Hey Publishers, Time to Increase Your Video Ad Load

Artificially Constraining Supply Is Stifling Innovation

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TV advertising is all about interruption, a model that 's been relatively effective for more than half a century. Consumers have come to accept commercials and will put up with them to get to the end of the content.

Traditional TV found a model that works, but online publishers refuse to fully replicate the TV ad load model in their long-form content, and that 's a major loss in revenue and advertising market share. Online video has made huge inroads in the race to make more premium, long-form content available to both consumers and advertisers, but online video will never compete with TV ad dollars if publishers aren't willing to build in a greater ad load.

Eliminating artificial scarcity
We've seen small-scale adoption of the interruption model in online video, largely on sites like Hulu that stream movies and TV shows. Yet many publishers, Hulu included, are constantly "sold out" of inventory. This is partly because of demand, but also because publishers create artificial scarcity.

In truth, greater ad load does not have much effect on video consumption, nor does it scare away video viewers. A recent study by FreeWheel actually found that ad loads within long-form content are on the rise, while completion rates are holding steady at an average of 88 percent. Even Hulu is hitting a 96% completion rate, and it serves more ads than any other video property. There is a clear opportunity to create more revenue by selling more impressions, but publishers have seized upon the idea that demand comes only by limiting supply.

Room for technology innovation
Beyond the obvious lack of inventory, artificial scarcity stymies innovation in the market. Look at audience targeting, which is the strategy du jour in display. When advertisers are forced to buy online video on a per-show basis, it completely eliminates targeting opportunities. Adding more impressions actually makes it easier to slice and dice the inventory into different groups, selling larger campaigns for smaller groups of consumers, and opening certain blocks up to audience targeting.

There's a clear consumer benefit as well, because more ad opportunities increases the chances of getting the targeting right. For example, let's say a publisher has campaigns for orange juice, a CPG product like cleaning supplies, and a minivan running on the site at the same time. The ad server detects a mom is on the site, and as she starts a 25-minute TV program, orange juice is served. The mom jumps to another tab to skip the pre-roll ad. There was one opportunity, and it failed.

Targeting algorithms learn based on interactions over time, therefore building more interaction opportunities speeds the rate at which the technology advances. If that same mom skipped the juice ad, but interacted with a CPG ad later in the program, the algorithm can learn.

Then there's the practice of day parts, which could in turn drive higher ad rates. We know the majority of video viewership occurs from 5 to 11 p.m., the same as TV's prime time. But with limited supply, it doesn't make sense to experiment with day parting. Greater availability means publishers can command higher rates for the prime-time inventory, while likely selling through the rest either directly, or through networks and RTB.

Creative experimentation
A greater ad load also opens the door to more advanced creativity, particularly for brand building. Effective advertising should feel like part of the content, rather than take away from it. More ads create the opportunity to develop creative executions based on sequencing. This could mean multiple ads that tell different parts of a story throughout the program, or new creative that is served based on an interaction with a previous ad from the same brand.

The latest Interactive Advertising Bureau protocol is directly tied to standardizing ad pods and sequences, alleviating the stress of multiple ad breaks. Most publishers utilizing modern video ad serving technology should find a greater ad load relatively easy to implement as well. If it still seems like a problem, it's probably time to invest in a new ad server.

Greater ad revenue is the most obvious benefit of a greater ad load, but the ability to innovate can't be ignored. Publishers constantly say, "I'm sold out, and there's no clear benefit to trying anything new." It's very difficult to see a benefit without actually trying, so I'll turn the questions back to publishers. What motivates them to constrain the supply of premium video? Is it solely the user experience, or are they trying to maintain their premium?

Mark Trefgarne is the CEO of LiveRail. Follow him on Twitter at @trefgame.
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