Digital Video Advertising KPIs Shift, Business Outcomes Take the Lead

Two-thirds of advertisers still face challenges in measuring the effectiveness of online video ads.

Digital video advertisers are increasingly prioritizing business outcomes over traditional metrics like reach. This trend is evident among 54% of Connected TV (CTV) buyers, according to IAB research in the US. Advertisers are now focusing more on business outcomes, such as sales or store visits, as key performance indicators (KPIs) for digital video campaigns. This is the second part of the Interactive Advertising Bureau (IAB) report, which evaluates trends in this channel.

The growing emphasis on business outcomes marks a departure from the traditional use of video as a tool for achieving broad reach. However, IAB found that the tools for measuring the effectiveness of video advertising are inadequate, and two-thirds of buyers face difficulties in this area. The use of alternative measurement methods in the US, aside from panel ratings, continues to grow, with 89% of advertisers either testing or using new solutions from service providers. These experiments are happening as the IAB forecasts increased investments in the largest digital video channels this year.

Insights for Marketers

The shift to a performance-driven marketing approach, where ads can be directly linked to sales and other consumer actions, is becoming more pronounced in digital video. Reach and frequency, long the leading KPIs in this channel, are being supplanted by business outcomes. This reorientation is noticeable in social video, where 64% of advertisers now primarily value business outcomes, as well as in online video (58% of buyers) and the CTV market (54% of buyers). IAB gathered its findings through quantitative surveys from Advertiser Perceptions.

At the same time, experts note that positive business outcomes are achieved precisely through proper management of reach and frequency. However, most companies do not use econometric analysis, which allows calculations to achieve the best results. These trends emerge as brands invest more money in online video advertising while simultaneously abandoning cable TV. In the first part of its report, published in May, IAB predicted that spending on online video, social video, and CTV advertising would grow by 16% year-over-year in 2024 to $63 billion, with social video in the lead. Investments are also spread across different content types, with short-form and vertical videos, formats popularized by TikTok, making up the largest share.

Conclusions

The transition to a performance-focused approach in digital video is not without challenges. Two-thirds of advertisers experience measurement issues in this channel. Granularity seems to be particularly difficult to achieve, as small advertisers targeting niche audiences versus broad reach are “significantly more likely” to encounter problems related to viewability and accessing sell-side data, according to IAB.

“As the saying goes, ‘with great power comes great responsibility,’” said David Cohen, CEO of IAB, in a statement attached to the research. “With the continued impressive growth of digital video comes demands for better measurement, viewability, standardized data, and placement transparency. The video ecosystem must fully commit to innovation, especially in measurement.”

As their benchmarks for success change, most ad buyers are either negotiating or actively testing alternative currencies to the gross rating points model associated with traditional measurement firms like Nielsen. About 28% of buyers are already transacting with alternative currencies, valuing offerings that can provide multiscreen attribution and real-time reporting, according to IAB.

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