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Online video advertising's to-do list

Online video advertising's to-do list Alan Chapell

As investors continue to throw money into the space, video advertising is beginning to rival mobile marketing; both for its vast potential, and for its propensity for being over-hyped. All kidding aside, one need not look too hard at the space to notice that there's good reason for the optimism. And equally, there's good reason for concern as there is still so much work that needs to be done to harness this vast potential.

Today, I'm moderating a panel at the MIXX Expo entitled: "Fitting in Today's Digital World of Misfit Content" that takes a closer look into the world of online video, and will offer some observations. The panel includes senior executives from Avenue A | Razorfish, Broadband Enterprises, Fuel Industries, Masterfoods USA and Zango.

As a preview, I thought I'd share some insight on where I think this space is heading.

Dearth of video ads?
One of the challenges many in this space have consistently pointed to is the lack of "good" video advertisements. There just isn't a significant inventory of quality online video advertisements to choose from, and that makes for a negative consumer experience as users view the same ads over and over again. Fortunately, this is beginning to change, and companies such as Xlntads.com and other content studios have gone a long way towards filling this void.

However, sometimes solving one problem may in turn create another. For example, some of the large brands have noted that it is difficult to ensure that their message is harmonized across the various media they buy. And it would seem that adding an additional agency with which to create online video may create consistency challenges. But I think that many brands are willing to trade the additional management for better video ads, at least for now.

See what sticks
At this point, we're witnessing significant experimentation as multiple players evaluate how best to monetize as much content as possible without turning off all those eyeballs they've worked so hard to obtain. So, the industry is somewhat mired in questions regarding ad formats, ad lengths, understanding the right ratio between content and advertising and whether or not to even advertise within content. And there seems to be little consistency regarding both how and how much advertisers are willing to pay.

This is becoming increasingly tricky as the industry moves away from repurposed television content and advertisements towards original online content and ads.

Ann Green, SVP of marketing solutions at Millward Brown notes, "Just because something worked for a TV audience doesn't necessarily mean that it will work online." TV is very passive, while online is active, hence the video ad models should be customized towards that environment. "To compound the issue," says Green, "most TV ads are copy tested so there is some understanding of how they will work in advance of 'airing.' This has not necessarily been the case for video ads created expressly for the online environment."

What metrics?
One of the byproducts of all this experimentation is that a true set of standards and best practices has yet to emerge for online video advertising. And this has resulted in a myriad of challenges. For example, lack of standards makes it very difficult to scale. Think back to the late '90s when just executing a media buy across a handful of sites involved significant manual workarounds; add another layer of complexity and you've got the current process for buying online video.

And the problem isn't limited to execution. There's also little consensus on reporting metrics. According to Dan Rayburn, EVP for StreamingMedia.com, "Almost every video ad network out there has its own way of measuring ads, and almost none of them are willing to make public their reporting mechanisms so that advertisers have a reliable means to evaluate the effectiveness of their campaigns." Sometimes it's better to have bad metrics than no metrics at all. And the lack of some mechanism to understand how video ads are working will undoubtedly keep some advertisers away. And that brings me to my next point:

Branding vs. direct response
Perhaps the largest disconnect is one between brands and publishers. As one executive from a large CPG company told me recently, "The current models don't reflect the buys being made." While this disconnect is certainly nothing new, it has now reached critical mass. Publishers may understand how their user base wants to consume content, but creating a vibrant community isn't enough. Publishers must be able to demonstrate why their community is a sound investment, and must be able to do so in language that the traditional brands can understand.

We can complain that the brands "don’t get it" (collective groan for using that tired '90s phrase) and that the current paradigm is fragmenting. However, regardless of where and how this space ultimately ends up, the reality is that premium advertisers aren't going to jump on board en masse until or unless they are convinced that this medium will deliver for them. Ultimately, we need to recognize the fact that we are dependent upon them for our short-term success, and not the other way around.

Keeping the bad guys out
One area of ever increasing importance to the brand advertisers is the question of keeping their ads away from poor quality or inappropriate content. As Erick Hachenburg from MetaCafe notes, "The problem with much of the video content out there -- particular user-generated video -- is that there is no promise of content quality, which can result in a very poor user experience."

Some in the marketplace, such as Keibi, have an offering designed to detect pornography. Others, such as ScanScout, have developed technology designed to ensure that advertisers' brands are not aligned with content they deem out of context or in any way inappropriate. Both of these approaches sound like a step in the right direction, but I haven't seen either for myself. Unless the process is truly automated, it's hard to envision how it would scale. Anyone with first-hand knowledge of how this might work for either company, please feel free to ping me.

Although some publishers are beginning to head in the right direction, most are not yet offering much in the way of targeted ads. As Randy Kilgore, CRO of Tremor Media quips, "The current level of targeting available for streaming video advertising is on par with that of being able to choose your cable company. You have one choice, it's based on the content of the site, now enjoy." As Rayburn explains, "Due to the myriad of technical issues, video ads are still being offered to web users with little information regarding what the user wants to see."

Kilgore adds, "The good news is that this will all change in the next six to 12 months." I agree, and have seen some significant things happening as many of the traditional behavioral targeting firms enter this space. More on that later.

The bottom line
There's tremendous potential here, perhaps even greater than that cited by the Jupiters and eMarketers of the world. But there's also a good deal of work to be done. Over the next few weeks, I'll be focusing in greater depth on each of the points I've made here. Stay tuned.

Alan Chapell is president of Chapell & Associates, a strategic consulting firm providing business and legal advice to the interactive technology community. .

Chapell & Associates is headed by Alan Chapell. In 1997, Chapell founded the privacy program at Jupiter Research, an internet research firm focusing on the consumer internet economy. During his four and a half years at Jupiter, Chapell also...

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