Advertising on the Video Internet

How will content providers make money? Same as always – subscriptions, pay-per-view and advertising. I think a lot about advertising -- that’s what my company does -- we enable in-stream advertising and, I think, advertising will be the single largest source of Internet video revenue. It’s the dominant broadcast method and the dominant Internet method of monetizing content – why should it be different on the Video Internet?

What will advertising look like on the Video Internet? It will be shorter, more interesting and more relevant – meaning dynamic, real-time, targeted and personalized. Advertisers and agencies will have to come up with more entertaining, interactive and more modular video ad creative. Agencies like Martin Puris’s Not Traditional Media and Alan Feldenkris’ and Alan Schulman’s Brand New World are trying new things and changing the rules, like working on “Broadband” advertising campaigns that deliver a message in multiple, smaller (than the 15s or 30s) chunks over a longer editorial experience and have multiple associated HTML messages. Nonsense to the people who say it will be a branding medium or a direct response meduim, there will be a place for both (like TV and like the Web, right?). Like content, video advertising will be dominated by Windows Media, Real, Flash and Quicktime formats. The proprietary Rich Media products -- Eyeblaster, Unicast, Eyeblaster, Klipmart etc -- will be challenged by the Video Internet. First, their primary Web businesses of video banners, pop-ups and interstitials will be impacted by increased user control (in a world where ISP’s compete on the basis of who has the better pop-up-blocker, how long can these “rich media” video units survive?). As for in-stream video, advertising should be in the same format, environment and management scheme as the content – better experience for all. Look at the experimental forays into the pre-roll world that the in-page video ad guys are making at places like New York Times -- the advertiser value, user-experience and content-owner-interests are all degraded from a true in-stream Windows or Real experience. Unbelievably, some agencies are pushing the Unicast in-page solution to in-stream publishers. How could agencies including the one that helped launch the fine MSN Video product now be pushing an in-page, rich-media, transparent Java video overlay that tries to time and transition to the beginning of the player stream (often unsuccessfully) as an alternative to in-stream (i.e. “in-the-stream”) advertising? What the Internet ad guys need to learn is video programmers and advertisers won’t tolerate OK execution -- there is a level of acceptability in the Web that will not fly in video.

In fact, right now the variety of ad formats – particularly the proprietary rich media formats – is an inhibitor to Internet Video advertising and in the near future agencies will simply distribute a creative in WM only and hit the large majority of the market (Real, Quicktime and Flash will be relevant but in some sense optional). Jupiter Research analyst Nate Elliott has written on this extensively and he couldn’t be more on point, see e.g. http://hive.jup.com/analysts/elliott/archives/006392.html.

While there may be a place for in-page video advertising it will be a smaller one and in-stream video advertising will be the unit that matters. And it will really be in-stream – again, in-the-stream, not-the-page, same format, same player, coordinated from a technology standpoint with the content (the thing that makes the ad valuable, right?). Why should it be any different? Right now, in-stream inventory is constrained and demand is high so the high-quality branded content providers will call the shots for a while and the agencies need to listen carefully to them. I can tell you that ABC News, Scripps, MSN Video won’t be leaving in-stream WM or Real encoded video advertising for in-page, rich-media, pre-roll Java overlays any time soon.