• by James Booth , November 4, 2014

Video advertising may be booming, but its very success is in danger of destroying it.

As consumers tire of overexposure to retargeted ads and brands no longer tolerate poorly placed creative, the video advertising industry needs to move out of its short-term mentality to develop approaches that work better for brands and consumers, rather than being primarily focused for the industry.

Video advertising is split into three main camps: pre-roll, where video adverts are played in front of selected video content; what could loosely be termed as "seeded" video existing in a more mixed environment including social media and some pre-roll exposure; and interactive rich media that exploits existing IAB placements and in some cases in-editorial native.

Each of these camps have flaws its business model, but seeded video has suffered more recently thanks to a cost-per-video (CPV) business model that has seen the commoditisation of the approach send prices to the floor, and with that the quality of placements, as vendors attempt to retain margins. Today, it’s not uncommon for videos to appear below the fold, on sites that aren’t brand safe, and viewed by robots rather than humans. Brands embracing CPV video seeding have been known to enjoy large numbers of impressions but little to no actual referrals. When a brand requests a breakdown of the host sites delivering the views, it has been the case that they’re presented with some plausible-sounding reason as to why this isn’t possible. Views count, and quality human engagement possibly less so.

Programmatic flaw

The more premium pre-roll video model, more likely to find a human viewer, is also somewhat flawed, and in this case the fault is due to its evolution. As with other digital media, pre-roll is moving rapidly to being bought programmatically, which in turn means it can be targeted to a near-exact user type the brand wishes to reach. This, everyone would agree, sounds brilliant; the problem is something of a catch-22 for programmatic.

Tech providers in the online advertising space increasingly boast about their ability to target down to the exact users the brand wants, but in being able to do this, they run the risk of compromising their income. Tech vendors are still paid on CPMs for ad serving and/or on a portion of the media spend; increased targeting reduces reach -- the targeting that ad tech vendors trumpet as their greatest strength actually has the potential to ruin them.

In ad tech provision, volume is everything; volume means income. Toward the end of a campaign, if only a fraction of the required impressions have been delivered, due to the successful targeting, a big push on volume becomes a necessity as does a reduced intensity in targeting. To deliver the extra volume, impression capping might need to be reduced. This either means the targeted users suddenly get hit with the same advert way too often, risking changing mild interest into resentment, or less suitable candidates are introduced into the target group. In both scenarios the results suffer. Without volume, the technology company won’t look good on paper and will struggle to attract the investment needed to scale their business.

Therefore, turning the targeting up to 11, or truly respecting session-capping right through the lifespan of a campaign, is a challenge that affects many stakeholders. It’s a catch-22 problem for anyone working in programmatic -- but as pre-roll video is an interruptive medium, the problem of over-serving ads has even more risk associated with it, as good-quality inventory is harder to find –-- a display ad following you around the net may be mildly annoying but it’s nothing compared to having to watch the same video ad over and over again when trying to access content.

Solutions?

YouTube’s solution was the introduction of the skippable ad format that advertisers only pay for if their ad is actually watched. That’s fine if you’ve got Google bankrolling you, but most premium publishers can’t afford to sustain a video offering on a cost-per-engagement model only.

So what’s the answer? Will consumer power eventually challenge video advertising in the same way it did with the infamous pop-up? Or will the growing maturity of programmatic, combined with a renewed focus on the user experience, ensure that a balance can be reached between targeting, volume and the creative?

It’s likely to be the latter. Media is a cyclical beast -- something we have seen already with rich media advertising. In the early days Web pages did literally explode with over-the-top creative, but the scene calmed down and rich media became a key part of the display mix. Interestingly, we’re now seeing new media planners who missed the initial era of exploding pages becoming excited by this inappropriate approach and enjoying a second outing. Fortunately the more mature protagonists are looking afresh at what unobtrusive rich media can do, especially when paired with programmatic.

As video ad spend continues to grow, better solutions need to evolve; that goes without saying. Unfortunately, digital advertising technology has a nasty habit of following a short-term agenda where making money quickly is a key driver; how brands and consumers benefit too often a secondary consideration. If programmatic holds the key to better targeting and new forms of rich media and video deliver a more engaged consumer, perhaps the value of those users will increase in turn through the bid mechanisms at the heart of this new ecosystem. One thing’s for sure -- online advertising technology still has work to do.