Photo: Bonnie Bogle
Two years ago, Sean X Cummings wrote a story titled, “The X Factor: Why Online Pre-roll is Dead.”I’ll never forget reading that four years after I started the first online video network, Broadband Enterprises—now called BBE.
Thank god Sean was dead wrong.
In over 10 years of building a market in online video, I’ve learned a great many things. The first and perhaps most important lesson I’ve learned is that pre-roll is not only, NOT dead, it’s just getting started. Here are the10 most important lessons I’ve learned over 10 years in the online video space:
1. The Pre-roll is alive and well
For many years, industry pundits have called for the pre-roll’s demise. Fred Wilson from Union Square Ventures, Mike Hirshland from Polaris Ventures, and the aforementioned Sean X Cummings have all put an expiration date on video’s most prevalent monetizing agent. The truth is, pre-roll works and it works very well. I have seen pre-roll lift brand recall (Ameritrade), drive tune-in (History Channel), help elect a new president (Barack Obama), and sell product (Vonage). Pre-roll, over the course of 10 years, has done just about everything it’s been asked to do.
So have we seen the pre-roll at its best? Absolutely not. We’ve got a ways to go. Let’s make the creative better, shorter, and more catchy. We’re speaking to a younger, more ADD-inclined audience with broadband and our creative ought to speak to that. Today it doesn’t. But even given this work ahead, pre-roll has proven to be a workhorse and it’s stepped up and delivered on its promises.
2. Rich Media and online video are two different animals
Our industry has done a great disservice by blending these two different models together. What the net result has been is a massive amount of confusion and frustration.
Rich media is not online video. Driving a pre-roll through a banner experience is akin to the long be-damned pop-unders. Pop-unders were intrusive and frustrating to the user and ultimately passed by. In-banner video will do the same and follow suit once in-stream video scales the way it’s trending and online video generates more quality inventory for advertisers.
Today, many brands are being sold rich media when they believe they’re buying in-stream video and the outcome of all this has been the rise of authentification services such as DoubleVerify and AdSafe. This confusion has also posed a barrier for big brands to enter into video and provide a safe home for reallocated TV dollars.
3. Content is King
Sumner Redstone said it and it rings true today in online video. Hulu is the best example – getting the premium CPM deals in the TV Upfront that online networks lacking broadcast quality content can’t compete with. It’s never been more true that “Content is King” and that trend will continue over the coming years.
4. Video will evolve similar to how Cable grew in the 80’s
Remember the old ESPN Sportscenter studios? Remember hundreds of channels of paid-programming? That history is very much how online video looks and runs today, only our studios are our backyards and living rooms, and our paid-programming is UGC (user-generated content). Much like Cable evolved as an original programming phenomenon, so too will online video. Funnyordie and MyDamnChannel will be two of many original content producers who will fill the Web with high quality original content for years to come.
5. Video’s 5-minutes is TV’s 30-minute format
We saw this happen very early on and the format has stuck over time. Viewers of video online want their content short and sweet. The average viewing time on video is three to five minutes. While longer-form viewing is prevalent on sites like Hulu and Netflix, it makes up a very small proportion of the total viewing online. Three to five minutes is the sweet spot of online video.
6. Standardization won’t happen overnight
Web video needs standards. It needs standards in formats, players, ad-serving, and measurement. But these standards won’t happen overnight. As long as the Web is a young and ever-changing medium (as it will be for the next few years), standards will be hard to come by. We may see that change as the leaders in video really distance themselves from the pack. Companies such as YouTube and Hulu can do a lot to shape the standards across the medium.
7. Clients will own Measurement
This aspect is one that absolutely fascinates me. I grew up in the TV business where all marketers clung to the Nielsen ratings system. I was at Petry Television selling spots when we dropped Arbitron and went with Nielsen as the sole ratings system for TV. In online video, measurement is not only not a one-game race, it’s scattershot across the board. Every marketer looks at video measurement differently based upon THEIR objectives. Clients will own measurement in video and that’s going to make the medium a very vibrant place for marketers. By owning measurement, marketers will shape their campaigns to meet their own goals, not that of one, monopolistic measurement firm.
8. Big brands drive video to achieve Scale and Price
Beginning with the major CPG companies and extending to the telecom giants, marketers are driving online video spending and that means two things: Scale and Price. Companies such as P&G and Kraft, who have been long-time TV spenders, demand scale in viewership and price efficiency no matter where the spending occurs. In the case of online video, scale in viewership didn’t exist five years ago, but it does now largely to the pick-up in spend. Price efficiency was hard to come by five years ago as well, and it’s now very much in line with TV CPMs. These marketers have shaped the video space today and will continue to drive scale and price in the years to come.
9. The Upfront will continue to gain in importance
With major marketers, or better said, major TV marketers driving video today, it is imminent that the Upfront buying season will gain in importance in the years to come. Many naysayers predicted that the Upfront would never gain steam in the online space and as the Web continued to be a display and search driven medium, this prediction rang true. But things have begun to change over the past few years. As video is growing into a multi-billion dollar business — driven largely by TV spending clients — the Upfront will become the key driver for dollars into online video.
10. TV will not yield an inch
And that leads us to my final learning: TV will not yield an inch to online video. That was never so evident as it was this year. This year’s TV Upfront was a show of strength of the TV industry. Their double digit increases were a shot across the bow to the video industry. The TV industry is not only a very successful industry, it’s a very powerful one. Online video will have to earn every dollar it makes; it will have to innovate and prove ROI on every campaign it delivers; it will have to integrate its expertise across platforms and enable TV dollars to get smarter and more efficient. The battle for dollars will only get more competitive as the video industry evolves and as the TV industry retrenches. It will be imperative for us in the video industry to reinvent ourselves, and make the media industry better and more accountable.
Matt Wasserlauf is CEO and founder of BBE. Credited as the visionary who enticed television advertisers to invest their marketing dollars online, Wasserlauf spent almost two decades in media and broadband advertising before pioneering the online video advertising industry.