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Digital video series: What is the future of online video advertising and will it take over from TV? The Drum catches up with a cross-section of the online video industry to discuss the evolution of online video advertising.
As part of The Drum’s latest digital media supplement, focused on the opportunities of online video, we are publishing a series of articles exploring a range of topics, from how to produce effective branded content to the challenges of video real-time bidding. In today’s article, we ask: What is the future of online video advertising and will it take over from TV?
As for whether digital video will take over from TV, I think digital video is more likely to take budget spend away from other mediums, such as print, outdoor or digital display, rather than TV.
Our recent 2013 UK Digital Video Advertising report gives a clear indication of where things are headed in this space. As with any development within advertising, including the future of online video advertising, it depends on the audience.
The future of online advertising is intertwined with how the video on demand (VOD) market develops. I don't believe however, that TV will ever stray too far from the centre of campaigns, as it can still draw large crowds and produce high volumes of impressions from a marketing perspective. TV will always have its place, but will come under increasing pressure to become more accountable, especially with the advent of connected TV. It is essential to understand that they are different mediums, using similar ad formats, that should be complementary to one other, like any other type of media. The future of online video advertising will focus on addressable media – the ability to target people based on their age, gender and interests. The winner will be the player that can generate the most efficiency – providing the right message to the right audience at the best price.
Data will define the future of video advertising, playing a role before, during and after ads are seen by the consumer. Online video won’t take over from traditional TV per se, it’s not simply a case of one medium replacing another.
With constantly improving streaming capabilities on smartphone and tablet devices, including rising 4G network subscriptions, consumers are watching video content on more than just their TV. Online video advertising won’t kill TV, although as more and more content is viewed on smart TVs there will obviously be a shift. What if I want upgrades in the future or changes to a web project that has been developed by you or another agency?
To date online advertising has taken a ‘carpet bomb’ approach towards reaching its target audience, spamming ads across wide demographics in hopes of reaching a relatively small percentage. But as the challenges to online advertising mount, with viewers still having many ways to skip or circumvent online advertising altogether, a new, flexible advertising strategy called Real-Time Bidding (RTB) has emerged and is expected to become a significant part of the advertising landscape for years to come. So if you’re looking to invest in online advertising but dread the process of chasing sales reps or developing proposals while still not sure your message is even reaching its intended audience, consider a direct real-time approach, one that gives you instant control of where your ads will be seen and best received. As the Facebook IPO disaster continues I can’t help but think that the entire social networking house of cards has been built on a failing advertising model, one where companies looking to purchase ad space pay as veritable shots in the dark, hoping their online pop-up ads reach someone, somewhere who is receptive enough to click for more info. In fact, one of the greatest challenges for online advertising has been matching consumers with appropriate advertising content.

But with the development of RTB advertising ad buyers and sellers now have a better option. Simply put, RTB is an auction-based model that allows buyers to purchase individual ad impressions, instead of large blocks, allowing companies to tweak their online advertising in real-time, leading to better audience targeting, more ad campaign control, and improved return on advertising spending.
Digitcom, established in 1991, sells and supports Avaya, NEC, Cisco, and Nortel voice & data solutions, including the Avaya Partner, IP Office, and Communications Manager (S8300 ), Cisco Unified Communications Manager, and Unified Communications Manager Express (and UC500), and Nortel Norstar, and BCM 200, BCM 400, and BCM 450.
To put it another way, thata€™s like watching the 1954 Cecile B Demille classic The Ten Commandments six times in one month (dona€™t try this at home-or anywhere). For business owners and marketers, the explosion in online video consumption represents a massive opportunity if handled properly. Any decent online video marketing strategy should also take into account the rapid consumer shift to mobile devices generally and tablets specifically. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Clipping is a handy way to collect and organize the most important slides from a presentation. Every day, agency trading desks like IPG Mediabrands and Xaxis are using software like ours to buy ads that appear on TV content – the difference is the content is now streamed on computers, tablets and more.
Advertisers are seeing the benefits of automated buying with VOD and it won't be long before they start demanding its use elsewhere. We are rapidly moving towards being able to effectively reach a consumer on whatever screen they are using at any given time. This will be the single highest drive behind the development of online video advertising, and could see it take the majority hold away from TV. TV continues to be the best way to reach mass audiences and delivering high impact, but online and mobile video are very strong compliments to it. The introduction of online GRPs into the digital lexicon demonstrates a shift in the way that digital marketers are approaching video advertising, and targeting TV budgets. Linear TV’s issue of wastage, which is currently still the norm, will become less acceptable over time.
There is no doubt that the proliferation of different devices including mobile phones, tablets, living room entertainment systems, connected TVs, to name a few, are fundamentally changing how people access and engage with TV and video content. We’ll move further away from simply buying environments and focus on our specific audience and the story we tell to them.
What we will see is a convergence of video media as it’s accessed through an ever increasing range of devices, it will be driven by data and differentiated by the context, not the environment in which it is viewed. Rather than take over from TV, online video advertising and TV will unite forces and become one.
Additionally there are interesting second screen opportunities that can link with on demand and linear TV, so there's a lot of activity in this area. The ability to watch video content on numerous devices will continue the growth of online video advertising. In the short term online and offline planning and buying will continue the process of convergence.
Video actually has the opportunity to complement TV as people can download video content to their phone that allows them to interact with TV programming.

In fact, as I look at the advertising targeted to me this morning—with an ad for relief of the symptoms of menopause, one for debt relief services on the American East Coast, and one women’s weight loss—I have to wonder if advertisers know anything at all about me (Canadian, white male, mid-thirties), especially given the fact that ad networks like Facebook sell my information like its going out of style.
But such receptivity, even among a target audience, is quite rare, with ads reaching their target audience less than 1 percent of the time, with only 1 percent of those people actually clicking on them. Traditionally companies looking to buy advertising purchase large advertising blocks through ad networks, with the buyer paying these networks to spam the advertising across said network, with the understanding that a portion of those ads will not reach the intended demographic.
New data from comscore Video Metrix reports that in May of 2012, 84.5% of the US internet audience watched online video. According to a Brightroll survey of US ad agencies, high prices, limited reach and lack of targeting are considered the top three growth hurdles.
To be effective, your online video marketing strategy should incorporate a healthy mix of video content that mirrors and compliments your other content marketing media. Every year billions of dollars are being spent on TV adverting and online advertising with the objective of increasing sales. Nielsen Online Campaign Ratings gives agencies a way to make direct comparisons to TV, and products like our own BrandPoint help them act on that reporting.
However, in order to achieve this, advertisers need to be buying their media programmatically and centralising the decision-making process. We will be creating a more effective dialogue and gaining a far deeper understanding of our viewing audience.
What’s more, as consumers are plugging their digital devices into TVs to watch online video content, they’re also seeing online video ads on the biggest screen in their homes. Part of this process is that both TV and online video mediums need to learn from each other.
Online video advertising will grow into a whole new area of creativity, which we have already seen the forerunners of this year with Vine and Instagram. With such ‘blind-buys,’ the ad buyer has no control over the placement of the ad, and thus its effectiveness can vary greatly.
In May of 2012, over 10 billion online video ads were viewed, more than double the 4.6 billion in May of 2011. However what is and will always remain true is that consumers will always be interested in high quality entertaining content regardless of its source and delivery mechanic. The personalisation that advertisers are used to in the online world will sync with TV advertising. Traditional TV has to keep up with the tracking and targeting capabilities of online video technologies. The online video advertising sector has to find metrics that attract the attention of the TV planners and buyers who make their decisions on gross ratings points.

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