The Five Biggest Technical Issues Hurting The Growth Of Online Video Advertising

For many years, the online video industry has always had some who like to point to limitations on the technology as being the excuse and reason why the industry is not grow as fast as some may like. For years it was people complaining that video quality is not good enough, that it’s  too hard to deliver and too difficult to scale. Today, those arguments are no longer valid. The technology is here today to have great quality video, to deliver it with performance and to reach as big of an audience as today’s business models support.

But when it comes to online video advertising, there is a valid argument that the technology today does not have the functionality that is needed for us to see video advertising growth on a faster scale. Will we get there? Yes. But it’s taking longer than it should due to these ten technical and industry issues:

  • There is no set standard for the length of an ad based on the length of the content. We all get ads at 10, 15 and 30 seconds in length for both long and short form content, with each content site doing it differently. And in some cases, like I outlined with Yahoo!, some sites deliver different ad lengths in the same piece of content. What a bad user experience. How can we expect viewers to get use to watching ads when the experience is different on each site?
  • Many times, ads are delivered at a lower quality and smaller window size than the content itself. This is a trend I am seeing more and more of lately. I click to watch a video that is encoded at 300 or 500Kbps but the ad I get before it is only encoded at 100kbps and the ad only fills up a fraction of the video window. What a poor experience. For instance you are given a 320×240 window but then the ad shows up as 240×180. The only reasoning behind this that I can think of is that it’s cheaper to deliver the ads this way since they are at a lower bitrate and/or the agency encoded all of it’s ads at only one bitrate. It looks like crap.
  • There is still very little being done in the way of targeted ads. Due to many technical issues, ads are still being churned out and delivered to web users with almost no insight into what the user wants to see or more importantly what the user should see based on their location. I always use the example of how I see Crispy Creme donut ads yet the closest Crispy Creme to where I live is 43.3 miles away in Milford CT. I know some ad platforms are doing more and more with targeting, but still not enough. This needs to be figured out faster. If you can’t deliver ads based on a persons interests, geographic location or even gender, then the majority of these video ads are completely being wasted. It’s no wonder the pre-roll ad format is dying.
  • Reporting metrics. Where are they? It seems that every ad network I talk to all measures and records user metrics for ads very differently. What is the problem here? Not being able to give advertisers back the reporting they want, thereby enabling them to try and come up with their own metrics to judge if their campaign was a success or not is like shooting the industry in the foot. No service, product or offering is worth anything if you can’t give the person who is paying for it the data they need to analyze if they should keep paying for it. The ad vendors make this WAY too difficult. For instance, if you look at the top six to eight vendors websites who provide these services, why can’t you download a product sheet from their website that shows exactly what type of reporting is offered? Why are they hiding this info and keeping it mysterious?
  • CPM rates. Ok so this one is not a technical issue but it is one of the biggest problems in the industry. Why is it that no one is willing to say what they get per CPM for online video ads? I ask content owners all the time, I ask the portals, I ask the major networks and to date, I don’t know of a single specific example I could tell someone of what the rate is. I could not point you to one major content owner and say I know what price they are getting for CPMs rates and no one shares this info. Yes, everyone says it’s between $10 and $60 and that’s completely useless. All of the major studios keep telling us how well they are doing online with their content and how well the advertisers love to sponsor it and how much growth they are seeing yet, none of them will give any numbers, to anything. Short-sided thinking folks. You know how many content owners actually have good content worth syndication or licensing but don’t as they have no idea what type of rates they can get? There is such a lack of information in the market for CPM rates and no one is doing any educating of the market. It’s a losing proposition for everyone when this information is hidden away as if it’s some sort of patented trade secret. They always have excuses like the one where the major broadcasters say
    advertisers are buying ads across many different platforms and they
    can’t break out the P&L from just one platform like the web. What crap.

I’m certainly not the first person to point out some of the technical problems the online video advertising industry is facing and I won’t be the last. We all see the potential that online video advertising holds and see the many ways that content owners and portals are embracing all forms of online video ads for pre-roll, post-roll, in page, in stream etc.

Part of the problem is the industry itself but a good deal of the problem lies with the technology of the entire ecosystem for video ad creating, selling, fulfillment, delivery and tracking. I’m as big a fan as anyone when it comes to ways that content can be monetized, but the industry as a whole needs to do a lot better job of working together to create as much in the way of standards as they can.

  • Amen to that. I think you have hit it right on the head. These are the absolute KEY issues. I do think that this will shake out over time, but it will take quite a while.

  • brian

    Most of those point to bad leadership on the part of the IAC. A lot of these sorts of issues were hammered out by them in the early days of banner ads. In video, they’re foot dragging.

  • Dan-
    Yes, the situations you mention do exist to some degree. But I’m not sure I agree with some of them as being actual problems that would slow the growth of the industry.
    When it comes to ad length, why is it a bad user experience to have different ad lengths? As long as the ad is an appropriate length relative to the content, why does it matter if it is a :5 or a :10 second ad? There is no reason to dictate a set ad length the same way you’d dictate dimensions of a display ad. This opens the door to creativity, and specifically creating for the medium.
    On TV, we still don’t have every commercial in 16:9 and 4:3. Doesn’t seem to hurt them. While a few black bars doesn’t maximize the experience, I don’t see it as a hurdle. Until every publisher adopts the same sized player, someone somewhere will see some blank space. I don’t see it hurting the user experience all that much. Having different versions of ads for different bitrates and bandwidths is just a matter of awareness as well.
    When we introduced rich media, we sniffed for bandwidth to make sure that we served an appropriately sized file as not to bog down a page loading with a ‘heavy’ ad. With video, however, isn’t it safe to assume that people are on broadband?
    Regarding metrics, that is a problem, but not a technological one. There are plenty of ad serving solutions, and ad networks, that can provide a full set of metrics, not just delivery. Whether or not a publisher chooses to use an ad server dedicated to rich media and video, or serve an ad themselves, is a choice they are making, but not a technical hurdle.
    While your Krispy Kreme analogy may hold true, it is also not a technical hurdle. It is a cost/benefit issue. Again, there are plenty of ad servers and ad networks that can geo-target. And if an agency wants to take the time and effort to break down their target media plans by zip code, you’d never see another Krispy Kreme ad…unless they were trying to convince you that its worth the 45 mile drive. However, its simply cheaper to run less targeted ads. Tremor Media has a partnership with VisibleWorld that enables us to serve advertising based on zip codes, for instance, and change the actual creative based on that zip code to provide a different address and phone number for the local Krispy Kreme.
    Regarding CPMs, again, I’m not sure why you think a wide range of prices would hold up the growth of an industry. Some content commands higher prices. Some does not. Thats why we have late night infomercials.
    Agencies aren’t having a hard time finding out what the CPMs are on NBC’s Rewind or MTV’s Overdrive. They are managing to buy it, so I assume they know what they are paying. But I can’t tell you what “THE” CPM is for our network because, like most publishers, it can vary based on targeting, content channel, etc. The eCPMs for TV vary too.
    Dan, its not that I disagree with you — these challenges exist. I just don’t think it is fair to call them technical hurdles that dont currently have technical solutions. If people choose not to implement them, that is a different issue.
    It is a matter of educating media planners and buyers and agencies and creative shops about what really goes into planning and executing video ad campaigns so they can plan accordingly rather then having to re-encode a video because a publisher wants a smaller file size.

  • Dan:-
    I stumbled on to your article by chance and as an “outsider” to the online ad industry, I have to say that Corey’s comments make a lot of “common” sense. To be honest, I am not really quite the novice that I pretend to be since I’m in process of going live in 2 weeks with a web-based platform for video ads that has intensely grappled for over a year with these issues. Out of all places, I have chosen to do this in China, my adopted home for the past 2 years and the place with the fastest growing internet community in the world and a refreshingly open-minded ad industry.
    I do think that Corey makes a good case when he points out that the issues you raise aren’t really of a technical kind, but rather the inherent short-comings of an online ad industry scrambling to figure itself out. As Corey says, there are folks out there that are actively addressing them already and I’m 100% sure that they’ll all be figured out before long, not least because of articles like yours; but you know what:- I am equally certain that once your prayers have been answered and these issues are resolved, there’ll be yet unfathomable questions that we’ll be asking ouselves for a long time to come, like: how ultimately intrusive the audience will online advertising allow to become or are there more redeeming and ultimately more rewarding approaches to engage a viewer in the video ad experience than the interuptive kind we are all so used to?
    Keep up the good work, Dan!
    Thilo

  • Hey Corey, I think not having a set ad length standard stops the business from moving forward. You want to get viewers use to the experience, which is hard to do when many sites all deliver a different ad experience, at different lengths. I think that is bad enough, but it’s even worse when someone like Yahoo! delivers two different length ads in the same piece of content in the example I pointed out on my blog a few weeks back. The user experience suffers. It made me stop watching their videos.
    As for the more technical issues like metrics, targeting, in-stream ads etc… all the vendors always say they can do it. And then the customers who call them and ask for it many, many times are told that the vendors can’t do it right now or they are working on it or it’s a custom request. I moderated a panel last year where I had 3-4 ad platforms on a panel and someone asked if you could deliver in-stream ads, all of them said sure no problem they could do it, yet when I asked them to show one example of it on the web, no one could. And the person in the audience who asked the question said that when they called into those companies on the panel, they were told by the companies they don’t offer it. So what companies say on panels and in general statements tend to then be very different when it comes to what they really sell. And the number one complaint I hear from the advertisers is that while they are given reporting, it does not contain all of the info they want or in the format they need it. Reporting and metrics are really two different things.
    On the CPM side, I’m not saying that a wide range is not ok but why won’t anyone say what all the different variables are that affect the CPM rate? Why can’t I find a single article on a website that clearly outlines how CPM rates are chosen and all the factors that go into determining the price along with examples? I have yet to find that online and people ask for it all the time. If you want to do a webcast, you can read many articles that say the cost varies greatly, but then they explain what the different options are that determine the cost, with examples of how each options make the price go up or down. The topic of CPM rates is always a “speculation” in the market with little or no real data from anyone to actually give the industry any indication of the CPM trends that are going on. I must have asked dozens of small and large companies and no one ever wants to give a number, always some big range that really tells us nothing. Why?
    In my eyes, the online ad networks/platforms etc… don’t do a very good job of educating the market or the industry. Why is it that each year when I ask these companies for customer examples that showcase good uses of online video ad campaigns, I get nearly nothing in return? I have a panel in November at the Streaming Media West show entitled “Demo: Compelling Video Advertising Campaigns” where companies can show off real-world examples of what is being done with online video ads today. Of the over 20 vendors I can think of in the industry who could showcase some of their customers work, why is it that of the 20+ vendors, I have submissions from only 2 of them. (your company being one of them) Where are these great examples the industry keeps talking about? Why isn’t the online video advertising vertical showcasing these campaigns and educating people? The online video ad vendors are the only segment of this market that aren’t showcasing what is taking place.

  • randy kilgore

    Dan,
    At the risk of seeming like all of Tremor is piling on, I too must disagree with you about ad lengths. Broadcast TV sets limits on commercial lengths for obvious reason around the need to manage inventory. The pre roll position needs no such boundries so why not let the creatives devise work that best fits their client’s communication objectives?
    I don’t get the bad user experience arguement either. i get different size ads in my newspaper everyday and that doesn’t bother me. More worrisome in fact is standardizing to the point where consumers become trained to glaze over because they know the next exact 30 seconds will be an ad. Far better to mix things up and engage them rather than commoditize and thus bore them (as has happened with display banners due to fixed sizes and positions).
    To me, the real call to arms should be one that demands an end to the endless kvetching about video ad lengths and one which demands creatives be set free to do what they do best. Market forces are powerful; ads that are too long, too short, too in-your-face, or just too stupid will fail and those who engage and entertain and deliver on the brand promise will succeed. Imagine!

  • I would agree that these are issues that once figured out and standards set in place would help turn the tide so to speak. However I believe that its because of such rapid growth, we are still in the process of defining and re-defining these very issues. The positive side is that after 15 years of pushing for video to take center stage on the internet the stars are aligning. We just need some patience and all do our part in working towards resolve on these topics.

  • Hi Randy,
    I think the bad user experience comes from the lack of the length standard. For instance, why should anyone have to watch a 30 second ad when the video they select is only a minute and half long? Why should the ad be 1/3 of the length of the actual video asset?
    I believe that’s why folks like NBC made a decision to no longer show any ad more than 15 seconds long for an short-form content on any NBC web property. To me, that’s a smart move as the viewer now knows what to expect from any NBC site that has ad supported video. I think that standard length for an ad is important.
    When I see a 30 second ad on such a short piece of content, I either close the window as I’m not patient enough or I go read e-mail for 30 seconds until the ad is over. If I knew it was only going to be 15 seconds long, I’d watch more videos and I’d sit through the ads.

  • Great post. Would you mind if I reposted this on ReelSEO.com?

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