How to Understand the Basics of Video Advertising — A Discussion with Chris Lynn

Video Inventory is growing and Chris Lynn is one of the few individuals with multiple years of experience managing it. After working with NBC Universal and NBC News in numerous roles for more than 5 years, he has found his current position with Viacom as their Director of Product, Ads. Due to this wealth of experience in a subject where experience is rare, we reached out to Chris to see if he would assist us in our exploration of the topic of video advertising.

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Chris graciously agreed to do just that and has shared with us some of his valuable knowledge on video advertising. He has provided with us information about the status of solidified specs in the industry, gave us a breakdown of different format used in the industry, specified the difference between display and video advertising, and provided a firsthand perspective on how ad blocking has affected video advertising.

Interesting Quotes:

Have specs solidified for video ads or are they still very up in the air?
Everybody has their own different flavor; mp4 is sort of the reigning king of video ad formats. Of course these are served over a third party VAST or VPAID tag, mp4 is a nice format it works across desktops and mobile. That said, usually sending a single mp4 file, that file is not going to look great across your smallest phone and tablet and your largest TV screen as well so, as emerging platforms like AppleTV are really heating up, we are finding ourselves in the position where we want to make sure that we have optimal experience across any end point or users own content and this raises interesting challenges. Ideally, and I think a lot of people, especially Hulu, are doing this very well, they are requesting source files, high res assets and they are taking it into their own hands. Transcoding the files to the formats, they’ll transcode to 10, 20 different versions of the file, small light weight ones that can go inside of a mold device or larger more high res, crisper images for HD TV screen. When you have full control over these source files it’s a huge benefit, you are able to optimize for your players and for your experience. What’s tough in the 3rd party industry is that, the agencies and the advertisers, rightfully so, are trying to get scale and they are trying to go across with as many as possible different partners as they can with the same files. If everybody were transcoding these assets to their specs it would be a big win.

Bottom Line: Specs have not solidified because video formats have not solidified.

What’s the difference working with the display advertising and working with video advertising
I would say that one of the biggest challenges is the fact that it’s temporal. There is a time element to it that you don’t have with display advertising so things like managing video inventory become much more challenging. With the display ad you can have x number of slots on a page, x number of page views, x number of uniques, and you got a pretty good picture of what your inventory pour is. For video, there’s no end to the number of levers you can pull to add multiple ads per pod, it creates a lot more scope and dimension to your inventory forecast. Apart from that, the fact that it’s in line with the content, means that bad ads experience is that much more noticeable. If you are tanking somebody’s viewing experience and they are trying to watch your show, there are million different places they can go to get that content and if you turn off the user they’ll go to some other competitor and you may not get that user back.

Bottom Line: Video is flexible, so it can have more upside, however because it is core to the user experience, it can also have way more downside.

Do you see a format dominating or taking the majority of the market in the next couple of years?
I’d like to see VAST 4 established and being adopted quickly and you’ll see a lot of advertisers moved to that VAST 4 standard and they will be able to get their verification and validation tools to work properly without one having to. A lot of time they’ll use VPAID ad but it will be a normal ad. It will not have any fancy inactivity but it’s still technically a VPAID ad and still has limitations. I think you will see that half users who are currently using VPAID may just peel off and use VAST 4.0 media files because that’s really what they are after. There are a lot of publishers now who want to do stream stitching or server side ad searching and not to get to technical but basically what you’re doing there is you have your content which is usually HLS (adaptive bit rate format) your ads are also HLS and what happens is that those two streams that are streaming your content get stitched together server side. It’s a seamless integration you don’t see any kind of buffering or breaking ads and content. It’s a really great way to have a beautiful ad and content experience, stable, easy to upgrade because it’s server side. You have fewer app updates you have to do for every single app because it’s all in the cloud and a lot of publishers are going on that route. When you are splicing these two streams together with HLS formats, VPAID is almost out of the question.

Bottom Line: Most likely VAST, but VPAID still has some traction

Has ad-blocking hit the video ads as hard?
Yes it has. I was reading that in Germany for video ads block rates can be as high as 45–50% but it depends on the site. If the site is younger and they’re targeting millennials you would see much higher ad block. If you see that 50% of your users are using adblock you’ve just cut your revenue in half. If you could find a way to circumvent that or prevent that from happening that would be a huge revenue opportunity. It’s an arms race to beat the adblock, they’re quick, you can plug up a hole but they are very good of finding a way around it. What we have been brainstorming is; what if you got rid of the problem. A lot of times when people are blocking ads they are concerned about; they’re data being used inappropriately, number of commercials, the ad loads. But if you send the right message and treat your users well it will change things a bit. But that may be naïve. They might just say; you know what, I don’t want to watch ads and this little browser extension lets me do that.

Bottom Line: Higher video CPMs + Millennial’s use more Ad Blockers = Yes, ad blockers hit video ads very hard.

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