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The Creative Virtuous Cycle

June 12, 2014, 11:27 AM

Virtuous cycles are wonderful things. And a creative virtuous cycle is now squarely in place on the Nexage Exchange. The cycle is quite simple; actions by publishers to increase the inventory of high-impact ad formats such as rich media and video are met with positive actions by media buyers to build and deliver these ads – which compels publishers to build more (and so on). The reasons are also quite simple:

  • Publishers gain significant economic and customer experience value
  • Advertisers are better able to present their brand and message
  • Consumers respond to engaging ad formats
  • Agencies and buyers see significant campaign performance gains.

The virtuous cycle is also being propelled by technology and creative factors:

  • Programmatic’s ability to support virtually any ad format, including native, means that advancements in the creative are animated by the power of programmatic trading
  • Cross-screen HTML5 technology platforms for display advertising like AdCreator 4 from Celtra ensure we have the tools to build a truly creative industry.

You put all of these in a pot and stir and you get a pretty powerful virtuous cycle. Let’s take a closer look at this cycle in action:  

  • Interstitial, rich media, and video ad formats are growing between 194% and 516% and taking more and more share of the total inventory available on the Nexage Exchange. Right now, these formats represent 35% of our total inventory. At the current pace, these formats will represent more than 50% by next year.

  • In similar fashion, interstitial, rich media, and video ad formats are growing between 178% and 404% and taking more share of ads delivered. A key difference here is that the growth rates from media buyers (ads delivered) are accelerating as they move more creative talent to building mobile-specific ads and implement substantially more aggressive mobile strategies.

  • The value for both publishers and buyers is clear. CPM premiums are consistent and impressive. The larger point is that the combination of high growth rates from publishes and media buyers and consistent price premiums tells us the market is strong and getting stronger. This means publishers and media buyers should expect ongoing high levels of liquidity on the Nexage Exchange for these ad formats.

Price-Performance and Consumer Engagement 

The Nexage Exchange is an efficient market. It screams of pragmatism: value is placed on items that perform well and placed away from those that do not. And this is evident in the creative. Our great partner, Celtra, looked at the performance of different mobile display ad formats across campaigns served in Q1 2014:

  • Ad engagement rates: Expandable banners (rich media) outperformed static banners by a factor of 26-fold; interstitials outperformed banners by 8x
  • Click-through rates: Expandable banners (rich media) outperformed static banners by a factor of 9x; interstitials outperformed banners by 8x.
  • Video play rate: Expandable banners (rich media) outperformed static banners by 8.5x; interstitials outperformed by 2x. 
  • Time on ad unit: As opposed to the banner blindness, consumers spend on average 11 seconds on mobile display/expandable formats; 4 seconds on interstitials.

The price-performance curve is stark in an efficient market. To wit, you can see the tight relationship between price and performance.  

So What?

The static banner is marginally suited to creating advertising value. That is true whether we are talking about both brand awareness campaigns or performance campaigns. The good news is that high-impact ad formats – interstitial, rich media, video, and native – are displacing the banner and will soon take a majority (actually super-majority) share in the market. This is driven by a creative virtuous cycle underway and picking up steam on the Nexage Exchange.

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