This week's MediaPost OMMA Ad Networks conference examined a variety of topics related to online ad distribution. An article reviewing a conference panel caught my eye - "Ad Nets Hungry For Premium Video Inventory." Within the online video community, continued high demand for limited premium video ad impressions and an oversupply of non-premium inventory is not news. Nor is it news that premium video publishers (especially TV networks) and big brand advertisers are reluctant to move away from current business practices based on human sales forces. But what got my attention was how the discussions about online video ad networks have evolved in the past few years, and how this informs what may happen with OTT video advertising.
Admittedly, at the moment the primary OTT video revenue model is subscription-based (namely Netflix). For the overall TV industry, however, the largest single source of revenue is advertising and over time this will more than likely extend to OTT. In other words, what's happening now in online video is a precursor to what will soon happen in OTT.
Currently, the owners of premium online video inventory are mainly "holding onto it" - selling it through their own sales forces. TV networks, informed by 60 years of ad sales experience, are especially reluctant to let anyone else sell their online inventory. Their one major foray into letting someone else sell inventory against their programming online has been Hulu. Despite being owned in part by TV networks, Hulu has still generated competitive friction between its own sales force and that of the networks. Advertisers in premium video content as well are reluctant to move away from human sales forces, in part because TV networks function as partners in protecting "brand equity" (failing to correctly match advertising to content can damage a brand's hard-earned value).
However, online video platforms (and OTT) offer the capacity to automate, optimize, and target advertising buys. How to utilize these tools while keeping the trusted partner relationship between premium publishers and advertisers? An emerging trend has been new kinds of online ad sales platforms that provide for more transparency and control, including demand-side platforms (DSPs), ad exchanges, and even private exchanges. As CE makers, content publishers, and technology vendors look to OTT as an advertising platform, it is critical to consider who sells the ads and how. Addressing these topics early on will minimize business friction and future delays.
ShareThis