Commentary

Closing Out 2009: Trends In Video

One of my favorite things about working for an ad network is the diversity of partners required to run the business.  As a network business scales, more demand requires an increased number and range of suppliers and technology to manage and optimize it all.  After a while, you find yourself at the intersection of a long list of customers and partners.  Those constituents not only represent the lifeblood of your business, but are a potential goldmine of information on trends in the marketplace that can be used for future planning.  All you need to do is ask and listen.

 

I've been doing a lot of asking and listening over the past few months, meeting with both advertisers and publishers to learn their priorities and needs when it comes to video.  In those conversations, several common threads have emerged.  Here they are below.

Pricing is a struggle.  Publishers are understandably attempting to maintain premium pricing for their in-stream video advertising units.  Many, particularly in the back half of the year, have delivered substantial sell-through at healthy CPMs.  Some have not.  Marketers have largely focused on the disparity between TV CPMs and their online equivalent, with the latter being much higher than the former.  Measurability and interactivity don't seem enough to overcome this disparity.  Interestingly, rich-media formats seem to be well positioned to benefit from this disparity, with in-banner formats (at least anecdotally) enjoying an uptick due to their cost efficiencies and scale.

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Quality scale is (still) lacking.  Despite increased online content and viewership, there still appears to be an imbalance of supply and demand for top quality in-stream advertising opportunities.  Hulu and YouTube aside, many publishers bemoan their lack of available inventory to accommodate the larger RFP sizes that tend to be attached to video.  Savvy publishers are exploring syndication and audience extension partnerships with ad networks to bring more opportunity to the table.  Short-term, this is a great strategy.  However, with video spending forecast to grow 40% per year for the next few years, the supply issue (combined with the pricing struggle noted above) may hamper that growth trajectory.

Metrics and measurement are a focus.  Cost-per-engagement (CPE) was an interesting topic a year or so ago, but failed to become a trend.  With the proliferation of more in-banner opportunities, CPE has made a bit of a comeback.  Additionally, as ad serving capabilities have grown, a push toward evaluating -- and paying for -- verified and viewed advertisements is  growing.  Witness YouTube's recent announcement of testing "skippable" pre-roll, in which advertisers will only pay for viewed impressions.  Experimental models such as this are a very positive development for a growing industry, and may partially address some of the above two issues.

Those are three key issues of the day as we close out the year.  Please add your own in the comments.  Next month, we'll tackle 2010 online video predictions.

5 comments about "Closing Out 2009: Trends In Video".
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  1. Diane Politi from Reel Centric, November 16, 2009 at 3:22 p.m.

    The article you mention also stated, "Pre-rolls in short-form videos, defined as less than between 15 and 20 minutes, can keep the attention of people watching the clip. The test will also run on long-form videos. But when a pre-roll ad runs 15 seconds, YouTube registers completion rates as high as 85%." I think's an incredible bit of good news.

  2. Rich Reader from WOMbuzz, November 16, 2009 at 3:45 p.m.

    The CPE valuation model leaves much to be desired. Why aren't we doing more survey work to ballpark the comparative likelihood of a conversion that arises from a video ad as opposed to the likelihood of conversion that arise from engagements coming from other types of ads?

    We're missing the boat halfway down the sales funnel when we get distracted by shiny objects in the middle of the process. Let's get valuation back to the end-to-end perspective, even if it's <i> partially </i> based on survey estimates.

  3. Craig Moore from Spider Video, November 17, 2009 at 6:06 a.m.

    I think that you are highlighting the opportunity for advertisers and marketing companies to jump into the branded entertainment forum. If they can't find the quality of content they want then start making it themselves or partner with a company to have them make it for them. They will have a unique product, be able to target their desired audience much better and have full control.

    Yes there is a investment of time, and a different type of commitment but also with different results.

    Thanks

    Craig

  4. Mike Einstein from the Brothers Einstein, November 17, 2009 at 10:01 a.m.

    All this talk about delivering the right ad at the right time to the right audience neglects the most important variable of all - the right place.

    Where better for an advertiser to state its case than within the exclusive confines of its own branded surroundings? The question then becomes, how do you get folks there without using traditional, dysfunctional ad formats?

    I welcome anyone so interested to contact me and I'll tell you how.

  5. Jack Thorogood from Invideous, November 29, 2009 at 2:45 p.m.

    I'd add - and it shows in some vendors interest in CPE whilst others eshew it - that the video ad sector is split right down the middle in a way that is rarely mentioned, namely: half the vendors think of video as an alternative online display ad format whilst the other half are trying to position it as an alternative to TV.

    It's probably more like 70% thinking with online mindset and 30% TV mindset. The big bucks are in TV though, so the vendors who think in CPE and other weird and wonderful terms are missing a trick by making things yet more confusing for TV planner/buyers looking for an alternative to TV.

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