For In-Stream Advertising, Standard Means Better

Let’s face it, despite the hype, in-stream advertising has not lived up to expectations and we as an industry need to take immediate action or online video and in-stream advertising risks going the way of Second Life. In the Spring of 2009, the IAB officially announced the release of the Digital Video Player-Ad Interface Definition (VPAID), just shortly following the announcement for the Digital Video Ad Serving Template (VAST). Now, just a couple of weeks ago, VAST 2.0 was introduced, which will provide more flexibility to media sellers and buyers to build different types of deals for in-stream buys, while still being straightforward and clear for the engineers who need to build the infrastructure to support these new business deals. Thanks to the development of these two major guidelines administered by the Digital Video Committee of the IAB, we can finally set standards for in-stream, potentially making video the star of 2010.

Online video is considered one of the most promising online advertising channels with a forecasted ad spending of $2.26B in Europe by 2012 according to eMarketer. Over the years a seemingly endless procession of start-ups has entered the space with a myriad of solutions touting inventory creation, ad management tools and yield optimization algorithms functionality. Judging by projections and innovations, the in-stream space is the place to be, but that doesn’t necessarily guarantee monetization.

Taming the Wild West
With any emerging market, the key is to increase supply and demand in order to achieve an optimal equilibrium point. To find that balance for in-stream we should increase premium ad inventory on the publisher side while growing budgets on the advertiser side. However, this requires having technology standards in place to allow efficiencies and scale. Unfortunately, non-standardized in-stream is like the Wild West with no sheriff. It’s a dangerous and unpredictable landscape with complexities and challenges for video publishers and advertisers alike. From trafficking inefficiency through ad-serving incompatibility to non-unified tracking and reporting, running an in-stream campaign is an inefficient process. If we don’t solve these problems we will never manage to increase supply and demand, reach a high equilibrium point and fully tap into the opportunities available in online video.

To address these complexities, different video technology vendors such as Panache and Adap.tv released proprietary solutions to streamline processes and communications between video players and ad-servers. Essentially these new solutions allowed video platforms, publishers and networks to work together through a single integration, thus increasing scale and reducing costs. However, due to the lack of video standards still in place, these solutions still remain closed to each other and don’t allow publishers, networks and advertisers using different solutions to work together. This is analogous to mobile carriers not allowing subscribers to make out-of-network calls. Obviously, this scenario would have caused unnecessary friction and made communications in our everyday life more complex.

Opening the Doors for 2010
What we really need is to create a standard open space where each video publisher could work with any network or ad-serving vendor in an efficient and scalable manner. Similarly, every advertiser should be able to serve and track its in-stream ads across any video publisher while maintaining full control over the campaign as well as consistency across channels using agency ad servers such as Eyeblaster, DoubleClick and Atlas. Fortunately, creating an open space is achievable at a reasonable rate and without a large monetary investment, but it requires cooperation and alignment from everyone in the space, something that is far than trivial.

Adap.tv, Panache and several other players have already implemented the VAST, but the overall adoption rate is too slow and we can expect that the adoption rate for the VPAID will be even slower. Conversations reveal that leading players have motivation to adopt the IAB guidelines, but in most cases the timelines are undefined and the sense of urgency is absent, literally stalling the standardization process.

Each video publisher, network, platform and technology vendor should be working towards standardization and contribute its part by adopting both the VAST and VPAID as soon as possible. The expected return on this small investment is huge and lack of urgency poses as the only risk. With VAST and VPAID now published, there is a small window of opportunity to build momentum and reach the required mass of IAB compliant solutions that would open up the online video space. Missing that window will prevent the industry from reaching standardization and realizing its true potential. Better scalability and higher profitability are right around the corner.