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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.
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 how online video compares with TV. In today's article, we take a look at the key to effective interactive advertising, and what formats are best when it comes to engaging viewers. Steve Doyle, European commercial director, InSkin Media and IAB Video Council chairman Making your video advert relevant for the online environment and the audience.
Peter Browse, creative technologist, Beattie McGuinness Bungay The key is having relative and worthwhile calls to action, that are presented in the right places and don't annoy the audience. Gavin Morgan, VP business development, Europe, Innovid Building the interactive creative around the KPIs of the campaign is key. Rob Cootes, director of UK and international business, BrightRoll Assets – if you have great video assets then you should make the most of them. Ideally, your focus should be less on standard metrics and instead on things like open rates or engagements. Despite the fact that this technology has been around for a long time, a lot of advertisers are still not using it. Suranga Chandratillake, founder and chief strategy officer, Blinkx Length is key in order to engage consumers.
Rob Cootes, director of UK and international business, BrightRoll We have found that the most effective way to drive engagement on digital video is through the use of overlays, skins and takeovers. Steve Doyle, European commercial director, InSkin Media and IAB Video Council chairman Any formats that stand out and offer relevance to the user, without disrupting their viewing, should work well. The previous instalment of The Drum's digital video series explored the impact of proposed viewability standards.
Here’s a thought exercise: What happens if the CRTC takes to heart the complaints lodged by consumer groups last week and forces Rogers, Shaw and Bell to open up Shomi and Crave TV, their respective streaming services, to all Canadians? If they’re forced to become full-on competitors to Netflix, will the companies still want to offer the services? At the heart of all these questions is the issue of vertical integration—the term for when one company controls the supply chain that allows for the delivery of its main products or services. Canada has indeed been found to have among the highest levels of media and telecommunications vertical integration in the world.
Currently Shomi, the joint venture between Rogers and Shaw, is available for $8.99 per month, but—currently, anyway—only to existing Rogers or Shaw cable or internet customers.
Both are defensive plays aimed at keeping customers signed up to the companies’ more lucrative businesses, rather than true competitors to Netflix, the juggernaut that has become the global streaming leader. The complaints from the Public Interest Advocacy Centre and the Consumers Association of Canada take issue with the companies’ extra service requirements.
Imagine a scenario where the Canadian Radio-television and Telecommunications Commission agrees and issues an order requiring Rogers, Shaw and Bell to sell Shomi and Crave TV to anyone who wants it—no specific internet or TV subscription required. Assuming the companies wouldn’t fold them out of spite, the services would then become true competitors to Netflix. On the first front, all three have made exclusive content part of their value propositions.

Rogers, Shaw and Bell have spent undisclosed millions on acquiring exclusive shows from U.S.
In many ways, this mirrors the traditional television system, where certain broadcasters buy the rights to air certain shows.
The Commission considers that permitting [vertically integrated] entities to exercise exclusivity with respect to the distribution on new media platforms of programming designed primarily for conventional television, specialty, pay and [video-on-demand] services would result in harm to consumers and the competitiveness of the industry.
Could Shomi, Crave TV and Netflix eventually be barred from exercising exclusivity on their respective shows? The second competitive issue would centre on access, and it’s here that the CRTC has already made some progress. The situation is more complicated when it comes to Shomi and Crave TV because both are offered over traditional television infrastructure and as true internet streaming services. Net neutrality issues aside, it’s safe to declare Netflix with a significant access advantage when it comes to usability, interface and availability. Price competition is normally a good sign of a healthy, competitive market, but there would certainly be complaints of predatory pricing if either service were to sell for less than Netflix.
All told, while the complaints against Shomi and Crave TV are on the surface about fair access to the streaming services, they are merely the start of a much larger argument. 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. Advertisers have traditionally spent a lot of money creating brilliant TV ads, but don't always take time to effectively digitise. After that, its really about enhancing the user journey, giving the user something they want to engage with so they lean forward and take the opportunity to interact.
It’s important to remember that an online video ad buy is not just about pushing your ad out to an online audience. On top of this, adding some form of incentive to the call to action will have a profound effect on the impact of your video advertising.
The message we send to our clients is that they should think more about a video solution rather than a TV solution with a digital video bolted on, and adding some form of interactivity is key to this.
For online video, 3-4 minutes is the maximum length before brands experience a severe drop-off rate. Engagement rates can vary between one per cent on a normal campaign to three per cent or more with overlayed microsites, and we often see dwell time increased by in excess of 30 seconds. Key to engagement is that the ad is seen; according to comScore’s visibility definition (50 per cent of the ad in view for one second or more), 54 per cent of online ads are never seen. And, considering that such an order would change the economics of those services, would they be offered at the same price? In the case of Rogers (which owns Canadian Business and Marketing), Shaw and Bell—all broadcast and telecommunications providers—the vertical integration is so deep and entrenched it’s hard to distinguish between what is the supply chain and what is the product. The forced opening up of the streaming services could therefore lead to even bigger problems.
Similarly, Crave TV is $4 per month, and currently only available to Bell TV customers, as well as customers of Bell’s TV partners Telus, Eastlink and Northwestel. They say it’s a form of anti-competitive tied selling that limits consumer choice and disadvantages other internet providers. The three services would compete on their libraries of content, the ease of accessing them, and of course, price. It’s why new episodes of The Big Bang Theory, for example, are on CTV but not also on Global and CityTV.

Existing CRTC rules aimed at mitigating vertical integration require such programming as a whole to be made available to competitors on an access level, which is why consumers who get their television service from Rogers are still able to watch Bell-owned CTV and Shaw-owned Global. The argument could be made that consumers shouldn’t be forced to subscribe to a myriad of different streaming services just to see the specific shows they want, the same way they don’t have to get regular TV service from both Bell and Rogers. The Commission further considers that the same harm would result if industry players that are not [vertically integrated] entities exercised such exclusivity. Could regulation eventually result in Orange is the New Black on Shomi or The Sopranos on Netflix? In its ruling on mobile TV two weeks ago, the regulator firmly declared it will not tolerate “zero rating,” where wireless providers such as Bell and Videotron don’t count their own video services against customers’ monthly data usage caps.
Customers get unlimited usage when they access them via TV set-top boxes, but viewing through phone, computer, tablet or game console apps counts against those caps.
If the CRTC decision goes against Rogers, Shaw and Bell, the companies could simply pull the internet streaming part of their services. Having a few years’ headstart, the Silicon Valley company has perfected the art of delivering streamed video across virtually every device, and it is continually investing heavily in improving that aspect of its business. As mega-companies with many businesses, Rogers, Shaw and Bell can afford to sell one of their services cheaper, or even at a loss, if it means slowing down or hurting competitors—especially ones with singular revenue streams. Rogers’ launch of discount wireless provider Chatr in 2010 just as Wind and Mobility were getting off the ground is a great example.
When the same companies that own the pipes are selling the content that comes over those pipes in competition with other non-integrated providers, the problems are only going to multiply. If you are an existing print subscriber and you have not yet created an account and password for your digital access, please select “Create an Account”.
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. Video advertising can be fantastic, but attention needs to be taken to optimise for digital platforms, and more advanced measurement should be discussed with clients. If we're going to raise the interactivity with these adverts, they need to include levels of functionality that make them useful to the end user. If a video has an offer or a competition attached to it, you should make that the focus of the call to action without obstructing the video. For mobile it is significantly shorter, with brands needing to keep content to 1.5 minutes before the audience becomes disengaged and inevitably moves on to the next interesting video. As this debate heats up, so intelligent formats will achieve cut through on cluttered pages, and offer results for advertisers above their expectations. And what would be the larger spillover effects on competition between media providers in Canada? Netflix, on the other hand, is increasingly producing its own content such as House of Cards and Marco Polo, which is programming that is unlikely to show up any time soon on Shomi or Crave TV. But, as the consumer groups point out, this would probably require them to get broadcasting licenses since the services would then be more akin to traditional TV channels. Would Shomi, which is currently priced the same as Netflix, lower its price to make up for its deficiencies when compared to its rivals? 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. It's not enough to just show a video with a URL or click through, the presumption that someone will or should click through to something is naive.
On top of all that, working with a great team and great people who can bring your ideas to life is key! While a TV slot allows you to passively reach 10 million people in one 30-second slot, the online community is a highly engaged audience eager for engagement. The key is to create truly snackable content that users can digest quickly and share easily – that means short and snappy, but always premium content with a solid story.
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. Provide a level of depth that otherwise the user would have over looked and you'll be rewarded with higher levels of engagement and conversions. Over the past year this has become even more important with the rise of mobile use and increase in social sharing – this is trend we predict will continue to rocket into 2014.

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