Though online video advertising is surging, standardization of ads and the user experience are key barriers to its continued growth. That's according to video ad network BrightRoll's 2nd annual publisher report, released this morning, which contains insights about the current state of the online video advertising market. Since the vast majority of the online video ecosystem is supported by advertising today, understanding how to increase spending and effectiveness are crucial to its ongoing success. BrightRoll surveyed over 100 executives at premium content publishers for its report.
Despite the fact that 80% of publishers said they could serve VPAID-compliant ads (up from 61% last year), 42% cited lack of standards as the number one factor inhibiting growth. Next was "interruption to the user experience" which was cited by 39% of respondents, followed by "technical integration" (31%), "integration with 3rd parties" (26%), and "metrics" and "lack of advertisers" (both 20%). None of this is inhibiting publishers enthusiasm for video though, as almost two-thirds of respondents said they anticipate a 15% rise in CPMs in Q4 '11.
The report also notes that video ad networks are continuing to play an important role in the ecosystem, with almost 75% of respondents saying they sell 20% or more of their video ad inventory through ad networks (up from two-thirds last year). By far the most important factor driving ad network usage is increasing overall revenue (55%), with increasing fill rate (21%) and selling off remnant inventory (16%) following. The research also shows that video ad exchanges are still in their early days; half of respondents said 5% or less of their inventory is offered on exchanges.
Despite all of the excitement around mobile video, the report found it's still very early days with 69% saying it accounts for 5% or less of their overall ad inventory. Key barriers to mobile video ad growth included "technical integration" (47%), standardization (43%) and lack of advertisers (37%).
Online video continues to attract huge attention by brands, agencies and content publishers, yet as the BrightRoll data shows, there is still a lot of room for the medium to mature. As that happens, spending will continue to shift.
VideoNuze is the authoritative online source for original analysis and news aggregation focused on the burgeoning online video industry. Founded in 2007 by Will Richmond, a 20-year veteran of the broadband, cable TV, content and technology industries, VideoNuze is read by executive-level decision-makers who need to get beyond the standard headlines and achieve a deep understanding of online video’s disruptive impact.