Digital video advertising's death wish

Rob Gallagher/Ovum
12 Oct 2015

“The age of enforced advertising is over,” states ad agency exec Barnaby Girling in an article for the UK newspaper The Guardian. If that’s true, then why haven’t so many at the supposed forefront of the advertising business – digital video – appear to have got the memo?

Girling, co-founder of Alpha Century, cites Spotify’s ad-free music service, subscription-based video on-demand (SVOD), skippable YouTube ads, and ad-blocking Web browsers as evidence that consumers can – and increasingly will – exclude ads from their lives.

Advertisers, he argues, should invest more in placing their products within movies and TV shows, sponsor innovative content by digital platforms such as Vice TV, or even follow energy drink manufacturer Red Bull in producing, owning and exploiting their own media and talent.

I agree that it is making less and less sense to force people to sit through intrusive TV ads. The spread of DVRs, catch-up TV, and SVOD means audiences are rarely stuck for something else to watch. Consumers will increasingly take control of what they see and hear and smart companies like Apple, Netflix, and Spotify will give them the tools to do so.

Advertisers will succeed by creating experiences that add to, rather than detract from, consumers’ lives. These experiences will increasingly include – but not be limited to – sponsorship and branded content.

The problem is that some companies want to pretend that the new breed of empowered consumer doesn’t exist. They have turned back the clock on the progress made by the industry in a series of short-sighted moves that could damage the outlook for digital video advertising.

In 2007, it looked like the ad industry was entering a more enlightened age, with digital video platforms leading the way. YouTube, Hulu, and media companies and brands began backing formats that gave the viewer choices over the ads they watched.

In August 2007, YouTube started selling ads with its first format being a transparent overlay that viewers can click to close or to watch the ad. In March 2008, Hulu launched in the US, introducing “Ad Selector,” a format that presents viewers with two to three categories or specific videos to choose to watch.

In February 2010. Ad Selector is named as the video ad format of the future by a research project led by Publicis’s digital agency, Vivaki; the media firms AOL and CBS Interactive; Discovery Communications; and a number of consumer-goods brands.

In December 2010, YouTube launched “TrueView,” a format that allows viewers to skip watching the full 30 seconds of pre-roll ad after 5 seconds.

The theory was that these formats would deliver both a superior experience to the viewer and a superior audience to advertisers. Both YouTube and Hulu, for example, expected to charge brands a higher fee per 1,000 viewers who chose to watch their ads than the rates levied for ads viewers couldn’t skip.

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