"Please don't suck" is my mantra as I wheel my hand luggage into a town essentially owned by the large TV advertiser I am set to meet. I am here to discuss their strategy for the transition of TV advertising into Internet connected devices. As I wipe the red arc of Bloody Mary away from my top lip, I know for sure that this particular large TV advertiser, once his defenses are eased, will admit to being completely and utterly confused about how to buy and track online video in a manner that makes sense for his business needs.
Damn, and you were thinking the transition to online video is already underway and most advertisers just need a gentle nudge to fulfill the media prophecy. Truth is—and it only comes out when you go to advertiser headquarters and sit with "transition" teams—we are nowhere near the tipping point.
Instead, we’re right now at the midpoint of a digital transition. Aside from a handful of advertisers I work with, most are not feeling any drive toward a strategic transition of TV investment into Internet connected devices—despite the fact that good content and strong audiences await.
In my humble opinion and based on my meeting notes, this is because brands are utterly confused. Here are three major reasons why.
First, the ad agencies are making good money. Ad agencies are prioritizing their own revenue opportunities ahead of their clients’ need for a smart transition to online video. In fact, online video is the perfect revenue storm, with hungry agency-dependent vendors on one side and confused advertisers on the other.
Most ad agencies demand high mark-ups on the media inventory they buy from ad networks, delivering rich revenue streams to the networks in return. I know of certain agencies requesting 50 percent mark-ups on media revenue in exchange for putting ad networks on their “preferred supplier” lists.
Second, the sell side is backed by VC money. A new VC-backed online video ad network launches every week. To ensure that revenues grow quickly, ad networks are forced to gain access to ad agency preferred supplier lists. To get on the lists, the networks must surrender to the agencies’ mark-up demands and data control policies—which conveniently ignore the quality of media that they sell.
Without enough high-quality inventory to go around, ad networks resort to playing games with advertiser dollars. This is why we are seeing increasing levels of audible muted preroll, invisible preroll, fake preroll media and carousel preroll—for instance, 2,600 versions of same ad appear in the same spot, on repeat.
Third, ad servers are conflicted. Most advertisers do not know who their ad server is and why that server has been appointed. Yet advertisers must rely upon ad server data when they make decisions about transitioning hundreds of millions of dollars into online video.
Ad agencies appoint ad servers—but most agency ad servers are owned and operated by ad networks on the sell side, which means they are conflicted. It’s a three-way stranglehold. Agency-appointed ad servers cannot identify or fix the problems I mentioned above because they’re in the pockets of the ad networks.
These dynamics are why the growth of a potential $15 billion online video advertising industry is being slowly, systematically and artificially hobbled.
So what to do about it? The first thing anyone who cares about building a stable and solid online video advertising industry should do is board a flight to see some advertisers in person.
Try asking advertisers about their concerns and offer some basic truths. Show them there are ways to transition TV weight safely and securely by honestly documenting where online video ad spending is going and bringing transparency to the industry.
Recognize that a medium with such promise of transparent, real-time sales and performance data doesn’t have to be manipulated into a three-way media scrum, with the advertiser lying face down in the dirt.
And by the way, anyone reading this with a deck called "the growth of online video" should stay the hell away from advertisers. Go sit and wait in agency reception with your beer pong table.
Anthony Rushton, CEO, Telemetry, an independent, real time, advertiser-direct ad serving, audit and intelligence service