April 20, 2008
Online Video Advertising
If you paid attention during your high school or college Economics class, you undoubtedly were exposed to the axiom of supply and demand. Video advertising must abide by this law just as a falling rock obeys the law of gravity. We are about to witness a classic lab experiment of the economic law of supply and demand, and it will give any economics professor who is monitoring the online video advertising world enough lecture material to last a semester, maybe two.
Currently there are billions of video-advertising dollars sitting on the sidelines waiting to stream into the Internet marketplace. Part of the reason, in my opinion, that the dollars are not already flooding into the marketplace is the absence of an Internet Video Advertising Standard.
We have had an advertising standard for regular network television broadcasts for many years. Many might agree that the standard is a 30-second commercial that plays at the beginning or end of a show. It makes perfect sense for the ads to play at these positions as both spots take advantage of deep-rooted psychological triggers that are hard coded into the human brain. Tuning in early to a show pulls the scarcity trigger as the viewer does not want to miss out on any of the programming. Watching the ads at the end of the show is a reciprocal response since the viewer was allowed to watch free programming.
Ask Randall Rothenberg, the President and CEO of the Interactive Advertising Bureau, and he will tell you that the accepted standard for video advertising online has not yet been cast in stone by the industry. We are close, but not quite there. Some of the things that are part of the standard and must be decided are:
- length of a video ad
- type of ad
- how many ads within a given video
- manifestation of the ad (overlay, preroll, postroll, interstitial, etc.)
- behind-the-scenes high-powered metrics for measuring ad effectiveness
- cross-platform ad buying allowing an advertiser to buy multiple websites at one location
Once the online video advertising standard has been accepted by the marketplace, I predict a green tsunami of cash to wash across many of the websites that host great video content. The advertisers will be looking for high-quality video that is contextually connected to their products. The videos that offer solutions to everyday problems will do well. The ads that appear with these videos will be accepted by the viewer as helpful additions to the content.
Let’s talk about this in the world that I work in each day. My AsktheBuilder.com videos might appeal to any number of large brand advertisers. For example, consider videos that would be in my Plumbing category for just a moment.
As soon as the advertising standard is decided, the marketing manager at Kohler might call the ad-sales department at YouTube and purchase all of the ad spots in the AsktheBuilder.com videos that have anything to do with plumbing fixtures and faucets. This is very likely as Kohler has the budget to do this.
Moments after the deal is struck, the phone at YouTube rings again. But this time it is Moen calling. Moen is another powerhouse plumbing faucet manufacturer. Unfortunately, YouTube tells the Moen ad buyer that all of the ad inventory is sold. Moen reacts by finding another video-hosting site that features AsktheBuilder.com videos.
Oh, we are not finished. What about Delta Faucets, Elkay, American Standard, Price Pfister, etc.? Where will these companies buy video ad space to showcase their products within plumbing videos? My hypothesis is in videos that are hosted on other video-hosting websites scattered across the Internet.
There are at least two major dynamics at play in this situation. The one is the supply of high-quality video content and the other is the number of different places where this content is playing in syndication. In both cases the owner of the video content is sitting in the driver’s seat. The owner of content on the Internet is king. I was quoted as saying that in the best selling book StrikingItRich.com by Jaclyn Easton. But a colleague of mine said just a few days ago that the owner of video content is going to be the king of kings. Having survived on the Internet since 1995, I have to agree with this statement.
In the meantime, I suggest you move to high ground to watch what happens when the green tsunami crashes ashore.
Posted by Tim Carter at April 20, 2008 11:22 AM
