Why online video is living in the past

Take a seat in my vintage DeLorean. I'll crank it up to 88 mph, and we'll head back to 1995.

Look! There's Windows 95 hot off the presses. JavaScript is in its infancy. The DVD format is the latest thing. And online advertising is in flux, with agencies beginning to move from site-serving banner ads and rich media to third-party serving (thank you, JavaScript).

Why online video is living in the past

Why the shift? For one, the mid '90s was the heart of the dotcom boom, so websites were proliferating and the internet was flourishing. Consumer money was heading online, with advertiser dollars on its heels. Online advertising began to grow, and budgets, campaign volumes, and impression counts followed suit -- creating a major problem of scale.

Site-serving (and agency personnel) simply couldn't keep up with the growing volume of advertisements. What's more, agencies had no way to optimize campaigns on a site-served model and had to rely on the publishers to provide performanceand billing numbers -- a clear conflict of interest that left advertisers insecure.

This need for an outsourced and impartial way to manage campaigns and bill accurately led to the development of Dart For Advertisers and Atlas. With these tools, advertisers could be confident they were paying for the correct number of impressions, and agencies gained control of their campaigns and eliminated an untenable workload. Third-party serving solved multiple problems at once during a time of rapid growth and change.

So let's refuel the DeLorean and return to 2013, where DVDs are now dinosaurs and online advertising has fully evolved. Or has it?

In the last few years, online video (in-stream) advertising has grown tremendously, experiencing more than 40 percent growth year after year and driving a '90s-like uptick in volume and scale. Yet stunningly, 80 percent of video is still being site-served, by the same agencies that gratefully third-party serve all of their other online advertising.

Where is the uproar from advertisers paying premium prices for video placements based on publisher-provided metrics circa-1995? As one head of a full service agency recently told me, "You might as well take all that money you are spending on site serving video, put it in a paper bag, and burn it -- because site serving is basically throwing your advertiser's money away." Ouch.

The fact is, the case for third-party serving today is even stronger than it was in 1995. In addition to objectivity, optimization, and efficiency benefits, it now also provides the ability to pool campaign data across search, email, banner, rich media, social, and other channels to serve the right messages to the right audiences at the right time.

Third-party serving also provides opportunities to enhance the user experience and campaign performance using interactive video. Interactive spots not only have the highest overall performance of any online format, but they also provide the ability to go beyond awareness campaign and incorporate response and engagement.

Dynamic video is another huge innovation advertisers are leaving on the table by site-serving. It works much like dynamic creative optimization in the banner world to increase relevancy by automatically versioning and optimizing video based on targeting and performance data.

Clearly, online video needs to go back the future. Video garners the highest CPMs on the market -- and it will continue to do so as it inevitably converges with TV. Agencies owe it to their clients and to themselves to pay based on objective data and exploit the latest tools for ROI.

And there's no excuse not to make the move. Third-party ad servers and standards are fully baked and proven after 20 years of refinement, and they are well established for online video. Making the shift should be a no-brainer. No flux capacitor needed.

Shane Metzger is product marketing manager, video, at DG.

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Comments

Scott Clark
Scott Clark April 11, 2013 at 3:23 PM

Very nice article here, Shane, well stated. My sense is that the decisioning to move to 3rd party ad serving of video is merely a matter of perceived cost vs. value. Why do it through a platform if the sites serve it for 'free'. If sites no longer incur the tech and service cost of ad serving, in theory they could remove some cents from the CPM to allow for a reallocation of the same dollars, instead of forcing agencies to pay more. When publishers start admitting that ad serving is NOT free, it's simply baked into the CPM, then agencies can demand more flexibility on pricing to have sites cover the ad serving fees. Then the budget issue gets solved and we can all upgrade the status quo of video delivery and analytics. And the smartest publishers know that 3rd party ad serving is to their benefit. Someone else does the creative swaps... Someone else does the reporting... The value prop of 3rd party ad serving for publishers is something I'd love to see further explored...