Commentary

It's All About SCALE!

Traditional television is moving to the Internet. Networks publish their videos, consumers watch. MTV announced 1.8 million streams of the first season episode of "The Hills" just 24 hours after it launched on the Internet. While there are plenty of rich-media ads created and lots of ad networks to provide them, the media buys haven't occurred. Why? The problem isn't targeting, ad formats, supply or demand. The problem is the inability to scale in-video media buys.

Last month, Bear Stearns' report, "Internet Video: Still the Next Frontier," asked, "Where would we like to be but cannot currently get to because of technological progress?"

We would like the entire Internet ecosystem to monetize video, but the lack of ad delivery standards is creating major barriers. Video player technologies can be reworked -- but is an ad agency really going to ask its advertisers to wait three months while every major network client rewrites its video player to accept that ad format? No, they'll stick with TV.

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And there is the problem: Every video publisher has a different video player implementation unique to its needs, and creating new avails and accepting different ad formats means re-engineering. Today there are no ad delivery standards or solutions that are implemented across all video players.

The good news is, our industry is evolving. The first half of 2007 was all about getting video on the Internet. The second half of 2007 was expanding beyond one type of ad format. Today, the promise of video advertising resonates, and the consequences of not achieving industry scalability across all players and distribution points are beginning to be understood.

Recently we watched a video publisher integrate one ad network's technology to accept a specific ad format. But the company quickly realized it was trapped. It could not sell its own inventory, create new ad avails or accept ad buys from other sources. Essentially it was locked out of the market and its monetization opportunities dwindled as it went through yet another engineering phase! Once the company found a way to accept any ad buy, its revenue opportunities were unlocked; it now claims to have increased revenue four to five times overall.

It is clear that online video publishers are going to have different video player implementations. Accordingly, a primary area of technological progress that needs to be made in order for online video to become a real, dependable profit center for the entire ecosystem -- not just the lucky few who find a solution on their own -- is the adoption of solutions (standards) that allow the industry to scale. Included as part of these solutions must be:

1) The ability to accept any ad buy, any format, and create any ad avail on any player. 2) The ability to control player functionality (pause, start, seek). 3) Ensure the actual ad delivery to the video player - all the time! 4) Integrate with ad management systems (campaign tools, ad servers, and reporting systems).

We all know that with scale, the entire Internet ecosystem will finally monetize broadband-delivered video, and we'll be a giant step closer to the realization of the Internet converging into the living room.

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