Commentary

Online Video's Growing Pains

The fastest growing channel in online advertising, online video is exploding. How many times have you heard that before?

It’s all true. But what’s also true is that it could do a lot better.

Nielsen's recently released TV ratings don’t look good. Ratings of all shows of all broadcasters declined, some by more than 20%. And everyone saw it coming. So why didn’t video (TV and online) planners and buyers compensate for the lost TV viewership with increased online buying?

I think there are several big barriers preventing them from making the move.

The Price of Video

Online video is still very expensive -- in some cases, more expensive than TV.

If I have to choose between spending the same amount for an old beloved product (TV) and a new, somewhat unproven product (digital), I’m going to stick with my favorite, thank you very much.

Happily, this is going to change soon. Prices will go down, with more content flowing from TV (watch for new cable channel content via TV-everywhere platforms and new syndication agreements), and more production of made-for-Web premium content by YouTube, AOL, Yahoo! and Netflix when they become ad-enabled). Until then, online is simply too pricey for some brands.

Oh, the Complexity

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Online video remains complicated to execute, with five or six different screens, three operating systems, a multitude of encoding specs and technologies, several ways to measure everything and myriad certifications and protocols.

Here, too, great progress has been made in the past few years. IAB’s VAST is perhaps the most important component to unlock the massive potential of online video. In the pre-VAST days, it was impossible to run online video campaigns at scale. Now it is standard. Same goes for VPAID and interactive video campaigns

Of course, there are ways to streamline the process and make sure every ad is served to the right user and screen without a lot of complexity. One is third-party ad serving, and if you aren’t using it, you are making your life more difficult than necessary.

Fear of the Unknown

Over the past year, I’ve had several conversations with TV folks that told me the ROI of online video is questionable.

“Seriously?” I responded. “You have completion rate and click-through rate and conversation rate. You have brand lift surveys and sales impact measurement tools and everything is tracked!”

But TV people still lack the confidence they have with TV, when they know, having done this for 40 years, what will be the impact on their brand or sales after buying a GRP point.

This barrier will take education and time to overcome. Online people need to have the patience and determination to prove, with every campaign they run, that this medium is effective. It’s up to us to explain the insights that can be drawn from analyzing online performance.

Apples and oranges

When marketers extend their campaigns across TV and online, tallying reach becomes problematic. They have GRPs for TV and impressions for online, but they don’t know how to consolidate the two.

Nielsen and comScore offer terrific data tools that solve this problem, and there are aggregation and visualization tools out there to make this data actionable for planners and buyers. Again, it’s just a matter of time until these tools are widely adopted.

Can’t see transparency

I addressed this issue  last year, and it hasn’t budged much.

There are two major transparency issues with online video today:

1.      Buyers don’t know what they are buying. The vast majority of online video is bought blind, and buyers cannot pick and choose the content their ads will accompany. Compared with TV, online is missing the contextual and psychological link between the ad and the content, which is what makes TV advertising so powerful.

2.      Unfortunately, some video networks are not totally honest with their clients and deliver less-effective, but much cheaper, in-banner ads when they promised in-stream ads. Even absent deception, buyers don’t always know the player size, media mix (premium vs. non-premium content) and whether or not the ad was actually viewable.

There are two solutions to these problems: sellers must clean up their acts for the sake of the industry, and they must reveal to advertisers the content and environment (player size, format, viewability) around the ad. In the meantime, buyers can protect themselves by utilizing video verification and viewability tools.

Clearly, there are some hurdles preventing online video from reaching its potential, But soon, when there’s more quality content online, less complexity and fragmentation, more confidence in online, more tools for cross-channel analytics, and a lot more transparency is common practice, online video will finally take off. And that will really be an explosion.

3 comments about "Online Video's Growing Pains".
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  1. Brian Allen from Altitude Digital Partners, July 2, 2013 at 4:05 p.m.

    Great article Admin.
    On point 1. I agree, we as an industry "must reveal to advertisers the content and environment (player size, format, viewability) around the ad.", among other things. But, I see the issues with transparency shrinking daily. We are enabling advertisers with transparency to the content now, and are able to show data on the environment. We are now integrating this to our RTB to allow this type of transparency in real time.

    On point 2. It seems there may be a difference of opinion on the use of fullslot/display and calling it instream, and what actually qualifies for instream. What is your opinion of using rich media display ads instead of video as linear advertising. Is there a real difference? If the display ad was delivered at 30 fps like video, would it be video? What about interactive and rich media ads?

    Shady business practices aside, if the conversation about the use of display as a fallback when no instream video ad is available,is had up front, is it wrong to fill that? No. In the end our business is about Reach, Relevance, and Revenue.

  2. Paul Calento from TriVu Media, July 3, 2013 at 12:21 p.m.

    Need for "content qualified" inventory. But, too easy to solely blame publishers/networks/intermediaries for lack-of-transparency. Some of these issues are inhibited by a display-optimized, domain-centric RTB environment and desire for lowest possible cost, over targeting. As data answers the structure and contextual questions, you'll start to see the cost of inventory change over time, with "more data" being the determining factor of cost, not just "best data". But rich media ad units will still have a place on the buy (added scale, etc) ... but, now, at the right price and differentiated from in-player inventory.

  3. Boaz Ram from mediamind, July 8, 2013 at 3:12 p.m.

    Brian - thanks for commenting.
    Point 1: the vast majority of the video inventory out there can still only be bought blind. As opposed to display content, where the placement and the page is what matters, with video, in-stream, to be precise, what matters is the content inside the player, and until that is transparent, buyers will still be reluctant to increase spend, just because they don’t know what they’re buying. Which brings me to your comment on point 2 – I think there’s a huge difference between in-banner and in-stream in terms of effectiveness, and it has nothing to do with the video quality. It has to do with the fact that users cannot ignore in-stream ads – they have to watch it (or skip it, but that’s another topic) to get to the content they want to watch. It has to do with the psychological link between the content and the ad which is so much stronger in TV and in-stream ads then it is for in-banner, the link on which advertising is based.
    Boaz (Author of this article)

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