Without Enough Inventory And Targeting Online Video Advertising Will Remain Dead

With a major snow storm about to hit the Northeast, many folks like myself are probably using the web to check out the latest forecast on Weather.com. The site is a treasure trove for anyone who really wants to check out the storm from all angles and there are already dozens of storm related videos available. As a result, I've checked out close to ten videos and each time, the site delivered me the same thirty second pre-roll add from pajamagram.com.

For content owners like Weather.com and others, examples like this highlight one of the many major problems with online video advertising. If a site like Weather.com that produces professional content, has a well known brand and has a large reach can't sell enough ad inventory, how can content owners ever expect to make any money online? Making matters worse, a site like Weather.com has a HUGE advantage over other sites in that they already know my zip code and could be delivering me ads that are tailored to my area. But that's not happening either.

While this is a problem that the online video space has been suffering from for years, why hasn't it gotten any better? Why isn't there more inventory and targeting taking place? What's the hold up? Every time I bring up this issue many who work in the online video ad platform space keep saying that they are already doing targeting or that their platforms support targeting, but clearly it's not taking place with content owners. I always ask for examples of sites that are doing this but don't get any. Makes you wonder if all these ad platforms can really deliver targeted, personalized ads.

While I do think ad platforms can determine what ads you have already seen and deliver you a different one, the fact this is not happening on Weather.com or CNN.com shows that even with the technology, the inventory is not there. For all the talk of how online video advertising is going to help content owners monetize their content, it's not happening on a major scale and won't until the user experience is much, much better.

Simply saying we need more inventory and better targeting to make online video advertising successful is not something people don't already know. I'm not making some profound statement that others have not though of. But in the past three years or so, I can't think of anything regarding on the online video advertising space that has gotten better. What's improved? Maybe the size of the ad window, but the quality of the ads is pretty poor, targeting is not there, the inventory is limited and the industry still has absolutely no video ad standards. I can't think of one aspect of the business that has improved the user experience in the past few years. Can you?

  • The cost of dealing with the ad network and technology is still probably larger than the revenue from the advertising in the vast majority of cases for internet video advertising. With the exception of extremely popular content, the dollar values are probably just too low for anyone to be interested.
    I think that ‘overlay’ ads or other non-video type advertising that appears in/around the video will probably dominate all internet video that isn’t top branded content for quite some time.

  • Larry

    Maybe the problem isn’t under selling or lack of targeting. Maybe it’s that there’s not enough people watching videos on weather.com? Is it possible that weather.com may have actually over sold the pajamagram campaign?

  • Sonal Gupta

    Hi Dan
    I was looking into researching more on Akamai Technologies, Content Delivery Networks and alternate solutions to increasing web speeds (faster TCP/IP, HTTP protocols). It seems like you have done alot of research on this. I was hoping I could ask you some questions I had regarding the CDN market.

  • Download Content

    Hello Dan – Any idea on how much news organizations (e.g., AP) charge for licensing video content to distribution websites (e.g., Yahoo). Even a ball park figure will help us understand the economics of video clips. I recall a post on Netflix, perhaps a similar analysis on the economics of online news video clips (supported entirely through ads) may be useful. I recognize that the 90 – 10 rule may apply, i.e., less than 10% of content will be viewed by 90% of customers, but portals have to carry significantly more than what is popular.

  • Sorry, I don’t have any data on what the costs for licensing are.

  • Fahd Altobaishi

    Why is it that consumers wont pay for valuable content online? People create content that people want to watch. If the content is valuable then audiences are built. If audiences are present then valuable content can be monetized.

  • Ira

    Hi Dan,
    I agree with you and your points were part of my inspiration to create oseeit.com. P.R. has just started and hopefully this site brings businesses and consumers closer together with the magic of video.

  • Adv

    Dude, are you kidding me? Do you not consider what old spice is doing video advertising? I think their current campaign is phenomenal. In fact, I seek it out because its so entertaining. Quality stuff right there.

  • small business consulting

    I agree with Larry. The staff of the site should review their site’s statistics and see if they are getting enough traffic. Maybe there’s not enough viewers on their sites, which lead to a lack of diversity in their audience.