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Online Video Advertising Is Broken, and It’s Only Getting Worse

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I want a good user experience when I watch video, no matter the platform or device I am using. It’s what all consumers want, and it’s something the online video industry has been promising for years. But when it comes to content that is supported by advertising, the market is completely broken, and the user experience is horrible. It’s been this way for years, with no signs of getting better. In fact, it’s getting worse—much worse.

There are almost no standards in the online video advertising market, which makes for a very poor user experience. Every website seems to treat video advertising differently, whether it’s the format, length, quality, or functionality of the ad. Ad-solution vendors promise things like targeting and high-quality engagement, but they fall severely short. It’s the whole reason why the average cost per mille (CPM) for nontargeted pre-roll videos has fallen over the years and now hovers at about $10. No advertiser wants to spend a lot of money, except in specific niche cases, because the targeting of the ad, the experience for the consumer, and the metrics given back to the advertisers are so poor. Some online sites can charge $25 CPM for pre-roll, but not many.

Day after day, site after site, I get the same pre-roll ad delivered to me 10 times in a row. On the CNN, ESPN, and NFL websites, I’ll often see the same ad on every clip I watch. On some sites, the content I want to watch is available in HD quality, but the pre-roll ad is delivered in SD quality. Some websites will deliver a 4:3 ad inside a 16:9 player. One site will run a 30-second pre-roll ad before a video clip that is only 30 seconds in length, but another will stick to only 15-second pre-rolls for short-form content.

You can skip some pre-rolls, but not others. And when it comes to the player itself, some ads can go full-screen, while others can’t. Some you can pause, some not. And then you have the problem that some sites won’t let you turn off auto-play videos that start with a pre-roll. I will read an article on a website only to notice later that a video was playing someplace else on the page the whole time. I didn’t see the ad or engage with the video at all, but an advertiser paid to deliver that ad anyway. Last year, Google said that 46 percent of the video ads running across the desktop and mobile web (outside of YouTube) never had a chance to be seen. All online video advertising vendors talk about is engagement, yet the metrics they use to measure engagement are different, or there is no real engagement taking place at all.

The live streaming experience is even worse. Server-side ad insertion is very hard to do, many vendor solutions in the market do not work, and the consumer experience is poor. If I want to watch a live stream of an event that has already started, I want to get to the stream as quickly as possible because I feel like I am missing out. And yet, for example, when I watched the Democratic National Convention stream on foxnews .com, I had to sit through the page loading (6 seconds), the player loading the ad (5 seconds), the ad itself (30 seconds), and then the live stream buffering (5 seconds). So 46 seconds after clicking the live stream link, I finally got the content. What is it about that experience that publishers and video advertising vendors think is good?

Nine years ago, I wrote a blog post titled, “The Five Biggest Technical Issues Hurting the Growth of Online Video Advertising." Sadly, almost a decade later, the industry is struggling with the same issues. Nothing has truly changed. Seven years ago, I commented that there is a shortage of online video advertising inventory, and that’s still a problem today. And the reason for all of this, the dirty little secret that no one wants to address, is that the cost of dealing with the ad network and technology is, in most cases, larger than the revenue from the advertising. At a $10 average CPM, there isn’t a lot of revenue to split up among everyone who has to get a piece of the pie. Sure, a site like Hulu can do well with video advertising because of the premium content it offers, but very few sites have content as valuable as Hulu. So you can get high CPMs in the $20–$25 range, but that’s only for high-quality video offerings, which isn’t a vast majority of videos on the web.

Demographics is key with advertising—we all know that, and yet almost no targeting is taking place. I get ads for physical stores that are more than a hundred miles from where I live. I get ads for senior citizens, which isn’t me. I get ads for kids, which I don’t have. And now I know why so many ads start off with questions like, “Are you ...,” “Do you ...,” etc. They don’t know whom that ad is reaching. So not only is there a whole host of technical problems preventing online video advertising from being truly successful, but we also have quite a few business problems as well. Hence, the use of ad-blocking software by consumers continues to climb.

Some will argue by telling me how big the online video advertising market is, but that doesn’t mean the consumer experience is a good one. It’s been a bad experience for the past 10 years, and I see nothing on the horizon that gives any indication it’s going to get better. We’ve seen a lot of promises made, but very little in the way of actual advancement. We’d all better get used to seeing the same nontargeted ads, over and over, because they aren’t going away anytime soon.

[This article appears in the October 2016 issue of Streaming Media magazine.]

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