NTV Live Panel: Is There Money in the Long Tail?

Advertising tries to wrap its mind around web video.

Moderator: Jeremy Liew, Lightspeed Venture Partners

Speakers: Jayant Kadambi, YuMe; Tod Sacerdoti, BrightRoll; Matt Sanchez, VideoEgg; Matt Wasserlauf, Broadband Enterprises.

Long Tail

JEREMY: Not so much *if* money in the long tail, but *how*?

(They’re all doing haikus, will track them down once we get the 5-7-5s.)

JEREMY: What’s the right ad unit?

MATT S: Seen pre-roll for a long time. That has its place working for longer-form content. For shorter form, it’s disrupting. We’ve taken an invitation overlay that we bring into the experience. That allows someone to click into it. User-controlled format needs to be something taken into account.

MATT W: Great bed for advertisers to test. A lot of our advertisers still use 30-second spots, a lot to ask of viewer by their adapting. His company is adapting by providing content, technology to provide relevant ads.

JEREMY: Todd, among first to experiment with first response.

TODD: Brightroll is format-agnostic. Whether overlay, post-roll, pre-roll, as long as it scales to a large number of publishers. Most business is pre-roll and overlay. Long-tail content is not tier one. For most sites we work with today it’s branded content. On every metric we’ve tested, pre-roll still works better than all other format.

JEREMY: Most effective units, most disruptive?

JAYANT: Most effective ad unit is dependent on the video to which it’s attached. It’s more dependent on its long-form, snack, contextually relevant. Tried to build a system where feedback you get allows you to alter the ad units. Across out network we support 15 types of ad units. We do find that 95 percent of biz is pre-roll or overlay. There are a number of people trying interactive placements, viral ads, DVD menus, and they try that as well.

JEREMY: How many ad unit types supported?

TODD: Five ad units for brightroll.

MATT S: Four.

MATT W: Mostly support the pre-roll.

JEREMY: Most discussion in industry on overlays. Most people making money in pre-roll. When will standards shake out?

MATT W: Pre-rolls aren’t appetizing, most just repurposed TV commercials. In 2008 pre-rolls will get better and creatively optimized for the web. We should hold film and see what the evolution will be.

MATT S: The overlay ad has a bright future; pre-roll is disruptive and depresses traffic. Seeing broad adoption of overlay, all major portals testing or launched. In 2008 you’ll see a shift. Advertisers want to move away from pre-roll because of brand association.

TODD: Tier 1 advertisers want pre-rolls. Today, most tier 1’s don’t allow third parties to serve ads, concerned around reliability. Networks have shown that they can.

JEREMY: Will video ad market be vertically integrated? Or does the industry break down into people who do selling, people who do serving?

JAYANT: The online ad biz, to make it most efficient is to make it an open system. Networks that move content and ad inventory back and forth to make it more efficient get more out of them. Our business is, look let’s find a way that multiple people can serve into your content, and may the best sales campaign win.

MATT S: There is no ecosystem for managing anything other than pre-roll. Beyond playlist and pre-roll there is no ecosystem, so publishers have to adopt every system out there. There’s a lot of work the segment needs to do to create some standardization.

JEREMY: Look at old banner advertising, was integrated before it was split.

MATT W: Will happen more slowly. There has to be some cooperation between content distribution and technology. We’re talking about a lot of major stakeholders who are creating video content, are not in that mix at this point. A lot of politics that need to play themselves out in order to move the industry forward. Sites like Hulu is a good example, NBC’s third or fourth try at this type of venture.

JEREMY: Because big media companies, it will take longer to get everyone rowing in the same direction.

MATT W: It’ll take longer, 2-3 years.

JAYANT: We found that there is a difference between large content holders (like networks) and where they are in the process in video and the little guy, who is an independent producer and how they monetize content. Smaller guys need the option to start selling into their content themselves.

TODD: Bigger companies want more dollars flowing in. There are some significant issues, not enough money in there yet. 24-month timeframe, but metrics suggest we’re in the right direction.

MATT S: It’ll happen sooner. Difference between indie and NBC is the ability to sell and leverage distribution. Challenge with media consumption is that it’s so fragmented. Hulu needs to figure out ads on MSN, AOL, and all the social networks they want to push their player out to.

JEREMY: Challenge of metrics. How can you measure viewership, when content lives all over the place? Where are the solutions?

MATT W: Comscore has been our metric measurement partner. They’ve researched this area very well. HUGE challenge for us. Am always disappointed because there’s TV shows, movies, but there’s no top ten for video. Let’s talk about relevance. That kind of comprehension is keeping the business back. ComScore and Nielsen are making their moves. We need to be thinking about that, as aggregators in the space. What is our 108 million households.

JAYANT: Content owners want to know how they track it across the online landscape. Once the measurement becomes clear, it will help the ad money flow. You pretty much know on your web site, but when it moves off the web site, it creates a problem.

MATT S: Problem one, how many views, problem two, how ads are being engaged. The business is still far too fluid. Definitely need to understand how many views, but advertisers still want to know how they’re being engaged with.

JEREMY: Impressions don’t mean the same thing. How are advertisers reacting to uncertainty.

TODD: Metrics is a second-tier problem. Content still trying to get to where it wants. The metric of is this working for my client being addressed?

JEREMY: The key is take away the uncertainty of ad unit, whether it’s an integrated solution, and uncertainty around measurement.

JAYANT: Another issue, advertiser still buying demographics and content type as a proxy for demographics.

TODD: Folks are buying sites, content as a demo proxy and demographics. Targeting and optimization not as important as making sure the ads work.

MAT S: Think about how media-buying world is changing. Clients he’s worked with understand the medium. It takes time to understand medium, and then communicating the value back to the advertiser, there’s no way to accelerate than (other than evangelizing). A lot of the activity from the last six months won’t get implemented until ’09 because of business cycles.

MATT W: We’re partnering with comScore, the more we integrate measurement houses, the more advertisers will respond.

AUDIENCE QuESTION: Is there money for smaller video libraries?

JAYANT: We sell our network much like the way TV network sells their channels. Like the NFL, they had enough content to make their own channel, but they used to sell through CBS, and you get aggregation through that. As content owners get more people watching it, they have other choices they can make.

AUDIENCE QUESTION: Most deal with large brands, will barriers come down to increase the number of advertisers?

MATT W: Largest advertisers looking to increase their revenue, opening up to long tail won’t got to mom and pops, but that mid-torso, suggests a great trend.

MATT S: This is fundamentally a brand-building medium. Biggest thing is shifting dollars away from television. Biggest near-term opportunity.

JEREMY: Shifting dollars away from TV, buys coming from where?

MATT W: TV dollars.

MATT S: Experimental dollars.

TODD: We see that most clients and agencies see video, so print is much more vulnerable.

JAYANT: Directly correlated to whether content is on TV or not.