Video advertising is one of the fastest-growing opportunities online today, as well as one of the most promising online advertising formats. The emotional draw of the television experience, consumers’ adoption of broadband, and subsequent change in Internet content, capabilities, and consumption all contribute to driving this growth.

Photo credit: Kheng Ho Toh and Ron Chapple Studios mashed up by Robin Good

Despite the surge in interest in digital video by both the consumer and advertiser, there are still many components of video advertising that are confusing, making the need for standards and best practices essential. To leverage and navigate the fast growing online advertising marketplace, a basic familiarity with web video industry standards like key terminology, perfomance metrics and video ad formats has become a critical necessity.

For this reason and to address the need for greater business awareness around the potential that online video advertising offers, the International Advertising Bureau (IAB) has released an overview guide to make sense of the online video advertising business.

Inside this IAB guide to the online advertising marketplace, and to its standards and best practices, web publishers and content owners will find:

• An overview of the digital video advertising market,
• An outline of multiple video ad formats,
• A review of the basic metrics behind video advertising,
• A basic economics of video advertising, and
• A scenario of the key challenges that the online advertising industry faces today.

Here all the details:

A Digital Video Advertising Overview

by Internet Advertising Bureau Digital Video Committee

Video Advertising Market Overview

Digital video advertising was born almost a decade ago after several seminal events, but many agree it was the sale of Mark Cuban’s and Todd Wagner’s Broadcast.com to Yahoo in 1998 for the sum of $5.7 billion that put digital video on the map.

During the early 2000s, as the Internet valuation bubble burst and the interactive industry regrouped, digital video progressed slowly.

As the interactive industry rebuilt, leaders such as Microsoft’s Windows Media Player, Yahoo’s Launch, The FeedRoom, and MSNBC’s video content inched the industry forward by selling “test” programs to blue-chip advertisers who wanted to learn about the medium and gain insight. CPMs tended to run on the high-end of the TV-CPM range and inventory was limited.

At this point, many believed that the future of digital video content lay in a subscription, rather than an ad-supported, business model.

In 2005 however, growth began to accelerate quickly. An explosion of companies from networks to content providers made both premium and user generated video content available as new revenue streams. Widespread adoption of high-speed internet connections and improvements in video.

Two events served to focus the advertising world on digital video’s bright future.

1. First, were upfronts by major media agencies such as Starcom and Mediavest.

   These were the first broadband upfronts in the history of advertising and the move proved to be transformational, positioning Starcom Mediavest as a leader in video advertising.

   Clients like Procter & Gamble, McDonald’s, Kellogg’s and Coca-Cola allocated millions of dollars for digital video and immediately focused media buyers across the industry on the value of premium online content.

2. The second transformational event occurred in 2006 with the sale of YouTube to Google. For a $1.65 billion purchase price, digital video was back on the front pages of every newspaper around the world.

Unlike 1998, however, advertisers, agencies, and publishers now had experience with online display and search advertising and were ready to expand their budgets to include digital video.

Meanwhile traditional television marketers easily understood the power of digital video’s sight, sound, and motion and began to take interest in online’s video advertising capabilities.

According to eMarketer, digital video grew to a $775 million segment in 2007 and the same source predicts rapid growth by 2011 with $4.5 billion in online video ad spending.

Video Advertising Operating Ecosystem

The operating ecosystem for video advertising can be complex and contains various entities, all of which play a different but vital role in the development, production and distribution of video advertising. These include:

• Web Sites and portals,
• Ad agencies,
• Networks,
• Measurement,
• Auditing,
• Research firms,
• Ad serving technology and service vendors,
• Video technology providers,

and more.

In an environment as fluid as the Internet, these roles are sometimes blurred and can be confusing. The following table lists the key video operating ecosystem entities along with a description of their functions:

Content Experiences

With tens of millions of videos available online today and millions being added each month, consumers can view videos never before accessible through traditional mediums like television.

Consumers can effortlessly go from watching a professionally produced television show to a 10-second clip of a friend describing their first year away at college. Although this universe of content is broad and varied, the disparity of video content can be classified into three main areas:

• Premier programming: gives users professionally produced content, generally, re-purposed from broadcast video and cable networks.

  There is a large amount of professionally produced video that has not been digitized but is quickly working its way online.

• Professionally-generated specialty programming: video content professionally but generally created for a specific subset of online video consumers.

  Whether it is original content for the web or content from traditional media like local news or community events, consumers are searching for and consuming video content relevant to their micro interests.

• User-generated video: consists of clips created and uploaded by everyday people and make up the largest volume of videos available online.

  Generally, the majority of these clips are watched by a small group of users but due to viral word-of-mouth messaging some become extremely popular and are viewed by millions.

While these categories may vary in production quality, time length, and resolution, consumers are drawn to each category for different reasons and a variety of video ad products have been developed to best fit each of these different experiences. See the video ad product compendium section below for more information.

Video Ad Product Compendium

Click to enlarge image

In May 2006, the IAB broadband committee (now the digital video committee) defined a video ad as a commercial that may appear before, during, or after a variety of content including streaming video, animation, gaming, and music video content in a player environment.

This definition included “broadband video commercials” that appeared in live, archived, and downloadable streaming content.

Since 2006, both the experiences and consumption of video content has evolved significantly. While the 2006 definition of a video commercial is still relevant today, newer video ad formats have been introduced to compliment these emerging types of video experiences and environments.

Through 2007 and into 2008, the most common digital video ad experiences were either viewed within or around “in-stream video“, “in-banner” or “in-text” formats.

• In-stream video is generally played or viewed from a video player like a client browser.
• In-banner video is generally displayed in IAB Universal Ad Package (UAP) banners.
• In-text video is generally user-initiated and triggered by relevant highlighted words within content.

Due to the fact that in-banner video advertising and in-text is generally tracked and operationally supported as a rich media advertisement, the major focus of this document will be on in-stream video advertising.

While these three video ad types currently make up the majority of video ad inventory, there are other available methods of triggering a video ad experience, including brand integration like sponsorships and branded content.

Another area of innovation in video advertising is to advertise entirely outside of the video all together, or within the perimeter of the video, leaving the video stream ad-free – this practice is generally referred to as an advertising “skin“.

• In-text video advertising is similar in that it does not require video content to deliver a video ad.
• In-text video highlights words and phrases within the text of web content and links the word to a relevant video advertisement. See example 3 in the video examples section below.

In-Stream Video Advertising

There are two core video ad product categories in today’s in-stream ad experiences. These are, “linear video” ads and “non-linear video” ads:

• Linear video ad: is presented before, in the middle of, or after the video content is consumed by the user, in very much the same way a TV commercial can play before, during or after the chosen program.

  One of the key characteristics of a linear video ad is that the user watch the ad instead of the content as the ad takes over the full view of the video.

  Examples of linear video ads include:

  • A traditional repurposed 15 or 30 second TV ad
  • A purpose-built digital video ad product with interactivity inherent within the core video product experience
  • A full screen display ad or bumper ad viewed within a video player

  Because a user cannot experience the intended video content during a linear video ad impression, the ads are either placed before the content (also referred to as pre-rolls), between the content, or after the content.

  Note: the term “pre-roll” is also regularly referred to as a 15 or 30 second spot, but in this document “pre-roll” is used consistently as a description for the placement of the ad which is preempting the start of the video.

• Non-linear video ad: runs parallel to the video content so the users see the ad while viewing the content. Non-linear video ads can be delivered as text, graphical ads, or as video overlays. Common non-linear video ad products include:
  • Overlays which are shown directly over the content video itself
  • Product placements which are ads placed within the video content itself

Both linear and non-linear video ad products have the option of being paired with what is commonly referred to as a “companion ad“.

• Companion ads: commonly text, display ads, rich media, or skins that wrap around the video experience, can run alongside either or both the video or ad content.

  The primary purpose of the companion ad product is to offer sustained visibility of the sponsor throughout the video content experience.

  Companion ads may offer click-through interactivity and rich media experiences such as expansion of the ad for further engagement opportunities.

The video ad products that publishers and vendors sell to media buyers are generally a combination of linear, non-linear and companion ad products packaged together in a compelling way.

Popular combinations of in-stream ad formats include:

• Linear ads (A) + Companion ads (C)
• Non-linear ads (B) + Companion ads (C)

In-Stream Video Examples

The following section illustrates examples of different in-stream ads and combinations:

1. In-Stream Video Ad Example

In MSN’s video player example to the right, a linear video ad plays before the video content and is accompanied by a clickable, expanding 300 x 250 display companion ad product.

2. In-Stream Video Ad With Skin

In this example by heavy, a 1020(w) x 620(h) ad unit surrounds a video for the duration of the program and actually becomes part of the viewing experience.

3. In-Text Video Ad Example

Vibrant media’s screenshot to the right shows a user mousing over a relevant word which triggers a relevant video advertisement.

4. In-Stream Video Ad Overlay

This screenshot depicts a non-linear overlay ad product in an original show. The advertiser is McDonald’s in a broadband enterprises production “The fantastic two”

5. In-Stream Video Ad Overlay

In this screenshot, Yahoo! offers a non-linear overlay that is triggered by the user mousing over the video advertisement content. This overlay communicates a call to action to the user.

6. In-Stream Video Ad Overlay

This screenshot illustrates a non-linear overlay ad format with an accompanying companion ad to the right of the video.

Metrics

The core metric used for currency in digital video advertising is a “digital video ad impression“, also referred to as a broadband video commercial impression as described in the IAB’s broadband video commercial measurement guidelines released May 2006.

In 2006, the IAB’s broadband committee and measurement task force developed a set of broadband video commercial measurement guidelines.

Specifically, these guidelines determined at what point a video commercial is counted by defining a video ad as a commercial that may appear before, during, and after a variety of content including streaming video, animation, gaming, and music video content in a player environment.

The key point to this guideline is that the video impression is measured at the latest point possible in the delivery of the ad creative to the user’s browser, which is the closest opportunity to see by the user.

The 2006 measurement guidelines are still the basis for the currency of video buys in 2008, specific to in-stream, linear and most non-linear video ad products.

In the future as the IAB embraces new non-linear ad formats into the mix of standardized video ad products, careful attention will be paid to determining the proper currency metrics for these new formats where appropriate.

Other non-currency measurement metrics exist today but because of the amount of innovation in the medium, none have become standard.

General Business Overview of Video Advertising

The buyers of digital video advertising include the interactive and traditional ad agencies and extend to major marketers, long-tail marketers and resellers. For the most part, digital video advertising buying mirrors other media buying behaviors.

Today, most buying of digital video is being done by interactive agencies on behalf of the major marketers. Traditional agencies and buyers of traditional media have lagged thus far, but are entering the marketplace. Progress at agencies where digital buyers are working closely with traditional buyers presents a powerful model for the future.

The sellers of digital video advertising range from the largest portals and media companies to the most specialized user-generated content sites on the web.

The major online portals and broadcast media companies comprise the bulk of the video traffic and all have made strategic moves in both the content and technology space to insure their leadership positions.

The smaller content sites generally use both direct sales and/or network sales strategies to fulfill their inventory needs. To take advantage of incremental video advertising revenue many websites are now choosing to deploy in-text video advertising within their content pages.

Current pricing practices in digital video suggest that the medium is quickly maturing.

CPM-based pricing is the predominant model for buyers, particularly the In-Stream, Linear Ad format (pre-rolls, post-rolls, etc).

CPMs can span a wide range and are based on a number of factors including the quality of the site’s content and users, targeting capabilities, and individual programming.

The CPA and CPC models are also available and are the predominant measures for in-text video advertising.

These buying models are helping to bring large, direct marketing advertisers into digital video and long-tail marketers or “mom and pop shops” that have not had a place in the medium in the past.

Many brand-based advertisers believe the CPA and CPC models lend accountability to brand-based advertising where other media have traditionally struggled.

Current Industry Challenges

There are many components of digital video advertising that have yet to be standardized, including creative units and new metrics.

While the video industry is still relatively young, the IAB digital video committee recognizes the importance of simplifying the buying and selling process as an impetus for further long-term growth.

The following have been identified by the digital video committee as current key challenges:

Key Digital Video Product Terminology Recap

Originally written by the Internet Advertising Bureau Digital Video Committee for IAB and first published on January 1st, 2008 as “A Digital Video Advertising Overview“.

About the author

The IAB digital video committee is comprised of IAB member companies who are committed to creating and implementing a comprehensive set of guidelines, measurement, and creative options for interactive video advertising. Additionally, the committee will educate markets and agencies on the strength of broadband as a marketing vehicle.

Photo credits:
A Digital Video Advertising Overview – badboo
Video Advertising Market Overview – golloween
Video Advertising Operating Ecosystem – Rainer Junker
Content Experiences – SSilver
Metrics – Alex Bramwell
General Business Overview of Video Advertising – grki

Entrepreneurial thinking: what is it all about? The late Anita Roddick, a great example of female entrepreneurship, was the founder and chief executive of British cosmetics company, The Body Shop, producing and retailing beauty products that shaped what became to be known as ethical consumerism.

Photo credit: Positive Nation

The Body Shop was one of the first commercial cosmetics outlets to prohibit the use of ingredients tested on animals and one of the first to promote fair trade with third world countries. Anita Roddick was also involved in activism and campaigning for environmental and social issues including involvement with Greenpeace and The Big Issue.

If you look up the classic definitions of entrepreneurship, you will find that an entrepreneur is a person who is willing and capable of converting a new idea into a successful new product or service, while taking risks all along the way to get there. And like the Anita Roddick case, being an entrepreneur means having to deal with true uncertainty, particularly when it involves bringing something really novel to the world, in a market which never existed before.

What are then, one would ask, the key characteristics that make a true entrepreneur different from someone else who pretends to be one? Entrepreneurial thinkers are:

• Primarily motivated by an overwhelming need for achievement and a strong urge to build something good.
• Driven by needs of independence and achievement. They are seldom are willing to submit to authority.
• Prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness.
• Carriers of an enthusiastic vision, supported by an interlocked collection of specific ideas not available to the marketplace.
• Able to develop strategies to change their vision into reality.
• Experienced at taking many and frequent prudent risks.
• Positive thinkers and a decision makers.

In this short, inspirational video, the late Anita Roddick, founder of The Body Shop, tells her own story as an entrepreneur: from borrowing money from a bank who didn’t want to lend it to her, to her approaches to product diversification, positioning, marketing and passionate involvement with issues that really mattered to her beyond the commercial side of business.

This is indeed the story of a true passionate entrepreneur. Here her video story alongside a full text transcription:

The Story Of Anita Roddick From The Body Shop

Duration: 7

Full English Text Transcription

Intro

Anita Roddick: …it has really come about as a livelihood. I needed to have a livelihood to look after my two kids, for my husband when for two years riding a horse across South America.

Women are very good at mixing what they’re interested in and what they’re talented at and making some sort of livelihood from it.

I was a teacher, I had worked for the United Nations, International Labour Office, I traveled, and that was really for me…. wherever I traveled I was usually not in Western types civilizations, but in areas where indigenous people were tough. I lived a lot of the time in Western Africa, South Africa, lot of the Indian Ocean islands, Pacific Ocean islands, and everywhere I traveled I lived in fishing communities, and I picked up the richness of the body.

Women are good at that, men are lousy. At births and marriages women will say among themselves: “Oh, what did you put on your body then? Oh, did you get there?”

So, those became… it was like a sort of a closet of an anthropologist.

The Birth of The Body Shop

When I came back from the travels, and ten years later, in my early ’30s, I decided to open up this little shop, and only going to trade water for two years and then we were going after, I think, Australia to open up a plantation.

Got the money, 4000 pounds from this miserable Barclay’s bank manager who didn’t actually give it to me, probably because I was dressed way too casually for him, while my two kids were destroying his office… but bank managers don’t like enthusiasts, so I was going: “Oh, I got this great idea and it’s going to be called The Body Shop and I’ve and all these knowledgeable ingredients from wise women around the world“.

The guy, I think he thought I was going to open Brighton’s first sex shop or something, so he didn’t give me the money, so Gordon, my husband, came back with me and I looked like a man. I wore my pin-stripe suit, and we had a plastic sheet we just came in with, a plastic folder, and had a profit & loss sheet, which we didn’t even know what we were doing with, and then he gave Gordon the 4000 pounds, not me.

Gordon then gave me the money and he went off to do his trip, and I opened up this little shop in Brighton.

What Entrepreneurial Thinking Is About

First day I was in trouble, because my shop was between two funeral parlors and they didn’t like the coffins part in my shop, with the words “The Body Shop” over the side, so they told me to close the name down, change the name “The Body Shop“, which I couldn’t do because I had just spent 700 pounds doing gold leaf lettering, which nobody could see anyway.

Then I did something very smart, I did an anonymous phone call to the local newspapers saying that I had been intimidated by mafia undertakers and my husband had just deserted me so… I knew how to talk to people.

So I started with 25 products, and this is what I did – and this is what entrepreneurial thinking is about – I did five sizes of everything, so I had 100 products. Smart, eh? Hand-written labels – not so smart because of the writing done by hand and just about anybody did it.

So, we survived, but we had stories.

Every product had a story: how I made it, what mistake I made, don’t worry about the black bits or the dirty footprints… Lovely anecdotes. Anecdotes that ring to the mind.

Gordon came back. I had opened up a second shop, and he sort of said: “This is interesting”.

The Franchising Strategy

We came up with this idea of self-finance. We didn’t even know the word franchising existed and my friends were saying: you can’t do this, I can do this.

We just painted the shop green, which was the only colour that covered the damn patches – now it’s a colour of the environment. And we just had friends, and sold to them, we had this alliance of friends, and then we got a bit more professional.

Then we set up a franchise system, which really meant… it was very eccentric, because nobody was allowed to be a franchise that was exclusively business-oriented, because we wanted teachers, we wanted activists, and I remember we gave them also the Proust questionnaire. “How would you like to die?” “What’s your favourite colour?” “What car do you have – we added this one – and what car do you want?” We jumped from VW Golf to Mercedes.

This was so hoky-poky, I can’t tell you, but what was really brilliant about it, it was community. And we were learning from the Quakers, we were learning from the corporate movement, from the Amishes, we were so excited about setting up community, of a development of the human spirit within the workplace, not just a product, and we were a very strong communications company.

We grew a real reality, it’s a true thing, as we weren’t a product-oriented company, we had great products thank God, otherwise we would have soon closed down, but our thing was about campaigning human rights, that’s all we were really interested in doing.

The Mistake of the Stock Market

We branched out, we had over about 150 shops, and then we made the biggest mistake we ever made. We went to the stock market. Useless, don’t ever do it. Don’t do it.

We did it for good reasons, we wanted to control our manufacturing and have the money to build the manufacturing plant and to control our recycling. It’s good, it’s vertical integration, but we suddenly were measured not by how many jobs you were creating, which was our heartbeat – “oh, we are creating 100 jobs this year” – but it was about how much you were worth. And that changed everything.

We put up these obstacles for being measured by wealth, by making every shop member, the community services, which we paid them to do, we did the campaigning, but in the end it was very fascistic. The fascism in the city is about one very unimaginative bottom-line profit and loss, which does not include human rights, social justice, environmental protection, or any of that stuff. It’s just as unimaginative and there was no other agenda.

Trying to change the world, the language of business, which we started to do really earlier in the 90s was phenomenal.

But it didn’t stay, unfortunately, because the system changed. We all lost the plot in the progressive business movement.

We didn’t see what was going on, which is the World Trade Organization. We didn’t see that.

We were all just hanging out… “We’re great“… “Oh Ben, you have got a great tool, I am going to do one like you… Oh you are going to Patagonia, you have the greatest development center, I am going to do one just like you too.” And so on.

We were sharing best practices, but weren’t keeping an eye on who controls the system.

Additional Resources

Originally published by pcrowshaw on MasteryTV on December 1, 2007 as “The late, great Anita Roddick“.

Photo credits:
What Entrepreneurial Thinking Is About – Pavel Muron
The Mistake of the Stock Market – Timur Nisametdinov