Why Kathmandu is betting big on mobile video ads
Kathmandu took its first big step into mobile video advertising in February of this year. The 10-week campaign targeted 18-30-year old travel fans on Facebook through six videos designed to evoke wanderlust.
In one of the ads, young adventurers look directly at the viewer from various exotic locations: the side of a spitting volcano, a foreign temple, a boat deck, a train hurtling past a modern city. Then a voice asks: ‘If you could only take one trip, what would it be?’
The inspiring visuals and target demographic made mobile video the obvious medium for the message. But it wasn’t a natural choice for the ASX-listed outdoor and travel retailer.
“We had experimented with video ads previously but this was our first big effort,” John Sette, Kathmandu’s group marketing manager, said.
Since then, Kathmandu has released dozens of educational, product-focused videos on Facebook and Instagram – think packing tutorials and fast-motion films of high-altitude treks. It’s currently running a video campaign about camping for the summer season. Mobile videos also feature heavily in Kathmandu’s marketing plans for its 30th anniversary next year.
So what convinced the retailer, which Sette described as ‘traditional’, to commit to the new ad format so quickly?
After analysing the February campaign, Kathmandu found the ads generated 8.6 times the amount of revenue as they cost. They also led to a 10-15 per cent increase in signups to the company’s loyalty program among the target demographic.
“This was right up there with some of our most successful campaigns,” Sette said.
Commercial impact was a crucial internal hurdle at Kathmandu, which, once overcome, paved the way for mobile video to gain prominence in the marketing department.
“We plan to continue to use Facebook and video as a core part of our campaign programs. We’re on a transformation program within our business to adopt digital channels more aggressively than we have in the past,” he said.
The rise of smartphones and streaming
Kathmandu is far from alone in this endeavour. Mobile video advertising is fast becoming one of the preferred ways for brands to reach customers. This is driven by two main factors: the increasing amount of time people spend on smartphones, and the increasing amount of time people spend consuming video.
According to the Interactive Advertising Bureau’s (IAB) Mobile Ratings report, Australians spend nearly 35 hours per month on average browsing content their smartphones, one hour of which is spent watching video.
Meanwhile, Reuters predicts video will make up 70 per cent of mobile traffic by 2021. Furthermore, research from Google and Ipsos shows that millennials are far less distracted watching video on their smartphones than on any other screen, including TV.
All of this is to say that consumers’ eyeballs are firmly fixed on the small screens they carry with them. As Facebook’s head of retail in Australia and New Zealand Kate Box explained: “Commute time is the new prime time.”
And advertising dollars are following this shift. According to the latest figures from IAB, spending on mobile ads, which includes video, other display formats and search, was $543.7 million in Australia for the quarter ending 30 June, up from $139.6 million from the same period last year. That’s a 65.5 per cent year-on-year growth rate.
While every major social media company is angling for a slice of the pie – Twitter, Snapchat and Pinterest all now support native video or video ads on their platforms – Facebook, and its subsidiary Instagram, along with YouTube, undoubtedly take the lion’s share.
The problem with mobile video metrics
Facebook recently reported strong quarterly earnings, largely thanks to its mobile advertising business. Mobile ads represented approximately 84 per cent of total advertising revenue in Facebook’s third quarter, compared to 78 per cent in the same period last year.
“We had another good quarter,” Mark Zuckerberg, Facebook’s CEO, said in a release to investors and media. “We’re making progress putting video first across our apps and executing our 10-year technology roadmap.”
This is despite recent revelations that Facebook miscalculated a key mobile video metric for two years. By only factoring in views of more than three seconds, the social media giant artificially inflated the average viewing time of mobile video ads by 60-80 per cent, according to documents obtained by the Wall Street Journal.
While Facebook has fixed the metric and has asked a third party to audit its data, it continues to downplay the impact of its mistake.
“The average view time hasn’t been the most important metric for the marketers we work with,” Facebook’s head of retail in ANZ Box explained. “Ultimately, the measurement that matters is how much more the people who have been exposed to the ad spend in shop.
But as Alita Harvey-Rodriguez, managing director at Milk It Academy and Internet Retailing contributor, pointed out, marketers still rely on the average viewing time metric in the content creation stage.
“I don’t agree that average watch time doesn’t matter to an advertiser. As a strategic marketer, it informs your understanding of how much consumers will spend based on how long they watch.
“I don’t think there’s enough transparency around data, but if Facebook gets the data audited by an external party, it will build trust with advertisers, which is a very good step forward.”