When a media buyer decides to buy online video ad space, she or he is first faced with the challenge of finding where the scalable, high-quality, targeted inventory lives. Is it with the publishers, portals, or ad networks? With experience, buyers learn where the "money card" is, and it's usually not where they originally thought.
We recently conducted an ad agency survey in which we asked 150 video advertising media buyers where they were most likely to buy video inventory today. In contrast to the display advertising business, in which portals dominate, survey respondents indicated they were much more likely to buy inventory either directly from an ad network (41 percent) or publisher (51 percent) than they were from a portal (8 percent).
Why is this? The reasons are due to key differences between the display and video medium.
First, experienced media buyers know that targeting and price are the two most challenging issues to overcome. As a result, they buy inventory directly from publishers as a rudimentary form of targeting in an effort to scale their campaigns, then rush to ad networks that can help them gain efficiencies on price. Portals often rely on display targeting technologies, which don't offer enough scale to justify their pricing, and have yet to offer the price efficiencies available on the display side.
Second, if media buyers agree to ante up and pay a premium for video inventory, they typically want added value such as custom content, a sponsorship placement, or free impressions to justify the cost. Publishers are uniquely positioned to provide this value because they have lower minimums and more flexibility in doing custom work. As online video advertising budgets get larger, it is likely that portals will have a more competitive offering for integrated deals and sponsorships.
Third, the largest aggregators of video inventory have yet to be consolidated. Before Ad.com was acquired by AOL, the largest pools of scalable, targetable display inventory were controlled by independent companies. The same is true in video inventory today. As a result, there is broad portfolio of technologies -- such as user targeting, storyboarding, and even frequency capping -- that can only be offered across an entire campaign by a third party, such as an ad network.
Like all forms of online media, the video category will mature to the point where ad dollars follow performance metrics and efficiencies of both execution and price. Performance metrics are still a ways out, demonstrated by the fact that a vast majority of advertisers in our survey (87 percent) have not performed any of their own research around the efficacy of online video. However, respondents cited lower price (46 percent) and campaign execution efficiencies (28 percent) as the primary benefits of advertising with an ad network, and this is likely a level of service that will be offered by portals in the future through development or consolidation.
As for today, the "money card" in video advertising seems to be held by premium publishers with branded broadcast quality content and ad networks that are aggregating the vast swaths of unsold video inventory. As Google warms up its algorithms, increases its focus on the video category, and prepares to play its card, it will be interesting to see if it can change the game.
Tod Sacerdoti is the CEO and founder of BrightRoll.
On Twitter? Follow Sacerdoti at @todsacerdoti. Follow iMedia Connection at @iMediaTweet.