How ad agencies are a bottleneck in the video economy

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Online video is flourishing. Better technology and more bandwidth means consumers watch more video in more places than ever. But there is also a roadblock that is slowing digital video’s evolution into a fully mature economy like television.

And that bottleneck is … advertising. While developers and publishers have evolved to support a digital video eco-system, advertisers are a step behind. The problem is common to all sorts of media transitions: the impulse to replicate old experiences on new platforms.

YouTube’s director of product management, Shiva Rajaraman, summed up the situation at this week’s Mobilize conference. Rajaraman explained that many conventional constrains of video advertising — especially the 15 or 30 second time limits — are artificial and dictated by the strictures of traditional TV. But in the online digital environment, many of those conventions don’t apply and there is endless opportunity for new types of creative ads.

Ad agencies, however, have been slow to pick up the ball, according to Matt Minoff, the CEO of Selectable Media. Minoff’s company makes a business of dropping short video ads into places where viewers might encounter a paywall or an offer to buy something. In practice, this might means that a video game player can receive virtual goods in exchange for watching a video. The player might see a screen like this:

If the player wants to earn the virtual cash, they can choose from a variety of videos:

After watching the video, the viewer receives a benefit such as virtual goods credit or access to an article. Minoff says publishers are embracing the ads and viewers are willing to watch them. His company is profitable and growing but he says appropriate ads are in short supply.

“What holds back advertisers from taking advantage of new platforms is that have to repurpose creative built for TV. They’re utilizing 30 second TV spots online and for mobile.”

Minoff believes that ad agencies should consider reallocating their budgets to create more custom content for online platforms. While this would take a larger investment into creative, the potential pay-off could be large if it improves advertisers’ ability to deliver the rights ads in the right situation.

(Image by Jacek Chabraszewski via Shutterstock)

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