July 21, 2007

Are you investing in online video platforms? If so, you may be missing a crucial piece of information that can be of key importance. It seems every venture capitalist and holding company is investing in online video platforms without a true understanding of the challenges and issues facing scalability. I've done a tremendous amount of research into the space, and from what I can tell, there are no current tools for dynamically serving third-party video ads into online video content!

From what I can see, most of the existing video networks either serve video into existing ad units, such as 728x90 or 160x600 ad units, into existing ad locations -- which is what Klipmart did for a number of years and still does now that it is part of DoubleClick (and potentially Google), or they are hard-coding or manually attaching video spots like 30-second commercials into existing video content.

This model is not scalable, nor is it what advertisers truly want. Advertisers want the ability to serve video ads into video content based on profiling and behavioral targeting. This addressability to define the target audience and serve an ad of relevant information is what advertisers can get from their display ads, and it's what they get from their contextual ads served by Google and other companies, but they are not currently able to do so for video!

The problem with video ad serving lies in the size and complexity of the file. In a typical display ad, the page can call for an ad and the ad-server can read the cookie and respond with the ad most appropriate to that user or to that content in a fraction of a millisecond. This process is almost seamless for the viewer, but a video ad is much different. The video ad can be broken down into frames and the content analyzed and entered into a database to be tracked and managed. Meanwhile the information regarding the viewer can be read off the cookie data, but to cull the database, identify the correct video unit and serve it into some other published form of video content on the publisher's page where both video units need to be buffered separately to be shown to a viewer, takes more time and is not effectively done on the fly, as of yet.

What's funny is that when you try to discuss video ad serving with the VCs and other folks who are already invested in the space, many of them are unaware of this challenge and are convinced that their brand or service can do it! Well, I consider this an open invitation to tell me I'm wrong (which many of you already do on a weekly basis)! I've only come across a couple of companies that are working on this and are close to completion, so please tell me who you've seen who is doing this?

I surveyed the major video ad networks, of which there are more than 15 I can list off the top of my head, and though I have significant respect for all of them, none of them seem able to do this quite yet. I followed this up with an informal survey of the major display ad networks, and all of them were investing heavily in this challenge to attempt to come to market first. I can honestly predict that the company who comes to market with this tool first will be in a strong position to lead the category!

I know that you reading this will automatically think I am incorrect, but I urge you to research the topic yourself. Attempt to find, or just ask your ad-serving partners, are they are able to dynamically serve a video ad into a piece of video content based on cookie user data? I predict they cannot, but this might require some digging, as I do not feel that most people truly understand this question at its core.

By Cory Treffiletti
Cory is president and managing partner for Catalyst SF and founding partner of The Arkitektive Group.
Courtesy of http://www.mediapost.com

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