Commentary

Vid Nets Poised for Growth ... And Monstrous Complexity

At Monday's OMMA Ad Nets show in LA the buzzword was "complexity." Those of you in the video ad ecology should feel lucky ... for now. You don' yet have to deal with a display ad network supply chain that just about every honest person in it admits is too damned intricate, interdependent and confusing. From DSPs (demand side platforms) to RTB (real-time bidding) the alphabet soup of ad technologies is stultifying. In just the last two years the number of data and service providers inserting themselves into the targeting process has multiplied.

In fact, almost as a joke, investment firm GCA Savvian created a chart that has been circulated widely now that graphs out the pieces, from agency "trading desks" to DSPs to data exchanges, data optimizers analytics, verification and attribution providers to the many ad nets themselves.

Display Advertising-Today/chart

advertisement

advertisement

But there is another chart getting built as well and this one involves the video ad ecology. GCA Savvian VP Josh Wepman gave us a superb presentation Monday on how his firm views this morass and where it suspects there will be opportunity.

Publishers, he warned are under threat by these new demand side platforms because they can depress overall CPMs and advertisers can find their audiences now elsewhere for much less money. But Wepman recommended that publishers need to leverage their assets more effectively in terms of embracing targeting on their own sites, demonstrating the value of context and selling data directly to advertisers themselves.

Wepman singled out one very important defensive position for publishing -- video. "Video promotes more engaging ad content" he said. "It has a 5x to 6x higher yield than display advertising." More to the point, video is the content that will directly pull from the biggest untapped well of all -- TV dollars.

And now there is a new GVA Savvian chart for the video segment. Wepman's video economy charts enjoys the benefit of being compared to the near-comical display chart. In comparison, its six categories of content creation, publishing tools, delivery/content management, enablers, monetizers and aggregators seems disarmingly clear, clear and (dare we say) sustainable.

Video Value Chain-chart

Let this be a warning to the video side of online advertising. At yesterday's Ad Nets I was struck by how much faith, money, time and complexity are being poured into targeting technologies that some agency panelist admitted had not really demonstrated superior performance yet. In order to manage and even understand the new digital advertising order of highly automated, algorithm-driven buying, agencies chuckled over the need to hire math Ph.D.s and add immeasurably to their own overhead.

When Wepman presented this much cleaner chart of the video economy I had to wonder whether streaming media ultimately will have the upper hand when attracting ad dollars. Not only is it simpler but in some ways TV has already made the case for its effectiveness. Dave Martin of Ignited Media said something on one panel that seemed to say it all about the advantage video had over display.

In essence he said that it didn't matter how much a display ad targeted the right consumer at the right place with the right message at the right time. When it came to advertising that movie that is opening this Thursday, it is preferable just to get your likely customer to watch a trailer for the film, and that audience often is best found and leveraged when they are in the context of an entertainment site.

1 comment about "Vid Nets Poised for Growth ... And Monstrous Complexity".
Check to receive email when comments are posted.
  1. Jeff Einstein from The Brothers Einstein, July 20, 2010 at 10:43 p.m.

    Wepman's advice for publishers to embrace targeting technologies and look for new ways to sell data is positively inane and explains why so many otherwise quality publishers are going out of business -- in essence because they don't have the presence of mind or intestinal fortitude to say no to guys like Wepman and the digital snake oil they promote.

    There's nothing sustainable whatsoever about Wepman's chart, if for no other reason than the fact that all the components in it are designed to deliver a product no one wants and everyone is equipped to avoid: advertising. Great advice: start with a product no one wants and everyone is equipped to avoid, then start adding layer upon layer of high-tech intermediaries that do nothing but suck value from the entire ecosystem. Like I said: nothing sustainable whatsoever about this model.

    Wepman cites a video ad yield of five-six times the yield of display advertising, which sounds great until you consider that online display advertising's effective yield is already firmly ensconced at statistical zero. Six times statistical zero is still statistical zero.

    Moreover TV ad buyers simply won't commit big brand dollars to any medium that doesn't deliver big brand reach, the only thing their clients truly want. Everything else is discretionary, and that's why digital media budgets remain so niggardly despite the ubiquity of high-speed bandwidth and streaming video.

    The only thing Wepman got right was the notion that it doesn't matter how much a display ad targets the right consumer at the right place with the right message at the right time. In an on-demand media universe (and all commercial media have always been on-demand), it makes no sense to target the audience because the audience targets the advertiser by default. Likewise, advertisers don't reach the audience. The audience reaches the advertiser. Accordingly, we don't need better targeting ammo. We need better bait. And better advice.

Next story loading loading..