Commentary
Can Someone Please Uberize The Video Ad Model?
- by Maarten Albarda , Featured Contributor, March 2, 2015
It’s easy to forget that the TV industry is in a real pickle. We forget because we are spoiled with content like “House of Cards” (Netflix) or “Bosch” (Amazon), and a multitude of other network and cable shows -- as well as more and more opportunities to consume it all now or later. It seems content creators have never had it so good, and were never as good at their craft, as they are now. (You MUST watch last week’s episode of “Modern Family,” which was created using Apple products exclusively, but that’s not what made it brilliant. What made it brilliant was the mirror it held up to our current hyper-connected A.D.D. society.)
But while content is living large, advertising formats still live in the Stone Age. Commercial breaks are pre-roll. The average spot is still 30 seconds. Endless repetition (in technical media planning terms, “frequency”) within the same program, whether online or off-line, runs rife. Advertisers, their media or digital agency strategists, and media platform owners have simply transplanted the bullhorn spray-and-pray method of yester-century to the digital age.
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And yet, despite (or because) of all this, online as well as good old-fashioned linear video content is less and less capable of making money as an advertising platform.
The U.S. TV ad market had a weak Q3 in 2014, followed by a weak Q4, and is looking at a weak Q1 in 2015. Apparently networks are still doing the upfronts in the U.S., but I am not even going to dignify that relic with any attention.
According to reports, the U.K., like the U.S. and many other mature markets, is losing TV audiences at a faster rate than ever before – not because of those finicky Millennials leaving the telly, but traditional heavy users. Cord-cutting in the U.S. is now such a “normal” thing that tabloids like the New York Postwrite about it.
And if you thought that digital pure-plays were the winners in this battle, think again. Last week the Wall Street Journalreported that Google’s YouTube is a loss-maker despite having a billion viewers. Netflix is making money, but remember: it does not carry advertising!
As marketers, we need strong media platforms that actually connect and move an audience. TV -- and before that, radio -- used to deliver that connection. Newspapers also used to deliver that. Now, nothing seems to be able to do that.
So it’s time we completely rethink the video advertising content model. Or, in Millennial-speak: Who is going to uberize the video advertising model?
After all, there’s plenty of audience out there. So how do we create better advertising opportunities to reach and connect with that audience? How do we move to something that reflects the data richness, the power of the awesome content, and the proliferation and diversified reach of platforms available today, to something that might drive revenue for content makers and distributors? To something that advertisers might want to buy?
I do not believe the answer is programmatic TV. That’s a useful tool once you know when and where you want to buy a particular audience at an acceptable price. But the question I want answered first is, what will there be to buy? More 30-second spots in prime time and pre-roll? More frequency, in hopes of breaking through the clutter and noise? There has to be a better way!
Dammit, Maarten, you're always so spot on! Thank you for this. I would add only that the starting point is to recognize, as Silicon Valley has, that there is more than just one form of currency in business. Those who chase DIRECT payment only have a serious disadvantage here.
Actually, i think the future belongs to the nimble web series. Yes, IKEA and Ford both tried, but they were brands getting into the content biz. There are indie web content producers who are making stories on a shoe string that people want to watch. (Full disclosure: the reason I know this is because my brother is one of these content producers.) What's more, they are building communities around these shows so that the fans--not focus groups--have say into what happens on the show. My bro's first 3 episodes were filmed on 0 budget--just favors. Episodes 4 - 6 were crowd funded. Because it's on youtube, he can look at the analytics of the viewers. Through comments on Facebook, he gets feedback of what's working. The viewer is more connected to the content and the characters and the producer has direct feedback that he can react quickly to because there aren't huge studio mechanisms involved. As a marketer, I think, there is a huge opportunity in this kind of content development for advertisers. Show is called Rogues of LA. You can see the first episode here; https://www.youtube.com/watch?v=WNyEW37IjQA His vision is to have a Rogues community in every major city--an opportunity for hyper local advertising and multi-layer brand advocates. IMHO, the future belongs to the nimble web series.
Maarten, while I agree with many of your points, I think you are confusing "TV" with the broadcast TV networks, who are, indeed losing share of audience thanks to the proliferation of channels. Cable, which accounts for the majority of TV consumption, is also "TV". So, when one looks at the big picture, there is no mass defection from TV at all. Actually, we are watching slightly more TV content than before; but our time with the medium is being split up differently. Also, while there is much to improve with "linear" TV in terms of audience targeting and the ways advertisers use the medium, It's not in trouble as a business proposition, either. As I keep pointing out, the broadcast TV networks, whose impending demise some people---not you, Maarten----seem fixated upon, are doing quite well in a business sense, as they rely on the huge profits they earn from the TV stations and cable channels they own, plus the recent influx of re-transmission revenues. Moreover, the upfront, far from being on its last legs, continues to be the linchpin of national TV time sales---including cable and syndication as well as the broadcast TV networks--- and extending well beyond the realm of primetime programming. So, please cheer up, Maarten, TV is not functioning as it once did, with three dominant players, fewer commercials, etc. but it has and will continue to adapt and, no doubt, prosper. Now, digital, that's a medium where they've got some real problems to solve.
I hate pre-rolls. But I love a good video ad. Maybe I am representative, maybe not. But drawing on some experiences that have worked in different configurations, I would prefer a 'Video Paywall' that offers users who want to have ad-supported content, the ability to choose the spot they watch. In my experience, this 'opt-in' leads to surprisingly high conversion rates. Advertisers will pay more. Users can pick what they want to see, which is a value added. So, instead of stuffing me into a pre-roll (thank you YouTube for the countdown-to-skip) give me a screen of twelve thumbnails with a 'next screen' button in case, for some reason, the publisher can't deliver even one relevant ad choice in the dozen. Over time, there should be many.