At first blush, recent acquisitions in the video ad network space give the appearance the video ad business is on fire – in a good way.
But, digging deeper, it seems that exits may not be happening at the levels first imagined for some video ad network entrepreneurs and investors as there have been quite a few entrants flooding the category and, except for a few working on differentiation through technology, the only other real differentiation seems to be scale. And, it’s no wonder scale is important as all anyone ever hears about is the incredibly high CPMs in online video ads.
From here, there appears to be three factors involved in the high CPMs:
- Engagement – As everyone knows, having to sit through a 15 second pre-roll ad is a very different experience than viewing (for an instant) a graphical display ad which might be to the side or above the website content.
- It’s Like TV – Online video ads remind the marketers and their agencies of television and buying TV spots. This mindset creates tons of demand especially as the marketer struggles to follow the user online. Much to their detriment, marketers and agencies often use TV spots for online video ads without any customization for the Web.
- Scarcity – There just isn’t a lot of available, non-guaranteed video ad inventory unless you’re willing to use the social network world’s supply of sometimes questionable, non-brand-safe content.
And, on top of audience buying, how about cross-channel attribution? Video ad targeting should ideally take into account the separate viewing of display advertisements from the same campaign, for example, and understand how the two digital marketing channels affect each other on the way to the final conversion.
Not Yet
It’s just too “early days” for most addressable video since there’s limited inventory and even more limited audience targeting opportunity. The video ad network and the publisher will still be offering website placement, vertical channels and context for the forseeable future as opposed to targeting through a deeper understanding of attribution or intent. It feels like display a few years ago when supply was more limited and the long tail wasn’t as long.
To be sure, companies are moving into the addressable media space for online video. But today’s limited supply continues to preclude the need to go very deep. Display’s over abundance of supply bred innovation. When will it crossover to online video? In part, when marketers become more comfortable with their brands in social media’s video and as the web user continues to consume more video online – and, finally, IP brings the web to the TV. Also, if comScore released a study called “Natural Born Viewers” (echoing “Natural Born Clickers“) that might have people looking beyond “the view” and into cross-channel attribution.
By John Ebbert
