With Kevel, you get all the video ad serving features you need, including video transcoding, reporting, and decisioning. To find out more, contact us today.

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