The IAB announced Version 2.0 of its standards for video in November and it's gaining real traction, promising to do for video what the original IAB standards did for display. This means pretty soon everyone serving display ads will be in the video ad business too, if they want to be. So frankly I can't believe how limited the coverage and commentary has been. Is the market truly failing to grasp the significance of a third party serving standard for online video advertising? If so, it should start grasping fast, because this standardization has major implications for advertisers (agencies and their clients), publishers and the incumbent video ad networks. For them it isn't game over, but in a very real way the standards push hits the restart button.
Previously, publishers all coded their video content players in different and uncoordinated ways, so there was no simple way to do third-party video ad serving. Agency buyers typically dealt with this by shipping creative assets to each publisher included in a campaign, relying on the publishers to separately host and serve the creative and manually aggregating basic performance reports. So, we had huge amounts of manual work just to run a simple campaign, and still no centralized control over ad serving; hardly an auspicious debut for an important new medium.
Not surprisingly, video-focused ad networks sprang up to "simplify" the agencies' jobs. These first generation video ad networks facilitated third-party serving through a portfolio of "adaptors" -- essentially, one-off translators between their own systems and those of each publisher they wanted to serve. Building out this portfolio of adaptors was no small undertaking; it involved each network separately working with dozens to hundreds of publishers to establish translation rules, write code, debug and maintain adaptors as publishers' code bases evolved. Just bridging this small part of the "standard gap" has consumed countless years of engineering and operational cycles, representing many, many millions of dollars of VC investment. And of course, that's before investing a single dollar or hour in how to make a campaign deliver better results for the advertiser.
Contrast this to the display market, where third-party ad serving is standard practice and ad units are standardized (also courtesy of the IAB). For display, a buyer provides a publisher with a DFA, Atlas or other standard ad tag. End of story. This means the vast majority of focus, operational effort, engineering candlepower, budget -- everything -- goes toward improving the results of the campaign, not just trafficking it. Whereas in video the energy, the effort and the money are largely getting tied up in what would be considered "overhead" on the display side. I would argue this critical difference has resulted in a video monetization market with fewer players and less innovation than display.
VAST changes this story dramatically. With serving itself increasingly streamlined, emphasis can and will shift quickly from plumbing to true innovation and technical advancement. How will this impact the current landscape for the key players?
- For Video Ad Networks: There are implications for incumbents, and the door is wide open for the sophisticated display and networks and greenfield companies to enter the market. As standards adoption increases throughout 2010, online video will evolve from a separate ad market to simply another format. As the basis for competition shifts from "can you do video" to "what capabilities do you provide, independent of format," first generation video ad networks will see a large portion of their technical investments effectively marked to zero. These incumbents will find themselves working double time to catch up to display platforms honed for years not on "does it work" but on "what can you do and how well can you do it."
- For Advertisers and Publishers: unqualified win. Advertisers are clamoring to use video more and more effectively, and publishers will get access to bigger and better video monetization. Better monetization will speed adoption of the standard, which will in turn pull more video content online.
So, 2010 will be a disruptive and transformational year for online video advertising, with new players coming in and well-known players either stepping up or fading out.
|ABOUT THE AUTHOR|
Andy Atherton is cofounder and chief operating officer of Brand.net.