Has Out-Stream Video Come Of Age?

“On TV And Video” is a column exploring opportunities and challenges in programmatic TV and video.

Today’s column is written by Ted Dhanik, CEO at engage:BDR.

With video consumption up, advertisers are following the eyeballs. eMarketer estimates that US digital video ad spend reached $7.8 billion in 2015, a 33.8% year-over-year increase representing 13.3% of total digital ad dollars.

Yet there is a limited supply of true pre-roll inventory available in the marketplace. Video advertisers have long been looking for ways to reach as many eyeballs as possible, and out-stream video is finally providing a high-quality solution for their needs.

Out-stream placements are video ad units that are not tied to content. An out-stream unit can run on the corner of the page or even within the content of a written article. It provides new ways to deliver video on high-quality sites, while guaranteeing 100% viewability. Out-stream video ads benefit both advertisers and publishers; advertisers get additional exposure on sites that deliver premium content without worrying about placement quality, while publishers create an incremental revenue stream with these new units.

There are several reasons why out-stream’s time may have finally arrived. The first is its ability to solve a key problem facing the industry: a lack of scale. There is growing demand for video inventory in the industry right now, but creating video to wrap ads around is a pretty big task. Not all publishers have the time and money to invest in developing their own video content, but for in-stream video inventory to be created, content has to be created. A very high-quality publisher may not produce video content, and out-stream allows them to provide video ad placements for their premium articles. In doing so, out-stream helps supply keep pace with demand.

This is additionally significant because video ad units allow publishers to collect higher CPMs than display units. Since out-stream brings a video player to the page without requiring the publisher to produce video content, it is an incremental investment for publishers.

Bumps In The Road

But like any new medium, out-stream isn’t without its challenges. For instance, mobile is still slightly difficult since many players take over the whole screen on iOS devices, which isn’t a great user experience. But new players in the market avoid this delivery method so this issue could soon become a thing of the past.

Another challenge is that out-stream doesn’t always include auto-sound. Advertisers that rely on sound to deliver their message shouldn’t make out-stream the center of their campaign.

One of the obstacles to more widespread adoption is buyer perception. When out-stream first emerged, the idea was that it was less premium than in-stream video. But the reality is that many consumers don’t mind out-stream units because they are not intrusive, which is a common user criticism of in-stream placements. Instead of watching an ad play before they can access the content they want, an out-stream video only plays when the reader engages with the content. The unit is not a gatekeeper to the content that the consumer wants to see.

Instead, a consumer can play an out-stream video and still click around on the page while the ad is running. What was once thought of as less premium is now gaining recognition as a premium unit since it is more user-friendly, while still providing a large-player format.

When Forrester asked in a survey about the types of video ads that would be more or much more important to their clients’ overall ad portfolios in the future, 77% of agencies and 70% of advertisers cited out-stream ad units. While at one point out-stream units had been seen as less premium than in-stream placements, these numbers suggest a change in industry perception.

Better Viewability

Since out-stream requires user action to deploy, these units are geared toward 100% viewability. Out-stream videos are also emerging at a time when fraud is a hot-button issue in the industry, and technically speaking, these units are built to only launch when they are in view. The ads are also only initiated when the page is moving around and registering user action, which can’t be done by bots. It takes a real consumer interaction –and opportunity to see – to trigger these video units.

Out-stream is suitable for agencies because they don’t have to take a risk in buying nonviewable inventory. If an agency guarantees an 80% viewable campaign to a client, out-stream can help ensure that those promises are met.

From addressing scale to avoiding fraud, publishers, agencies and advertisers appear to be getting on board with out-stream. I expect adoption to take off this year.

Follow Ted Dhanik (@teddhanik), engage:BDR (@engageBDR) and AdExchanger (@adexchanger) on Twitter.