• by Bryon Evje , October 15, 2009

Video networks, some have said recently, are a media hazard that threatens to undo whatever progress the segment has made in the first decade of this digital century, an unsafe harbor into which Fortune 500 marketers have been irresponsibly ported. As someone trying to build a company attempting a trustworthy reputation in this often unclean space, I can empathize with the many detractors who have cast their doubts of late. Just as a rising tide lifts all boats, we all tumble together. Guilt by association, perhaps. The stains that have been revealed have been there since birth, and the folks who have fathered these companies know it. These are the guys who have taken people's money so they can take other people's money.

While you might not agree with the misguided practice, you can begin to understand how and why we are where we are. Not surprisingly, greed is the seed. In the land grab of online video, many of the people who set out to put together a network went about it the same way -- in retrospect, the all-too-obvious way. They would cobble together a list of Web site "partners," the majority of whom would have no idea they were being openly represented in the market by a company who'd never received the proper authorization. Contracts were minimal. It all looked good on the surface at the agency. Here were these companies that purported to do the heavy lifting for which the agencies had neither the time nor the human resources. The rate flexibility being offered would allow the agencies to round up meaningful scale (so they believed), and bring the buy in for the client with a healthy mix of premium content sites, with whom the agencies would negotiate directly.

In the usual absence of a contractual relationship with their site partners, the networks become extensions of the agencies, acting as media buyers who promise delivery against every category and demo requested, and with deal in hand, go out and shop it to the publishing community. The routine is purely transactional and caters little to the services-oriented business ideals on which many networks claim to be founded. Close the deal at any cost (and any price) and worry about delivery later, and never mind performance.

Many publishers and media companies -- at least those that operate at the high end of the food chain -- discovered long ago that this felonious practice was taking place, and made public their end with networks altogether. Those whose media sales teams may not be as firmly established chose to look the other way. And then there are the many publishers that haven't developed an internal sales force, a portion of which make doable the whole video ad network business of selling low and buying lower (we'll come back to these folks in a moment).

With few differentiators from one to the next, the video networks compete almost exclusively on price. And tough times call for tough measures, which means CPMs that are depressed on the front end to begin with, are further challenged as the AORs shop for the best available deals in the growing mass of video ad net options. More often, these high-volume, low-CPM network deals are happening as part of the upfronts, which allow the networks to backload as much  media as possible and yet still recognize revenue. This may help initially inflate valuations in the capital markets, but ultimately investors are left disappointed, as campaign revenue falls short of delivery goals and/or cancelations occur due to unsightly performance levels. And this brings us back to the originating CPM.

Few, if any, of the video nets can deliver on CPC or CPA programs, though some might not acknowledge this without first trying and failing a few times. It all comes down to delivery -- a troubling reality in the digital age. With required impression levels already increased as a result of the pricing competition, and the high-volume DNA required of any video ad network, demand quickly outstrips supply.

Despite this fundamental truth, the concept of givebacks -- acting openly and honestly with the agency, informing them that the network can't chew the amount of media it bit off -- never enters the discussion. Instead, the segment as a whole goes down in a horrible heap. We all suffer from the indignity of a few. The justification, as unjustifiable as it is, goes something like this: competition is increasing, numbers are slipping, VC money is needed, no dollar shall be left behind, don't tell me how you do it, just do it.

And with a wink, the hounds are unleashed.

Advertiser ROI becomes auto-initiated, video-in-banner without sound, below the fold, on unapproved or less desirable sites, often associated with UG or unsavory content. This is what passes for pre-roll these days. When the sheets are rolled back and the guilty parties are exposed, the folks who aren't in the room to defend themselves (the sites) become the natural targets. If most of the sites had agency-level contact in the first place, there would be less need for the networks, as it's easy to exploit an obvious vulnerability when the situation calls for it. Meanwhile, these are the same sites that have allowed the few guilty parties to stay in business -- and, in some cases, thrive.

Sure, in many cases, these are the sites that act on the impulses of the suspect networks, who piece together mini networks of vagrant sites, who operate away from the layers of falsified site lists, who carry out similar orders for multiple networks, who make much of the online video industry go.

After a recent article exposing some of these issues was published, one of the suspect networks reacted by saying they monitor their sites "through our partnership with network monitoring services such as Content Watch." But this is the kind of say-anything mentality that gets these folks in trouble in the first place.

We did a little checking and determined that Content Watch is an Internet software provider that businesses use to monitor the Web browsing of its employees. Unless we're missing something here, it seems the network rep missed the mark on this one.

Obviously, there's no policing taking place here. If so, a real network, one in which all sites are wired together in a uniform system, would immediately deactivate a site if something unauthorized was taking place. And the unauthorized action would have been quickly identified as a result of actual relationships with companies like Telemetry or DoubleVerify, who provide services that monitor participating sites, associated content and on-page placement.

For all the millions of dollars these networks take from the market, you'd think a small reinvestment to provide brand safety wouldn't be too much to ask.

If online video is to become a trusted media vehicle anytime soon, it's up to the rest of us to bring order and accountability into the space, and, for others, to come clean before it's too late -- if it isn't already.