• by Michael Shehan , February 10, 2011

We've seen some consolidation in the video ad industry over the last few months. Along with the slow rise of trading desks and exchanges, it's clear that video ad networks have a large role to play in the shifting online media landscape, and will indefinitely. We at SpotXchange recently attended OMMA Video in San Francisco, where the panelists talking about the topic of consolidation believed the acquisitions and mergers we'll see in the near future will have the goal of better positioning companies for these changes.

I fully agree. Some of these changes are happening faster than others, and only the proactive networks that are ready to perform and adapt alongside the rapidly growing online video industry will thrive. The naysayers will continue to declare the demise of ad networks, but those who are ready for the challenge ahead will prosper. Leading ad networks already provide scale, efficiencies, robust targeting, brand protection and optimization technologies. The very best will break away from the pack by further automating existing processes and providing even more reach.

Video ad networks still are the best at providing advertisers with reach and efficiency. The media audience is becoming increasingly fragmented as more video content is becoming device-agnostic. As content is created and syndicated around the web it will continue to be the networks' job to connect these advertisers to the right audiences. Despite the supposed doom for the future of ad networks, the networks that will succeed in coming years will be those that are able to aggregate appealing audiences and provide a one-stop shop for advertisers to reach consumers across all these platforms - and do it well.

As real-time bidding and exchange platforms become more prevalent, video ad networks will provide that necessary personal touch on ad campaigns. Agencies want the best customer service and greater efficiencies in buying media as their margins continue to shrink. The best video ad networks provide both, along with targeted reach on brand safe sites. There is also a trend toward building more engaging and interactive video ad units with elaborate pricing models (such as various levels of CPE). Balancing these complicated ad units with performance-oriented buys takes a skilled team that fully understands the strategy and performance objectives of the advertiser as they build out a plan. They must understand how to run that program to reach a large, targeted audience. Top video ad networks provide all of this and more.

Video ad networks are also in a unique position to lead the charge with industry standardization of tracking and performance metrics. We don't yet know whether this will be GRPs, some form of the click, or even brand lift and sales offline, but there needs to be standardization. Standardization will make it easier for TV dollars to really shift to the online video market, and this is a real incentive for those ad networks that step up to the challenge. Time is of the essence if we look at it from the perspective of what consumers expect from their viewing experience.

Standardization will help increase video ad inventory because it helps speed up the process. This also has to happen within the top group of properties serving video ads (some of these being video ad networks) because they are receiving the largest share of the aggregate online video budgets. Standardization is also important because the way people view online video is changing as rapidly as the video ad industry.

We heard in the comScore presentation at OMMA Video that the amount of ad time consumers felt they should be shown during an online program has decreased over the past year - probably because there just aren't as many ads online in comparison to a program on TV. Standardization gives brands the confidence to invest more heavily in online video, which will bring ad rates closer to TV levels. It's better to do this now while there is still a high threshold for the amount of ads consumers will tolerate per program. The online video marketplace is still in its infancy, and video ad networks that seize the opportunity to stand out and deliver superior value to advertisers will be in a great position to drive change and thrive.