47(As posted on MediaPost)

Recent research by eMarketer shows mobile video ad spend is on the rise, up 119% in 2014 alone, with growth projected to outperform desktop video ads for the next five years.

Still, this marketplace faces some surprising headwinds. Contrary to desktop video, premium mobile supply currently far outstrips demand.

What is causing this trend? Current technological hurdles tell part of the story. For example, the idea that advertisers can increase their reach and frequency by adding mobile video into the mix with TV and other digital ad buys is alluring, but targeting users and reporting across screens is challenging. Cookies don’t work for mobile so, instead, device ID matching is needed, and this technology has a long way to go.

Additionally, viewability tracking and poor view-through rates (VTRs) on the mobile screen continue to depress the value of the inventory. Until mobile video targeting, tracking and viewability reach the sophistication we are seeing on desktop, it will be a harder sell for performance-based media buyers.

Also important, the mobile video ecosystem is hugely programmatic compared to desktop. While more and more advertisers are starting to adopt programmatic technologies, it is still a barrier to entry for those who haven’t. Some advertisers still fear programmatic and cannot purchase mobile video inventory because they are not managing their buys through a DSP or agency trading desk.

This imbalance has several consequences. For instance, the growth of mobile CPMs is being stunted. AOL recently shared it is seeing a slight increase in overall CPMs, and growing supply is the only factor keeping CPMs from increasing more dramatically.

Fill rates were significantly lower than their desktop counterpart in Q4 as well. While this can be symptomatic of technological inefficiencies, the high supply and low demand per request is certainly a contributing factor. This predominantly affects longer-tail publishers, as advertisers have the luxury of only buying inventory on the most reputable, top-tier sites because it is so readily available.

Significant advancements are being made to directly address the issues listed above, but the key factor increasing CPMs is that advertisers are finding greater value in mobile advertising.

Increasingly sophisticated mobile video ad units, including rich-media interstitials, are becoming hugely popular for advertisers. Audience and cross-screen targeting are also improving, thanks to more reliable device IDs like Apple’s Identifier for Advertisers (IDFA) and Android’s Advertising ID. As mobile targeting becomes more refined and measurable, marketers’ confidence and ad spend will rise.

Finally, despite the hesitance of more-traditional agencies, media buyers as a whole are increasingly embracing programmatic. With the majority of mobile inventory sold in an automated fashion through ad networks and exchanges, media buyers need to embrace programmatic technology before they can boost demand.

In the future, it is entirely possible that media budgets will not differentiate between desktop and mobile. As we converge toward a purely programmatic ecosystem, advertisers will laser-focus on reaching certain audiences or achieving certain performance metrics. In this case, it doesn’t matter if impressions are served on desktop or mobile, as long as the campaign goal is met.

The industry has a lot to do before we reach this somewhat idyllic scenario, but all signs point toward its happening. Technical issues like targeting and measurement are being addressed head-on, while programmatic is poised for serious growth as the paradigm shifts towards more automation. Taken together, we can expect to see a serious lift in mobile video demand as the dust settles