A Critical Turning Point for Online Video Advertising

In 2010, it became overwhelmingly evident that online video sites had found the right formula for  delivering content in a way that earns and retains audiences. For example, if you look at 2010 comScore numbers, the amount of time American audiences spent watching video for the major live video publishers (Justin.tv, Ustream, Livestream, LiveVideo and Stickam) has grown 648 percent to more than 1.4 billion minutes year over year. Short- and long-form content achieved similar success; time spent watching YouTube and Hulu increased by 68 percent and 75 percent, respectively, over the same time period.

Consumer behavior has shifted, and it’s becoming increasingly clear that online video advertising is an effective channel for reaching consumers. Yet, online video represents only 7 percent of the entire ad market, according to eMarketer, which suggests that advertisers are still trying to figure out how to access online viewers successfully with the media buying dollars traditionally used for broadcast.

On the surface, buying online video advertising seems like it should be similar to buying television advertising. However, media buyers have approached online video buys as a one-off due to the perceived lack of delivery and fulfillment mechanisms across publishers. Unlike television, which has defined standards, online video buys require a one-to-one approach. This means every online campaign must be coordinated, engineered, trafficked and tested on a per-publisher basis.

Resources are often bogged down by this intensive process, and there is little time or money for market education or the innovation of new formats. So, media buyers tend to just go with what they know, which is why pre-roll and single-site custom sponsorships are the most common media buys in the space today.

These approaches are a step in the right direction, but single-publisher buys do not provide visibility into the big picture—recall, engagement and purchase intent of investments across demographics and audiences. Without these critical insights, media planners and buyers cannot advise their clients on how to develop more effective audience reach and engaging campaign creative.

Media buyers should consider a more balanced online video mix by building more robust engagement opportunities into existing creative standards like pre-roll. These “middle ground” solutions are more interactive and creative pre-roll video ads that engage the audience while providing an enhanced opportunity for consumers to learn about or experience the brand or product in action. These solutions are scalable within existing budgets and therefore can run across many sites. This buying scale can yield actionable measurement for advertisers.
As with any emerging medium, standards are key to making the new cross-media buying relationship effective. A standardized, industry-wide operational pipeline for fulfilling digital video ads will do two things: allow advertisers to place ad experiences on any publisher site without having to re-create every campaign execution and enable scalable innovation as the market identifies optimal ad experiences for Internet-distributed video content. 

Industry consortiums, such as the Rising Tide Co-op, are taking critical first steps toward standardization, bringing together the right industry players to implement technology initiatives that create a common on-ramp into major publishers. However, media agencies and buyers must support this effort to unify the entire marketing and media ecosystem and move online advertising toward revenue parity with TV. In particular, now is the time to conduct thoughtful experiments to gather data supporting 2011 upfront strategies.

The formation of industry initiatives like Rising Tide shows the stars are aligning for digital video as the market continues to move toward a sustainable, profitable business model that meets revenue parity for TV. Standardizing ad delivery and fulfillment so media buying and ad fulfillment become a predictable process will help further this goal. For media buyers, advertisers and publishers, this shift ultimately will lead to increased efficiencies, higher audience engagement and greater ROI.