ScanScout's founder outlines the larger challenges facing companies that are driving the growth of video online and offers solutions.

What if it were possible today to enable all manner of video advertising to reach all groups online based on context and interest? Making this work would require the following and more:

• A defined means of measuring progress (defining success)
• The ability to amass a very large warehouse of advertising video; essentially an inverted network
• The ability to use a known business model of charging per video served; perhaps a cost-per-view model.

Of course, all of this begs the outstanding copyright issues, but for the moment, let's put those aside and look at the challenges facing advertisers in the online video world.

In addition to keeping this model simple, this way of thinking would align the companies that make the model work more closely with the source of advertising revenue within the market. And we all know how desirable it is to stay as close as possible to the money.

Haven't we already seen something like this?
Do you remember Match Logic? Match Logic was the darling of the agency community in the late 1990s and proposed a similar model. The company attempted to amass the creative assets, apply mathematics and technology to serve a relevant ad to a relevant web page, at a minimal cost of per-ad-served to the agencies. In its model, agencies would adjust rates for the actual media placement with the publisher to allow for the technology fee.

Match Logic was acquired by Excite (which became Excite/@Home) in early 1998, and this model was hardly even considered again until we began exploring video more recently. That is why, whenever I read any of the bourgeoning articles and commentary on video in our press, I'm reminded that one major barrier to this model remains.

Ten years ago, we weren't speaking of this in terms of video so much. But the challenge remained the same mundane one that plagues this model today in a video-enabled web: With so much personalization and user-generated content (UGC), how can advertisers be assured that their brand will be protected?

How can we assure advertisers and their agencies that the appropriate ad will be shown to the right consumer at the right moment, protecting both that consumer and also the advertiser?

The landscape today
Let's face it, although it is true that there is a great deal more creativity and innovation in content than there is in advertising online, that has far more to do with the sites that have enabled users to create that content. Regarded more simply, if you make it simple and free for users to slap their UGC video online, you're going to get a ton of rubbish, but you're also going to get some fascinating content. If you build it, they will upload.

The problem -- as anyone involved with Google's development of a YouTube ad platform would likely attest -- is that just because the platform enabling the UGC to be loaded is so simple for users, it does not translate at all that the same will be true for advertisers. In fact, since the vast majority of UGC video is fluff alongside which no advertiser would want to see its brand, the very thing that has given video such buzz may also be that which makes monetizing it so complicated.

The UGC crowd is not prone to waiting on pre-roll, and the level of personalization already being enjoyed by users has enabled successes primarily only from marketers who have created entire experiences from their ads, such as Ford's efforts with its "Edge" launch or the growing number of viral efforts. Nice stuff, to be sure, but certainly not the sort of tactic that will drive the half-billion dollar anticipated growth of online video this year.

That level of growth will only occur when someone figures out how to match the best creative with the best content in an exchange-based model that simultaneously filters away the content the advertiser would like to avoid and protects advertisers. Only then will the branding money flow into online video. 

At the same time, don't be surprised if the most efficient models enable a great deal of performance spending as well. Once these exchange models are in place, that will be a natural fit. After all, most of the money already online is in performance. With a new, higher demographic market to leverage via an exchange model, it's not as though performance marketers will stay on the sidelines. Recently, there have been reports that Google's AdSense Network will sell ads alongside content from Sony BMG and Warner Music Group. So, this is already upon us.

Watch it grow like wildfire, but only if participating advertisers can rest assured that their brands will be protected. That's the only way that we'll get to a billion-dollar plus online video market over the next couple of years. Protecting the advertiser, showing consumers advertising content that interests them, and moving away from less targeted, RON, campaigns helps everyone: consumers, advertisers and publishers. Now, there is a model on which to build a billion+ market.

Waikit Lau is co-founder and CEO of ScanScout, which develops video-enabling technology for the web. Read full bio.