• by Joe Mandese  @mp_joemandese, October 30, 2008

LOS ANGELES -- A year or so after the online video advertising marketplace emerged in earnest, experts on both sides of the table say it remains a vital but messy, complicated and often difficult-to-evaluate business--although it clearly is the future of what Madison Avenue has historically considered its dominant, persuasive advertising medium: television. Those were the conclusions of speakers and panelists participating in the OMMA Video conference here on Wednesday.

"If you look at how many people are viewing videos online, the industry is monetizing only a small fraction of that," Adam Kasper, senior vice president-U.S. director of digital at Havas' Media Contacts unit asserted during panel of top digital media buyers. "Right now, we're kind of behind the adoption curve, and we're not taking advantage of everything that's out there."

Kasper seemed to sum up the consensus among the digital agency executives, but Jason Tsai, senior vice president-group communications director at Interpublic's Universal McCann unit, indicated that this wasn't necessarily inappropriate, given where online video is in the evolution of the overall media marketplace.

"I think that's for a good reason," Tsai said, "given the complexity and all the issues, and the fact that TV--although in a little bit of a transition state--in the short-term is still a very, very powerful medium. I think we are about where we should be in terms of the adoption of online video as an advertising medium."

Reiterating the multitude of challenges confronting the nascent online video marketplace, Tsai implied that the reason why Madison Avenue's coffers have not sprung open is more a function of the fact that the medium still is immature, and not because "there's some super-stodgy person holding the money somewhere."

Among the challenges cited by fellow panelist Jason Steinberg, director of Publicis' Spark Communications unit, are the fact that buyers and sellers have not been able to strike a balance on the appropriate cost/value relationship between online video CPMs and traditional TV advertising costs; the lack of consistent, comparable "metrics;" and the overall "management issue" for agencies dealing with a complex array of professionally produced and emerging micro marketplace online video advertising options.

Nonetheless, Steinberg characterized the evolution of the marketplace as "orderly," and said budgets are increasingly flowing to online video.

That's the ad industry side of the equation. And the sooner that pace accelerates, the better from a consumer perspective, implied Larry Kramer, senior advisor to Polaris Venture Partners and chairman of Black Arrow, during a morning keynote at the conference.

Citing Black Arrow research, Kramer said the current TV usage landscape is still dominated by linear TV viewing--about 389 billion hours per year in 2008, compared with only 800 million viewing hours for online video. By 2010, he projected, linear TV viewing will decline to 342 billion viewing annual viewing hours, while online video will expand to 14 billion.

The problem, Kramer said, is that much of that online video viewing will not necessarily fall into the kind of neat categories that Madison Avenue has historically sponsored. In fact, he cited a concurrent trend emerging toward a new form of online video programming, which is "not necessarily created to live on its own" and may not be part of traditional ad-supported advertising models.

He described this new genre of online video programming as "part of another digital storytelling process" and suggested that it is part of a bigger trend in non-linear programming that has begun to evolve.

"This is the first time since Guttenberg that we've created a new storytelling device," Kramer declared, referring to the invention of the moveable-type printing press.