Why Online Video Is The Disruptive Force?
We seem to have entered the post digital revolution era, which I tend to call digital re|evolution. Here the only constant factor seems to be: change?! This item might be interesting to: advertisers, broadcasters, online publishers and media networks.
About Online Video Ad Exchanges
For years, online advertisers have used online ad exchanges to buy display advertising. But now exchanges are also coming to the more complex and fractured world of online video.
Adap.tv, a 3-year-old Silicon Valley video ad-serving company, has opened the doors on the first online video ad exchange, and is expected to announce that Gannet, Demand Media and dozens of local TV stations are trying it out, as well as Publicis Groupe’s Vivaki and Omnicom Group’s OMG Digital.
But Adap.tv won’t be alone: As more sites outsource their video ad serving and adopt standards from the Online Advertising Bureau, online video ad exchanges promise to become more common place. The need they fill is to service the vast low end of the market where news, semi-professional and amateur video has been difficult for publishers to monetize.
More video exchanges coming
Several video ad networks are said to be developing their own exchange-like capabilities, and there is little stopping the big display ad exchanges from developing the capacity to trade video inventory as well. Adap.tv CEO Amir Ashkenazi said several large video ad networks were already buying in the exchange, but declined to name them.
The online video market is starkly divided with a high end consisting of premium content such as TV, music videos and other professionally produced entertainment, which is highly in demand by brand advertisers, and a long tail of low-end semi-pro and user-generated clips, which also may be valuable to some advertisers.
There is plenty of inventory on the low end but very little premium inventory. Brand advertisers may want to construct custom programs around scarce and expensive premium video; they may also want to buy as many targeted impressions as possible, such as Reckitt Benckiser did last year with cost-per-thousand-viewer ad rates as low as $1.
Where did online publishers go wrong the last decade?
That’s pretty simple. And sorry to some online publishers, I’ve been chairing the Interactive Advertising Bureau NL for 6 years, so I happen to know just a few insights.
Some or many online publishers have been refusing to understand traditional media for many years. They simply would not listen to some hard facts, global brands (I really hate the word: advertisers!) and media agencies.
Here’s the problem. A large global brand that spends hundreds of Millions (or much more) on TV commercials per year, pays about 400 to 500 USD per TV GRP. That same brand has to pay much more for online video ads if you would compare the costs per contact. That is because some portals and online publishers refuse to believe that reaching the same target audience on a different platform or channel, can impossibly be much more expensive.
So many publishers have learned the hard way, simply because their rate cards with online video ads made no sense at all. For example, how can any online publisher explain that the costs per contact for an online video ad are 2-5 higher than reaching the same consumers with a TV commercial.
And although some online publishers tried to convert their online video CPM’s into IRP’s (Internet Rating Points), they did not succeed since their rates were dropping of their rate cards. Some online publishers however, did embrace the message and they lowered their CPM for online video ads from 80 USD per 1000 impressions to 10 USD per 1000. And they grabbed market share.
Same for some large video portals like YouTube and social sites. They have many Millions of monthly eyeballs but due to their ridiculous high CPM prizes they are not making many advertising Dollars and they keep hiring expensive consultants or online marketing gurus to help them coin their massive eyeballs.
But both the consultants and online publishers seem to be pulling dead horses. And the problem with dead horses is: you can create all the business cases or strategies in the world- but a dead horse will not recover and will never win any race. So many online publishers are stuck, making no money and have 99% of unsold inventory.
Okay, let’s be fair. Most online publishers tried another solution: pushing aggressive pre-roll video ads before their content. But still their CPM prizes were way too expensive in costs per thousand. And the internet is a pull “medium” on which consumers do not accept aggressive and intrusive ad formats and methods.
And this will never change, so why do we not want to understand the fact that the internet is not another traditional channel or platform, on which we can push ads and banners like on TV or in a football stadium?
Why do so many video portals and social networks think they can charge a brand 0,25 USD per clip view? Why do they not understand that 250 USD for a 1000 video views is too much money? Why do YouTube and many video portals do not understand that sponsoring around a great piece of user generated content can be a better business model and make more money than try selling some very expensive and intrusive pre-roll videos.
Why chose expensive and intrusive advertising layers over user generated content, dear friends at i.e. YouTube? Why not try to offer sponsored layers around the video? Maybe even sponsored layers around the video that can be chosen by the users (viewers) or the content creators (uploaders). The sponsored layers can even be targeted based on keywords.
In my opinion the user generated content offers great opportunities for advertisers: For example (and see the picture in the beginning of this article): if you are Go Fast, you could target your sponsored layer to be shown around all videos containing keywords like: extreme sports, K1, F1, boxing, snowboarding etc.
Why yes to an intrusive pre-roll commercial and no to a relevant branded skin around it?
This way Go Fast could claim many extreme sports and increase it’s prompt awareness among an extreme sports minded target audience with 10-25%. Yes, we have done several studies with i.e. Metrix Lab and these figures are achievable for the brands that can think beyond traditional advertising.
With this approach YouTube could help built Go Fast to become a leading and top of mind brand in this category and among a specific target audience of sports fans and lovers, within one yearYouTube or any other video taking this approach could even take a bigger budget from Go Fast, to bring Go Fast’s TOMA above the TOMA of Red Bull.
It’s just an example of taking another approach. Just trying it, measuring it with an independent brand tracking study/ company that measures the AIDA attitude of the exposed target audience. Simple and fair approach, but why do the YouTube’s of this world take such a traditional approach in online marketing and advertising? What should happen first: try or die?
Maybe, just maybe, earning people’s attention with great online video content should be the first step in the marketing (or should I say: advertising?) value chain. Why not try to spend a little more time and energy (no guts no glory) on creating a compelling online video. One that people will love to share with their peers?
Maybe, just maybe, companies like ViralTracker and Visible Measures can predict what great online video content is for your brand and target audience. They have seen the intelligence and insights of hundreds of online video campaigns and can probably outsmart your creative agency about 100 times? If I see this video demo, it looks like a no brainer.
What could brands learn from online video metrics intelligence?
And there are many other ways to disrupt traditional marketing models with the internet. If we just were willing to try, measure and learn. Many models have brought proof that online can really do great for building awareness, preference and loyalty.
But for some reason too many out there think that the internet is ONLY suited for performance marketing. Yes, online performance works great as well. But could there be a reason to believe that it’s not always AND/OR?
That the truth lies in the middle might be the real truth. I’m just trying to state: internet can contribute a lot to drive performance marketing, leads and sales. But the internet can also contribute severely in building awareness, preference and loyalty! Might AND + AND be a scenario as well?
Probably enough about advertisers and online publishers for now? How about Broadcasters and Media Networks?
Will regular CPM Ad Exchanges bring a solution? Will Online Video Ad Exchanges really change the rules of engagement? You might think so, since most global media networks are already working with online ad exchanges.
The global media networks have learned from disruptive forces like Google that painfully cut out the media networks as beneficial intermediaries. I like to call to call Google a Disruptive Force that is dis-intermediating the media agencies . But, the online Ad Exchanges might bring some buying power and added value back to some innovative global media networks.
Some large ad networks and global media networks have already dropped Billions of Cookies and are pretty well equipped to do great behavioral targeting and re-targeting which have increased CTR’s and Conversions (leads and e-commerce) through the roof.
These last steps even enable great new eCRM and loyalty programs. So the Ad Exchanges might go beyond performance marketing and drive some global networks up the value chain, a step up, moving away from traditional online advertising towards eCRM programs. It might even help the global media networks towards claiming the use of brand’s owned and earned media.
After all, 99% of the global media networks have been solely focusing on bought media and acquiring new customers. Spending some of the brand’s media budget on creating satisfied and loyal clients, why might that not be a great idea too.
Be aware, I’m not saying: STOP shouting and stop buying online airtime. I’m just saying: a bit more focus on keeping existing clients happy and satisfied, even after their purchase or subscription, that might be smart sometimes. All I’m saying is: AND/ AND could be possible too. I would happen to know a few online consumers that would like this approach. Maybe we all know that Billion or more online consumers that would feel appreciated by this AND/AND approach.
Maybe these satisfied clients would be willing to tell their friends how happy they are to be one of your customers… Maybe, just maybe, some of your satisfied clients, loyal clients, fans, lovers or brand ambassadors could each pull 10 of their peers through your sales funnel for free? Since we all have learned to push rope up a funnel, does not automatically mean pulling every now and then is such a bad idea, right?
I like to call this: the VSPOT theory. Pushing is hard labor and very expensive. Pulling might just be much more easy and much cheaper If you think: what the hell is that guy talking about, I invite you to discover your VSPOT (just a theory of us, not the truth!).
Can the Ad Exchanges help the Broadcasters. Could be. But Broadcasters seem to have decided a decade ago, that they do not like to listen and interact with their viewers. Most broadcasters do not seem to like opt-in databases, dialogues or user created content?
But with the TiVo’s and other DVR’s becoming massive weapons of mass affection, how long will it take before all TV audiences are able to skip and block TV commercials? So I feel that, even though TV is cluttered and TV spendings are not falling, the Broadasters will have to change their mentality and DNA even faster than brands (advertisers) and global media networks.
The Online Video Ad Exchanges is entering this era of digital re|evolution, it might even take away some more traditional TV spend, and pull it towards online video? In this era we might see many more brands moving away from traditional advertising and shifting towards a model which is more content driven, engaged and focused on consumer dialogue?
Are you a broadcaster, publisher on media mogul? Please share us your opinion, so we can have a great debate and take away a lot of peer learnings from this discussion…
A tip that is not for free, but offers great value for money: buy the new whitepaper The Economics of Online Video ($199). Hope you will enjoy it as much as we did.
Inspired by an AdAge article.
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Great post. Great lesson specially regarding the causes that lead to the point we are now.
In my opinion it’s simple, not even talking about online advertising. As we see that people are shifting from the conventional media (newspapers, magazines, radio, TV) to online media. As soon as anyone understands that in the last 20 years the incredible shift that happened, it’ll also understand what will come in the next 20+. The power of online-everything in its greatest strength.
From this standpoint we need to realize that we cannot deal with media as we were dealing 50 years ago. This is the error that most of human beings commit, we tend to use the same methods if they still work, and indeed they ‘still’ work, but the question is, until when?
I think we don’t need to be wise to understand that those who have biggest success, are the ones that understand the change and adapt to it asap, and are the first understand that they should already be adapting to the next level yet to come.
I guess it’s about education, understanding where we stand and where we are going and above everything understand that future does not come in black and white like the first TV sets from the previous century.
Thanks for for reply.
Yoiu are so right, but honestly: how long do you think we need before we really get it?
This video was really explaining it great I thought.. a shocking truth that backs your remarks 200%!
check this video if you have not seen it already. Can’t help it, I love it
http://www.viralblog.com/social-media/the-dramatic-shift-in-marketing-reality/
Thanks for your post Igor. It’s very interesting to read how to combine both ways of communication…social and non social.
Did you see this…ok intrusive as … but very nice http://vimeo.com/9194146
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