Most of the user-generated video content that is popular today is what we might commonly term "independent video," or video that is not commercial. And in truth, its independent quality -- the roughness around the edges and its aim clearly outside of the mainstream -- is much of what makes it popular. But I would also posit that what makes these independent videos attractive to viewers is not just that they are the antitheses of commercial; they're also absent of commercials.
Even as some of these videos develop large and consistent audiences, they won't enjoy meaningful advertiser support for some time. Why? While all video is not yet the same across media, in the next two to three years we will each be able to access any content we want via a one-foot (our mobile phone), two-foot (our laptop) or 10-foot (our home entertainment system) experience, each supported by advertising. Right now, however, much of the user-generated content on the internet -- even some of the more professionally created productions -- isn't anything that many brands want to be associated with, let alone pay to support.
Even when that content is something that advertisers don't mind being associated with, it's hard to get positive, measurable results for brand or direct-response advertisers. And while most people currently find online video quality and engagement inferior to that of TV, most demographic groups continue to shift their content consumption from 10-foot experiences to two-foot ones. Right now, folks can send TV to their computers (worldwide, for that matter, with products like Slingbox) and from their computers to TV (via Apple TV).
But while this shifting viewing experience is challenging for publishers and content producers who must clear distribution rights from previously recorded shows or figure out how to pay for streaming costs, it is a huge opportunity for advertisers. No matter what medium ads are placed in, many compete toe-to-toe for attention with the very content they are paired with. Using modern technology like a DVR or its predecessor, the refrigerator, it's simply too easy for consumers to avoid watching ads.
Online ads, on the other hand, are nothing if not resourceful. Some compete by impeding content as pre-roll. Others overpower content through expansion and page takeovers. Some focus on increasing relevancy via integration and sponsorships with content. And some advertisers cleverly use DVR's logic to their benefit by place- and time-shifting advertising.
One of the past models experiencing revitalization, thanks in part to vast application improvements, is behavioral targeting (BT). In 2007, BT 2.0 is far superior to BT 1.0, which had players like DoubleClick in hot water over privacy issues that typically resulted in advertisers paying higher premiums on banners that users saw a few minutes earlier anyway because of limited creative options at the time. The new and improved BT 2.0 works much better and is gaining traction both in the United States and Europe.
Currently, online ads have a competitive advantage over TV and mobile ads because they can not only leverage what people are doing online, but BT is getting to a point that it can predict what people ought to be doing when they're really surfing clips of motorcycle crashes, human beatboxes and celebrities in various stages of disrobement.
Ads know that people ought to be refinancing their mortgage, booking a Bahamas vacation, working out a budget for their kitchen remodel, or any of a hundred other things that brought them to a search engine or other commercially relevant website yesterday or over the weekend. Instead of targeting people when they're most engrossed by their favorite content, advertisers should also reach in-market customers when they're not so absorbed.
BT enables reaching qualified prospects at any time, sparing advertisers the necessity of slugging it out with content that is invariably more interesting than their ads. By using BT combined with place- or time-shifting (serving an ad at a point after an advertiser has identified a prospect online through a search or other surfing activity), advertisers can target qualified prospects at their most distractible moments, thus maximizing an ad's influence and potentially making a sale, facilitating customer movement down the "sales funnel," or building positive brand lift. In this way, advertisers can hone in on their targets and cherry-pick the environment in which they want to reach them.
Eventually, the increased performance that comes from this advantage will drive the ever-elusive convergence, or BT 3.0, which will provide advertisers with even more relevant information.
What is BT 3.0, you ask?
BT 3.0 will be the point at which advertisers can combine mobile, online and home entertainment system behaviors into one master profile to better present customers' relevant offers at the optimum time and place for both sides. That doesn't mean, however, that online advertising should likewise mature to resemble TV advertising. That would be like Blu-ray reading the VHS playbook. As search marketing has proven in spades, putting advertisers in the right place and at the right time to present offers or influence brand impact is the target for which all platforms should shoot.
Ultimately, all content will be supported by subscription, brand-integration opportunities, and/or BT/contextually time-shifted advertising systems. Some advertisements and brand integration efforts may be so relevant that the category of "advertainment" will take hold. Regardless of the time frame, getting ahead of the behavioral targeting and place-/time-shifting curve is a near-term return on investment that pays dividends in perpetuity.
Daniel Todd is co-founder and president of Zango. .