One thing is certain to happen over the next 12 months: Marketers are going to spend more money on video than they did in 2010. So, that being said, I'll try to avoid the obvious for the rest of the article. Three trend predictions for 2011:
YouTube will become MORE important in 2011. There has been some discussion recently about the decline in importance of YouTube. This is crazy talk. YouTube is only going to become more central to the online video ecosystem over the next year. Here are the reasons why:
1. Lack of quality pre-roll inventory. Due to a shortage in quality pre-roll avails, advertisers are going to start getting comfortable advertising in front of some user-generated content (UGC). Given the choice of advertising in-banner on autoplay or in front of UGC on YouTube for about the same price, advertisers are going to start picking UGC on YouTube. Now this won't apply to all UGC, but I am sure that Google is busy identifying more and more channels within their network that can be categorized as "brand-safe." There is simply too much money at stake for this not to happen.
2. YouTube-sponsored video listings are becoming more important. Sponsored views are increasingly becoming a standard line item in online video spends. As a result, YouTube is pushing sponsored placements into new locations in search of volume (such as in the related videos stack). As brands continue to see good returns on these buys and sponsored avails increase, they'll spend more. On top of this, branded entertainment is going to have a banner year in 2011, and YouTube is becoming a primary hub for these campaigns.
3. YouTube is a simple way to publish once for all devices. AppleTV, GoogleTV, and most other over-the-top devices (that matter) focus a lot of their navigational real estate on YouTube. Android and iPhones both push YouTube as default app on their devices. As a producer there is no easier way to get on all three screens (and including iPads, four). As over-the-top becomes more prevalent and as Android and Apple devour the mobile market, YouTube becomes a multi-platform Comcast with unlimited channels. Nobody else is close.
Display budgets and video budgets will blur boundaries. With display networks buying their way into the video market through in-banner video networks (like the recent acquisition of Jambo by Undertone), budgets for in-banner video and display will become increasingly blurred. Here 's why:
1. Increased transparency in pre-roll placements. Throughout 2009 and into early 2010, brands had little visibility into where their pre-roll ads were being placed on the page. With the increased oversight of firms like Double Verify, brands have been able to better identify how their ads are being trafficked. This has led to more efficient pricing for in-banner video placements, where CPMs are beginning to approach display pricing.
2. Exploding demand for video avails. More money is pouring into online video -- so much so that it is outpacing the growth in quality pre-roll avails. As a result, brands are pushing video into display units and interstitials. Nobody has more reach than the guys who have been building display networks over the past decade. As video becomes easier to traffic and prices settle, display networks are going to find a new path to renewed double-digit growth.
3. Optimization becoming more important. In-banner autoplay autosound will continue to grow, but the reality is that consumers don't like the units. To unlock the full potential of the display opportunity, more networks are going to start pushing in-banner click2play and other less-intrusive executions. This requires access to data and experience in things like CTR optimization. Display networks have been doing this for a while and should be able to adjust quickly. Brands will go where they can access scale and advanced targeting.
Interactive video will continue to disappoint -- but probably only for one more year. Interactive pre-roll holds a lot of promise. VivaKi has done some pretty solid field testing, and it appears that sites like Hulu are seeing the benefits in increased ad rates and performance. Brands are starting to spend dollars but the total size of the market for these units will remain small throughout 2011. Here's why:
1. Implementations are still a challenge. Not only do brands have to traffic a different set of creative assets, but implementation is not consistent across networks. As such they are forced to run across a single publisher or network. Until running something like an ad selector asset through VAST compliant ad server is made easy, more advanced forms of video interaction will remain over the horizon and brands won't be able to spend their money here easily.
2. Pricing models are all over the place. Brands appear willing to pay a premium for interactive video, but how much of a premium and what is the pricing unit? CPC, CPV, CPM? Interactive video would seem to fit well with the movement towards performance assurances in video buys, but prices can still vary by an order of magnitude. Until planners feel like they know they are not getting ripped off, they are not going to routinely spend big dollars on these units.
3. Ad selection is simply not that compelling an interaction. Most of the time the choices between ads are between different creative executions within the same campaign. Giving me a choice is a step in the right direction, but I may not be interested in any of the versions of the campaign because I am simply not that interested in the product. Until I can select between different campaigns, ad selection falls short. But once you move to campaign selection, trafficking pre-roll becomes too difficult to manage.
2011 will also see growth in branded entertainment, the full commoditization of video ad network inventory, the launch of a bunch of new video ad networks flush with VC funding, and a lot more parties. It's going to be an exciting year.