Execs: We Still Don't Have Video Ad Model

by Erik Sass, Mar 18, 2008, 7:00 AM

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[Video] HOLLYWOOD, Calif. -- Online advertisers still haven't hit on the magic formula for video advertising, a panel of top executives agreed Monday at MediaPost's OMMA Global Expo in Los Angeles. One possibility already tested by several panelists with positive results--pre-roll spots that can't be skipped--was greeted with skepticism from audience members who doubted its long-term viability.

One thing isn't in doubt, according to Larry Kramer, senior adviser with Polaris Venture Partners, who was emphatic that "content has to be heavily advertising-supported." Of course, that doesn't exclude alternate means of monetization: the Torante Co.'s "vuguru" Jane Hu said it uses a mix of ad-supported and fee-per-download models and Patrick Keane, senior vice president and chief marketing officer for CBS Interactive, said the company has plenty of download-to-own relationships. But Keane added that "advertising revenue is the prevailing stream that we're looking at," expressing what seemed to be the consensus view.

But nobody knows quite what the model should be, conceded Jonathan Miller, a founding partner of Velocity Interactive Group: "There's been a lot of experimentation with pre-rolls, to curtains, to wraparound, but we still haven't seen it." In the same vein, Keane lamented that "there are still lots of agencies that don't have the creative pallet to offer advertisers something new and different."

As Miller indicated, pre-rolls are still widely used (not to say popular) and they do produce measurable results for advertisers--especially if viewers can't fast-forward through them. Keane said the unskippable pre-rolls were completed 85% of the time. Seeking a more palatable delivery system, Kramer recounted a successful model in which the viewer was able to choose one of four unskippable ads to watch, restoring some measure of consumer control.

But during the Q&A that followed, some audience members bridled at the idea of unskippable pre-roll ads, expressing concern that advertisers might simply throw up their collective hands and settle for a format that is broadly disliked by consumers.

As an alternative, 60Frames Entertainment is developing original "brand-sponsored programming," according to CEO Brent Weinstein, working with producers to "really integrate the brand messaging into creative." Advertisers have always been interested in this approach, he recalled, but were prevented by the sheer logistics and expense of the old broadcast model.

However, Keane said that CBS Interactive has also experimented with original programming with some success--and may again in the future. While he didn't explicitly link the two, his separate call for "better product placement" in online advertising suggests that CBS may also venture into branded or "brand-sponsored" content.

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