• by Rich Routman , Op-Ed Contributor, September 12, 2013

The growth of digital video has not only given rise to many new businesses and business models, but has even created new verticals.  And while the traditional cross-platform video sellers still reign supreme, the market is becoming wide and deep enough to support a variety of approaches. The question is, will the great diversity in video offerings eventually lead to an industrywide consolidation?

The Networks

Not the video ad networks. I am talking about the broadcast and cable networks -- at least, the ones that have their cross-platform messaging together.  More than ever, this year’s upfront is growing for the cross-platform network sellers.  Frankly, those that can leverage one effective rate across all their screens for spot media (television, online video, mobile video, their TV-everywhere products and connected TV) are set to command significant dollars for 2014 before this year is over.

Portals

Just a few years ago, Google, Yahoo, Hulu and MSN were content with being part of video upfront presentations and conversations.  This dynamic has significantly changed. What started as a “privilege to be here” has become an exchange of well in excess of $200 million. The major portals are the most likely to sell out their premium inventory in the upfront market.

Video Ad Networks

More than ever, this is becoming a two-horse race, with YuMe and Tremor Video leading the industry, not only from a revenue perspective, but in industry acceptance as well.  Having recently gone public, both companies are no longer resource-constrained.  The biggest challenge for both entities is the lack of differentiation, as they share comparable CPMs, comparable reach and scale, and in many cases duplications of content and publishers.  Watch out as a few of the smaller, and now more nimble, traditional video ad networks transition to video RTB, public and private exchanges and ultimately, platform enablement over media sales. 

Content Platforms

Content owners range from multichannel networks on YouTube to how-to video producers that have achieved scale through smart distribution dealings.  While they may fall to the number 4 slot in the buy-side pecking order, content platforms speak to both the paid and earned side of the marketing budget, making them especially intriguing to brand marketers.   And that intrigue is accounting for real dollars.  Content owners and content aggregators are also storytellers.  And, while media is at the forefront of the conversations above, media can take a back seat to the broader content adjacency value proposition that each of these companies brings forward each day.

The Exchanges

Public, private, semi-private -- The exchange space is starting to mirror the golf course options for a Saturday morning tee time.  However, “exchange” verbiage does not truly capture the different facets of this dynamic industry category.  From the leveraging of data to develop smarter advertising campaigns, to RTB, to the building of private markets of their own, one can only guess where this market will actually end up.  AOL’s acquisition of AdapTV is a sign of things to come, as media companies would rather acquire ad technology than salespeople; but given AOL’s not-so-stellar track record on the acquisition front (see Bebo and Patch), the jury is still out.

When you closely examine what each category above brings to the table, you'll find a lack in crossover of overall approach, business model and even advertising budget allocation.  We should expect a time when a major media player will harness the value of each category into a singular video market proposition, essentially offering upfront guarantees, video portal demand, audience extension through affiliate supply partnerships, a compelling slate of original content and even a private first-party data exchange to the ad community -- all in support of their billion-dollar video advertising machine.  So while today, the video market’s proliferation has given rise to new companies and thus, opportunities, proliferation will undoubtedly lead to some level of consolidation -- and it’s not as far down the road as many would think.
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