While the online video channel continues to grow, with record numbers of people viewing video content online, TV still takes the lion's share of advertising spend and, despite proponents of the "TV is dying" camp, is growing faster than the overall ad spend.
This might seem counterintuitive, where the promise of better targetability, engagement, and measurability make online look like the more attractive investment: So why has video advertising on the web failed to grow at more rapid pace? Let's walk through some of the obstacles that online video presents... and explore possible solutions to help break through these barriers.
Online video is the new must-have feature for web content publishers. Today, it's a quick and easy way to augment the audience's experience. There's also the allure of new opportunities for monetization through advertising. But hyper-fragmented viewership presents an obstacle for buyers that require an efficient means to achieve reach and scale: The explosion of video content online is split across tens of thousands of sites.
Through remassification utilizing online video networks, it can and does deliver the big numbers, but there are still kinks to be ironed out surrounding things like transparency, player compatibility issues, and placement controls. It's also still fairly cumbersome to deploy on a site-by-site basis.
Digital veterans have made peace with this, but traditional TV media buyers still find the whole web proposition ridiculously complex. One advantage fragmentation offers is the opportunity to reach highly defined audiences on their terms, with messaging unique to their interests. But fully capitalizing on this will require marketers to develop a deeper understanding of the various channels and technologies available and how they can be used to best serve different marketing agendas. In time, continuously rising viewership will justify the effort, but not before a critical mass has been reached.
On demand vs. scheduled
The traditional and online video models are fundamentally different. Online video consumption occurs largely on demand, which means advertisers can't know exactly when and where their messages will be viewed. This presents a scary proposition for many marketers who find the same controls they have over placement on broadcast and cable TV don't translate perfectly online. Successful adoption of the video channel online requires a fundamental rethinking of how advertising is distributed.
But, the user-controlled nature of the web offers a key value add that TV cannot match, and that's earned media from real-time socialized sharing and other forms of passalong, like email, texting, blogging, etc. By investing effort into the attribution of value to digital metrics like interactions and passalongs, marketers will be better poised to treat online video in its own right, rather than as a proxy for television.
There is no standardized online equivalent to the GRPs and TRPs widely used in offline video buying. A majority of advertisers think that video ads online should be measured in GRPs exactly equivalent to TV GRPs. This is understandable: As a planning tool, GRPs offer some consistency across the media mix. But, on the fragmented and 100-percent-on-demand internet, the concepts of reach and frequency on which GRPs depend become a lot more elusive than on TV where everything is orderly scheduled.
Paradoxically, the internet offers a stronger proposition in terms of performance measurement after the event, with measures impossible on TV, such as completion and drop-out rates, engagement times, etc.
So is the GRP the right yardstick for online video?
Although the subject is not new and there have been attempts at developing a made for web GRP, we are still far from establishing GRPs as a measurement norm for online. Part of the problem is how fundamentally different online video is from TV. Online does not conform to a static broadcast model, where viewers tune in at scheduled times. Online, the user is in complete control of what, when and where they consume content. In this world the notion of a reach- and frequency-based measurement pre and post view seems incompatible by comparison. But still, this is how the vast majority of budgets are assigned... budgets that continue to grow despite rise in viewership online.
Unlike television, which is limited largely by ad impression-based measurement, online offers new and exciting possibilities for measurement based on user interactions or "engagements." But without a clear understanding of how specific engagements impact ROI, it will be very difficult for this model to take root.
Before the potential of richer measurement can be realized, marketers need to fundamentally change the way they measure and valuate.
Video ad technology lacks standardization. The production and distribution of video ads online are no easy tasks, due to the number of video players and formats available and the ensuing interoperability issues.
While trafficking may appear irrelevant to the calculation of CPM, CPC, GRP, or ROI analyses, the hidden cost of time spent in implementation indirectly affects decision making as brand marketers, ad agencies, and online media companies assess the overall total cost of involvement.
Attempts at standardization by the IAB, in the form of the VAST and VPAID initiatives, struggle to keep up with new developments and are slow to take root, but represent a step in the right direction that will prevail in time, as buyers become more vocal about their needs.
Running a video ad online poses the risk of questionable associations, not only with the context of the site in general, but also with the content of the stream within which the ad appears -- something that is currently very difficult to gauge.
TV seems particularly safe in comparison, offering marketers greater visibility and control over the type of program their brand will appear next to, and even the schedule within which this is going to take place. Online, sticking to in-stream within well-known TV material offers the most familiar approach.
But, there's more to the world of online video beyond pre-roll, and surely this in part contributes to marketer confusion about the channel, its creative possibilities, and how best to measure it. A socially seeded "viral video" offers the potential for massive earned exposure; product placement or sponsorship surrounding broadcast-inspired webisodes offers branding with tighter controls; banner-based video overlays offer yet another alternative, where the audience must choose to engage with a message before it can be viewed.
What the future holds
Like any emerging channel where standards have yet to be concretely defined and adopted, using online video for advertising calls for caution. Sitting at the intersection of two different worlds, the internet and TV, online video pulls advertisers in opposite directions, which explains why the great media revolution -- and the ensuing flood of money migrating from TV to the internet -- is taking time to unfold.
For marketers, it all boils down to a clear definition of their objectives so they can determine the best implementations. While television offers a higher degree of certainly over where messaging will run, online video offers the potential for interactivity and engagement, as well as a wealth of rich audience insights that go well beyond even traditional web analytics.
Experimentation is cheap and can bring great rewards in these still early days. As marketers toy with different tactics, like extending broadcast buys online with repurposed TV spots versus creating "made for online" clips, and sponsoring versus integrating products within short-form content, they will be able to build confidence and gain an appreciation for the precision and world of opportunities online video provides. Budgets will inevitably follow suit, but in the fashion of a rising tide rather than tsunami.
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