Vivaki's "Ad Selector" could significantly change the online video
marketplace. But maybe you need to catch up on just what the state
of online video is these days. We've got a white paper for
that. The Economics of Online Video examines the
difficulties facing this fast-moving and burgeoning market, which
companies have had success and why, and exactly how much money is
being spent by marketers. This report also includes a 10-page
directory of distributors, TV networks, producers/studios,
live-video producers, ad networks, advertising-services providers,
search companies and distribution/measurement companies.
Vivaki, which is offering it to clients in the upfront, said
there's a $100 million market for the new format this year, partly
from its own clients, which include GM, P&G and General Mills,
and partly from other agencies. That would move the needle for
online video, which was a $1.1 billion market in 2009, according to
But Vivaki sees the format as a potential solution to an
increasingly vexing problem: As high-value content, such as TV and
movies, moves online, it earns fewer ad dollars and weakens the
largely offline ecosystem that financed the content in the first
"The ad formats we are using are not properly monetizing the
value of the value of the content," said Tracey Scheppach, senior
VP-innovations director at Vivaki. "We know that as content becomes
more digitized that the ad formats have to work harder so the ads
continue to provide value."
Ad Selector seemed ideally suited to attack the problem.
Advertisers would only pay when their ad was selected; publishers
would get a much higher ad rate than a typical pre-roll. And
consumers, of course, would at the outset of the video get to
choose an ad from a category that interests them -- say automotive,
fashion retail or food -- rather than being force fed whatever was
The concept was chosen as part of a yearlong research project
Vivaki called "The Pool" as the format with the best potential to
be embraced by publishers and brands. The format itself was
invented by Hulu, but it had not been widely adopted because few
advertisers had taken part.
To lure other publishers and agencies to embrace the concept,
Vivaki figured it needed to build an ad server capable of placing
those ads on major sites across the web. It toyed with the idea of
creating a new joint-venture with tech providers but instead it
created a coop with four start-ups: Panache, BBE's Vindico ad
server, Visible Measures and Tidal TV. Panache will provide
publisher-side integration, Vindico, the ad serving, Visible
Measures, the measurement and verification, and Tidal TV, ad
Each of the coop members will get an equal share of an
ad-serving fee, about 5% of the media buy. If, for example, an ad
is sold at a $25 cost-per-thousand, the partners would split $1.50.
(Vivaki doesn't get any money for selling clients into it, outside
the normal agency fees it makes from handling clients media buys.)
The revenue will support operations, but more importantly, help
establish the start-ups involved in the video marketplace. "The
economics wasn't the first question when you meet with these
folks," said Tidal TV CEO Scott Ferber.
All the publishers that participated in Vivaki's "Pool" research
-- Yahoo, Hulu, Discovery, BBE, Microsoft, CBS and AOL -- have
agreed to take the ads. Notably absent is YouTube, which doesn't
have much long-form content, but also does not yet permit
third-party ad serving.
Initially, the start-ups involved were wary of working together
since some of them considered themselves competitors. Ms. Scheppach
summoned all four CEOs to Chicago and met with them individually
before putting them in a room together.
"I think all of us, the CEOs, were entering that meeting with
some trepidation," said Brian Shin, CEO of Visible Measures. "Is
this a bake-off? It seemed like we were going to do different
pieces. To her credit she was able to get everyone on the same page
and working toward the same goal."
The biggest question now is whether other agencies will adopt
the format. Initially Ms. Scheppach considered keeping Vivaki's
involvement more discrete, so other agencies wouldn't view it as a
Publicis-led project. "WPP could say they're not going to use it
because it's from Vivaki but I think that's the wrong answer," she
said. "We got it started but we're not leading it."
She dubbed it "The Rising Tide Co-Op," because the more
publishers and advertisers participate, the better the entire
ecosystem will work. She said the idea came from farming coops in
her native Iowa, where individual farmers worked together to
achieve a greater good.
And the system will need many advertisers if it's going to work,
as each video will need to offer up ad options from at least three
different categories, ideally varied enough so that they could be
targeted at the interests of the consumer.
Adam Kasper, senior VP-managing director at Havas' Media
Contacts, said he could see agencies viewing it as competitive, but
that he'd feel obligated to at least try the format and offer it to
clients. "I think we would want to test it and see how it works,"
he said. Plus, agencies may also participate for competitive
reasons, he added. "You don't want a competitor out there saying
they've got something you don't."
Mr. Kasper, whose clients include Carnival Cruise Lines,
Fidelity and Volvo, has tried Hulu's Ad Selector and found it
"valuable." The upside, he said, is it guarantees an opt-in
impression unlike typical pre-rolls which are foisted on consumers.
The downside is that if your ad is not selected, it might be hard
to get scale quickly if you wanted to reach consumers with