The bright shiny inventory in the digital space for the last couple of years has been online video. Some of the biggest brands are moving dollars there, hoping to combine the effectiveness of video as the best medium to carry their message with the allure of targeting to specific audiences. But while online video advertising continues a very aggressive and impressive growth trajectory (estimates from eMarketer indicate that U.S. digital video ad spending will nearly double in only four years, climbing from $4.14 billion this year to $8.04 billion in 2016).

Some folks are starting to dig in to what exactly they are getting with those impressions, and the story is not looking quite as rosy as perhaps everyone thought.

chris hock

Recently, the Wall Street Journal and The New York Times have come out with articles that start to shed some light on what people are actually getting for their online video dollars.  The New York Times’ take is that a good amount of online video ads are not seen either because they are buried low on web pages or run in tiny, easily ignored video players on those pages, or run simultaneously with other ads. In addition to this, online video is subject to outright fraud, which are affecting somewhere between a quarter and a third of all video ad views. 

But at least online video ads can be targeted and measured, right? Perhaps not as well as some might previously have thought. A recent article published by the Wall Street Journal makes the case that even if the online video industry solves the viewing problems, they can’t yet say, with any certainty, who exactly is watching their content. And according to the article, purchasing online video the way TV ad buyers are accustomed to buying spots – i.e., aimed at very specific demographic groups such as women ages 18 to 49, for example – isn’t yet possible on the web.

While online video has managed to efficiently reach targets for certain ad categories/brands, they are still facing some hurdles with targeting.  A ComScore spokesperson noted that “there is an assumption with ad targeting that you can hit exactly who you want. We are trying to educate the market that that is still not technically feasible.” ComScore found that only 43 percent of ads aimed at women 18 to 49 hit their intended target across multiple campaigns during the first quarter of 2014. For advertisers, that means a lot of waste (and significantly higher eCPMs) as they have to over-serve to hit their targeted audience.

As the online ad industry works on these problems, where should advertisers look to put some of those TV ad dollars?  A great choice is Video-on-Demand (VOD). While dynamic ad insertion (DAI) for VOD is still in the early stages of being rolled out, it is being rapidly adopted and offers a number of contrasting capabilities to online video including:

• Viewability is not an issue – VOD views are 100 percent screen and only initiated by the viewer.  Also, inventory holders can prevent viewers from fast forwarding through ads if desired.

• Fraud is not an issue – Because VOD operators distribute over pay-TV networks instead of the Internet, bots committing fraud by playing out video ads is not an issue.

• There are large libraries of desirable quality TV programming content. TV Entertainment, the age old source of quality content, is the largest category of VOD views, and by far the most rapidly growing. This ensures advertisers a great supply of premium TV programming to accompany their ads.

• Existing TV measurement and ratings such as C3 can be leveraged with VOD.

• Operators have a wealth of information about their subscribers, that when harnessed with emerging technology, will make this data available for addressability and accurate measurement.

Taking all of that into account, where do you think advertisers should be investing their dollars?