The year 2004 held a great many memories for me, not least of which was competing in Procter & Gamble’s first Online Video Upfront — the time of year when marketers lock in their media plans and spend for the next 12 months.
What was evident then, and very clear now, was that the market for video advertising in the U.S. was in its infancy. At the time, the Interactive Advertising Bureau, online advertising’s standards body, didn’t even recognise online video as a category. While online video is now an established digital channel to reach a U.S. audience – Americans viewed more than 4.6 billion online video ads in October 2010, according to comScore – the market in Europe stands precisely in the same place as the U.S. was in almost seven years ago.
While I was building Broadband Enterprises (later branded as BBE) back in 2004, what served me well was the realisation that the digital video industry was growing up much like the TV business — the industry where I spent the first half of my career — had previously done. The multiple-billion TV industry gained its early success on the backs of advertisers, particularly the Fortune 500 crowd. Companies like P&G, Texaco, and Ford sponsored TV’s earliest programming to make the model work. Europe hasn’t yet enjoyed this kind of investment in its digital video market, but those days are coming right now.
A few companies have stepped to the fore to drive this market in Europe, which include Smartclip, Adconion, and my own firm, Specific Media, which acquired BBE in October of this year. And as I mentioned previously, the situation in Europe closely resembles what the U.S. market looked like circa 2004. Any new market requires a few firms who can prop an industry on their back, validate it and then provide the resources necessary to make it work.
The work done here in the States will help us to anticipate some of the challenges that lay ahead in Europe. Some of these similar challenges include fewer technology media companies to serve as catalysts, a cultural bent toward traditional media and a general lack of scale across the region. Not least of the challenges—and something unique to Europe—will be the varying languages and cultures of the many countries that are a part of the European region; advertisers often buy into one country versus the entire region, which will hamper real scale.
On the other hand, while Europeans are served ads online with less frequency than their American counterparts, Europe’s mobile infrastructure is much more developed than it is here in the States. As a result, the number of people viewing video on mobile devices is increasing—by as much as 66 per cent in 2010 to 12.1 million across the EU5 countries (U.K., France, Germany, Spain, and Italy), according to comScore. In addition to tackling differences in language and culture, advertisers may also need to start out by thinking for mobile screen, rather than the laptop.
These challenges, among the many others that will arise, present opportunities for companies like the aforementioned to bring new solutions to the market. What was apparent in 2004 and evident today is that the video market is a market that needs to be made; it won’t just develop on its own. Like the TV marketplace 50 years ago, advertisers will again be the early drivers and they have to be comfortable spending their money in a new way, on a new medium. That’s going to take leadership and for those companies that plant their flag in Europe today, great opportunities exist to do there what we’ve done here in America for the past seven years – build a new market.
Matt Wasserlauf is the EVP of Video for Specific Media, which aquired BBE in October 2010.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.