Programmatic Video Advertising: What It Is, How It Works, and Why You Need It

Whether it’s a 15-second commercial, a short clip that catches someone’s attention as they scroll through an article or, increasingly, an ad spot on a billboard in their favourite video game, programmatic video advertising is the perfect channel for creating an emotional connection between your brand and your audience.

Despite the rise of similar channels like connected TV (CTV) over the past few years, video advertising is showing little signs of slowing down. Programmatic video ad spending in the US is expected to increase 15% and reach $110.37 billion USD in 2025. In other countries, the story is the same, with programmatic video forecasted to grow 13.1% in the UK, 13.7% in Germany, and 15.4% in China in 2025.

With 82% of people saying they’ve been convinced to buy a product or service after watching a video, it’s clear that video advertising remains a powerful tool for influencing consumer behaviour.

In this deep dive, we’ll cover the basics of programmatic video advertising: what it is, how it works, current trends, the formats you need to use, and best practices for creating ads that capture people’s attention.

What Is Programmatic Video Advertising? 

Programmatic video advertising is the automated buying and selling of video ad inventory through a digital advertising platform. It involves real-time bidding and data-driven algorithms to determine the most effective ad placements and deliver targeted video ads to specific audiences across various digital platforms, including websites and mobile apps.

What Are the Benefits of Programmatic Video Advertising?

Unlike traditional methods, programmatic video advertising provides advertisers with more precise targeting, greater cost efficiency, and the ability to reach the right audiences in real time.

Here are some of its benefits:

Programmatic Video Is Powered by Data 

Programmatic video advertising leverages data to enhance targeting capabilities, allowing advertisers to reach specific audiences based on certain demographics, behaviours, and interests. This precision targeting ensures that video ads are shown to the most relevant viewers, increasing the likelihood of engagement.

Additionally, programmatic video campaigns provide access to detailed video marketing metrics, such as view-through rates, completion rates, and audience engagement, which are crucial for measuring campaign performance and optimizing future strategies.

Video Is Memorable

According to Forbes, viewers retain 95% of a message when they watch it on video, compared to just 10% when reading text. Other studies have shown that videos get roughly 12 times more shares than text and images combined, making programmatic video advertising an effective tool for increasing engagement and reach.

Programmatic Video Ads Convey a Lot of Information, Fast

Unlike other ad formats, video advertising combines visuals and audio. This allows advertisers to convey a lot of information in a short period of time. 

With video, you can do more than just introduce a product or service. You can educate the viewer and start building trust between them and your brand right at the start.

Videos Are Getting Easier to Produce

Not every video ad requires the production quality of a Super Bowl commercial. As recording devices, video production software, and generative AI tools become more affordable (if not free), it’s easier than ever to create ads in-house, with 42% of video marketers saying they only spend between $0 and $500 when creating a video. That said, if you want to make professional-looking ads, but don’t have the bandwidth, talk to the StackAdapt Creative Studio team.

Programmatic Video Ads Are Easy to Repurpose

With adtech platforms like StackAdapt, advertisers can access and launch ad campaigns across multiple channels from a single dashboard. This means that advertisers can save money by repurposing video assets for digital out-of-home (DOOH), CTV, and even in-banner display ads to enhance brand recognition and recall as part of a multi-channel strategy.

How Does Buying Programmatic Video Advertising Work?

Much like other types of programmatic advertising, programmatic video advertising automates the formerly complicated process of purchasing video ad space for agencies and brands. 

Here’s a simplified step-by-step breakdown of how it works:

• Step 1: Defining the Campaign Goals: Advertisers begin by defining their campaign objectives, such as increasing brand awareness, driving website traffic, or boosting conversions. This helps determine the target audience and the type of video content to create.
• Step 2: Campaign Set Up and Targeting: Advertisers use a programmatic advertising platform to select their budget, campaign goals, and target audience based on various criteria, including demographics, interests, browsing behaviour, and location, which ensures that ads get delivered to the most relevant viewers.
• Step 3: The Auction and Ad Delivery: When a user visits a website or app that has available ad space, an auction is triggered in real time. Advertisers automatically bid on the ad inventory based on their targeting criteria and budget. Once the bid is won, the ad is delivered to the user through the publisher’s platform. This process happens in a fraction of a second, seamlessly integrating with the user’s viewing experience.
• Step 4: Reporting and Optimization: After the ad is live, performance metrics, such as impressions, clicks, and conversions are tracked. Advertisers can analyze this data and share it with clients to assess the effectiveness of their campaigns and adjust targeting, creative content, or bidding strategies to optimize results.

Types of Video Ads

Now that we’ve gone over what programmatic video advertising is, its benefits, and how to buy it, let’s break down the main video ad types you’ll want to leverage in your programmatic campaigns.

Native Video

Like traditional native ads, native video ads blend seamlessly into other content. The goal here is to increase clicks by engaging viewers naturally rather than disrupting their browsing experience. Native video ads match the look, form, and feel of the website they appear on, allowing advertisers to add their own headline copy and body text to make it more engaging and less intrusive than other types of ads that may appear on a site.

Interstitial

An interstitial video ad is a full-screen ad that covers the entire screen or interface of an app, typically appearing during natural transition points (for example, in between levels of a mobile game). Interstitial video ads are a popular format for programmatic video advertising due to their ability to capture the user’s attention and provide a more immersive experience compared to other ad formats.

Native Outstream

You’ve probably come across one of these ads if you’ve ever spent time browsing a site like Forbes or CNBC. Native outstream video ads are found outside of traditional video players and typically auto-play when a user scrolls through a webpage or social media feed. They integrate seamlessly with the content of a webpage without interrupting the viewing experience, making them less intrusive compared to other types of video advertising.

In-Stream Video

The most classic form of video advertising, in-stream video ads are short-form video ads that appear before (aka pre-roll), during (mid-roll) or after (post-roll) a video. The most common example of an in-stream video ad is the type of ad you see while watching YouTube.

In-stream video ads are a great way to capture a user’s attention while they’re already watching content. They can be made even more engaging with interactive elements such as QR codes, clickable overlays, and direct links to landing pages.

Programmatic Video Advertising Best Practices

When creating a video marketing campaign, follow these best practices to help ensure you make the most of your ad’s runtime and the space available:

• Don’t Overcomplicate the Design: Consumers are sensitive to ad clutter. Ensure brand logos, brand cues, and product shots are large enough to be easily seen, especially on smaller screens (75% of viewers prefer to watch short-form video content on their mobile devices). 
• Keep It Short: Create ads that convey a message in 10–20 seconds to make sure viewers watch your ad in full and stay engaged (completion rates tend to drop off substantially after 30 seconds).
• Hook Viewers From the Start: The first few seconds of a video ad can make or break its performance. Instead of following a basic storyline, experts at Google suggest using an emerging heartbeat arc, which involves grabbing people’s attention in the first few frames, introducing unexpected tonal shifts to create multiple peaks of excitement, and inserting subtle branding and product cues throughout to keep your brand top of mind. That way, viewers are more likely to stay engaged, wait around to see what comes next, and actually remember your ad.
• Find Ways to Make It Interactive: According to a 2022 study, interactive video ads doubled consumer consideration and increased awareness by 70% compared to video campaigns without interactive features. Making video ads interactive doesn’t have to be complicated. Use QR codes and clear calls to action (for example, entering a URL on your browser) to make ads more engaging.
• Extend Your Reach With CTV: Repurpose video assets and make more of an impact by adding CTV to your media mix to extend your reach and connect with viewers across devices.

Examples of Programmatic Video Ads

Looking for some inspiration? Here are some ads created by the StackAdapt Creative Studio team that showcase the full power and potential of programmatic video advertising.

GoCo

In this programmatic video ad, the Creative Studio team used dynamic visuals—including unicorns, yetis, and dragons—and powerful copy to distinguish GoCo’s all-in-one HR software from stuffier alternatives.

Chevalier Resorts

For some, vacation is about relaxing. For others, it’s the thrill of discovery. In this mock-up used as an example by the Creative Studio team, travellers are encouraged to experience a bit of both by discovering new worlds, thrilling views, and inner peace at a world-class resort. (Note the affordable pricing and QR code featured throughout to encourage users to book a stay.)

Northwest University

In this programmatic video ad example, the Creative Studio team used motion graphics, a variety of voice actors, and impactful brand colours to capture viewers’ attention in less than 15 seconds.

What’s Next for Programmatic Video Advertising?

Despite programmatic video advertising’s growth rate slowing to low double-digits over the next few years, the space continues to evolve and expand. 

According to EMARKETER, video ads are responsible for a growing share of mobile ad sales, with mobile video ad spending forecasted to increase 21.9% YoY in 2024. Although spending is primarily being driven by social media platforms like TikTok, YouTube, and over-the-top apps, the rise in mobile video ad spending further signals the need to tailor campaigns to mobile environments as people spend more time on their smartphones.

Programmatic video advertising is also becoming an important channel for B2B marketers. B2B video advertising’s share of digital ad spending has been increasing steadily for nearly a decade and is projected to reach 13.9% by 2025. The increase is largely due to user-generated content, which marketers are increasingly adding to their B2B marketing strategies to humanize brands, establish an emotional connection with buyers, and improve brand recognition.

Then, there’s Gen Z. Online and mobile gaming platforms like Roblox have been experimenting with immersive video, which Marketing Dive reports gives marketers a scalable way to reach Gen Zers who are “notoriously wary” of traditional advertising. So far, it seems to be working, with three-quarters of users saying they were more likely to notice brands that used immersive video ads in-game compared to brands that mostly rely on traditional video advertising. Although the technology is new, other video game publishers are expected to follow suit, opening up whole new worlds and audiences for video advertising.

Getting Started With Programmatic Video Advertising

Video is an amazing channel for conveying complex or emotional stories, which makes it perfect for brand building. When including video as part of your media mix, consider a holistic approach. Leverage video as part of a multi-channel strategy by integrating display to supplement inventory, CTV to increase reach and product recognition, and native ads to drive interest and engagement.  

Ready to experience the power of programmatic video advertising? Request a demo and find out why StackAdapt is consistently ranked the #1-rated video advertising software on G2.

Programmatic Video Advertising FAQs