• by Michael Shehan , January 8, 2008

Once again, SpotXchange CEO Michael Shehan talks to Dueno Group, Publicis' Senior Vice President Tim Hanlon.

The first article explored the state of the emerging space, reviewing adoption issues and what is coming up for the new medium to hit its stride. This discussion covers video ad networks, exchanges, auctions, pricing and video ad units.

Michael Shehan : Do you think that traditional TV buyers should look at video ad networks, auctions, and/or exchanges? Or, can they bring their broadcast best practices to negotiate individual buys on long-tail inventory?

Tim Hanlon: There are two dimensions that are occurring with video. First, there is the sheer explosion of choice, so whether it's the fragmentation of networks and traditional media providers, a TV station now has four or five digital channels to program versus just one linear analog channel.

Next, there is the maturation of avails, as the technology allows traditional programmers and ad sellers to offer advertising in a more sophisticated manner. This unbundling has historically been a tightly wrapped packaged of availability, buttressed by a less than elegant measurement system (example, Nielson) that has given us a relatively crude measurement device called ratings, and demographically oriented at that. We are now able to measure more granularly. That brings an increased sophistication of audience definition that goes far beyond a generic grouping. Add to that the sheer explosion of avails and the ability to slice and dice.

 It's fair to say that marketers and their agencies are moving towards a sophisticated targeting environment where they're going to want to cherry-pick an audience or multiple audiences in a granular fashion to advertise multiple messages -- perhaps even simultaneously.

Shehan: Where do you see online video advertising headed?
 
Hanlon: Online video or video in general is the next logical place for that marketplace exchange behavior to happen. Simply because so much money is tied up in it, and there are so many new ways to serve video today. The marketplace exchange dynamic is absolutely crucial to the future of video, regardless of which touch point. Whether it be by itself, or probably more wisely as something bigger, this phenomenon to the uninitiated is already underway.

Shehan: What thoughts do you have on more effective ways to reach consumers via online video?

Hanlon: Targeting and addressability are of the utmost interest to the marketing community. We all want to be very deferential to people's privacy. But I'm a big believer that increased relevance of ad delivery in any form -- not just video or online video -- is what the world is moving towards. That will ultimately be helpful for not only the marketer, but the consumers themselves.

So, anything that helps us better deliver with an intelligent, appropriate ad message that is relevant is of interest. I am very interested in Visible World's ability to componentize creative on the fly as audiences are presented in a broadband video setting. I'm very interested in the privacy constraints of behavioral targeting-like what Revenue Science can do in online advertising. I am very interested in what I call the dimensionalization of online video - a company like adap.tv and its graphical overlay structure that allows people to go further if they are interested in the ad message.

To me those dynamics are pretty compelling opportunities, really less about mass and scale and more about targeting and quality. I think marketers -- especially mass marketers, brands and agencies -- need to get used to the notion that quality is going to trump quantity and the only way to achieve the scale that marketers need to be successful is for agencies and marketers to aggregate numerous audiences on their own. You're going to have to go at those audiences in individual ways. I'm not saying one-to-one marketing. I'm saying one-to-some marketing.

Shehan: Do you think that will translate into a different pricing model? We have run into traditional media buyers who have bought TV programming at an effective CPM rate of, say, $20. Do you think they will go past that?

Hanlon: In the short term you're still going to get the money that is going to be found by TV buyers who continue to impose TV buying dynamics on online video. Longer term -- maybe a year or two -- you will see an increased sophistication of purchasing that is done in a much more targeted and quality oriented way with multiple buys aggregating to scale.

The irony is that it's not just simply a function of media. I would argue most television buying or video buying has been a media agency exercise. What we are really talking about with technologies like Visible World, for example, or even some of the behavioral targeting companies, is actually a co-activity of media and creative. The creative agency and the media agency are separate entities, which makes going back to them a challenge. But that which is media and that which is creative is getting harder to distinguish when you talk about Visible World being able to deliver a componentized stream of video on the fly as audiences are presented.

You absolutely have to have a handshake between the creative and the media process. My argument is that audiences are better targeted and more relevant, so we have to get more granular in the way we address audiences. That not only means carving out smaller and more concentrated media environments in audiences, but literally creating numerous ad messages for each of them.