Are Ad Agencies Becoming a Bottleneck in the Video Economy?

Employees generally do what they think is best for their company - and for their careers. And they tend to like to minimize effort whenever possible. So the fact that there has not been a rush to embrace new ways of employing online video in advertising is not dissimilar from what has occurred in the field of mobile advertising. The first instinct was to re-purpose what was already out there. It saved time and money and provided a productivity-enhancing tactic for an industry desperately in need of financial boosting. The problem is that it hasnt worked.

The convenient notion that online video advertising and mobile advertising are simply smaller versions of TV advertising has been proven wrong. The emotional and psychological context in which the ad is being viewed may well demand a very different strategy in order to generate the impact for which the advertiser is paying. Time limits, production values, characters, imaging and messaging may all have to be adjusted because the viewer brings a differing mindset and expectations to the experience. This could significantly influence the degree to which the ads deliver brand awareness and subsequent sales.

The challenge for advertisers and the agencies attempting to help them realize their dreams (as well as meet their goals) is that the sales have not yet justified the budgets that may be required to discover the appropriate solution. There is belief in the promise, but until that promise line intersects with the reality line, tolerance of experimentation may well outweigh investment in full-fledged development. The research that needs to be done and the kinds of changes that need to be made are not sexy. They may not even be obvious. And that is an impediment to sectoral growth. But incremental improvements have worked in the past. These channels, platforms and media will probably demand the same patient approach. JL

Jeff John Roberts comments in GigaOm:

Online video is flourishing. Better technology and more bandwidth means consumers watch more video in more places than ever. But there is also a roadblock that is slowing digital video’s evolution into a fully mature economy like television. And that bottleneck is … advertising. While developers and publishers have evolved to support a digital video eco-system, advertisers are a step behind. The problem is common to all sorts of media transitions: the impulse to replicate old experiences on new platforms. YouTube’s director of product management, Shiva Rajaraman, summed up the situation at this week’s Mobilize conference. Rajaraman explained that many conventional constraints of video advertising — especially the 15 or 30 second time limits — are artificial and dictated by the strictures of traditional TV. But in the online digital environment, many of those conventions don’t apply and there is endless opportunity for new types of creative ads. Ad agencies, however, have been slow to pick up the ball, according to Matt Minoff, the CEO of Selectable Media. Minoff’s company makes a business of dropping short video ads into places where viewers might encounter a paywall or an offer to buy something. In practice, this might means that a video game player can receive virtual goods in exchange for watching a video. If the player wants to earn the virtual cash, they can choose from a variety of videos. After watching the video, the viewer receives a benefit such as virtual goods credit or access to an article. Minoff says publishers are embracing the ads and viewers are willing to watch them. His company is profitable and growing but he says appropriate ads are in short supply. “What holds back advertisers from taking advantage of new platforms is that have to repurpose creative built for TV. They’re utilizing 30 second TV spots online and for mobile.” Minoff believes that ad agencies should consider reallocating their budgets to create more custom content for online platforms. While this would take a larger investment into creative, the potential pay-off could be large if it improves advertisers’ ability to deliver the rights ads in the right situation.