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FOLLOW THE MONEYMONETIZING DIGITAL VIDEO

SOLUTIONS FOR PUBLISHERS

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Capitalize on an Emerging Opportunity Digital video is a hot topic among online publishers looking to grow revenue. Prices for digital video ads have skyrocketed, driven by unprecedented demand among advertisers and a scarcity of high-quality inventory. For publishers looking to capitalize on this situation, mastering a few fundamentals and understanding the nuances of the marketplace are important. This white paper explores the essentials of monetization that will help publishers build a strong and lasting revenue stream.

THE MOMENT TO MONETIZE

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FUNDAMENTAL FIRST STEPS

PROVING PERFORMANCE

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SUCCESSFUL SELLING



Digital video has captured the attention of online publishers around the world, from the largest digital media enterprises and broadcasters to the most niche news sites and blogs. It’s easy to see why. Revenues for digital video advertising are growing at an astounding rate of 43.5% year over year.1

In short, advertisers can’t get enough digital video. Demand for digital video inventory is at an all-time high, far outpacing supply. The format has achieved nearly equal status to more traditional channels. In fact, 75% of U.S. ad agency executives said digital video ads are equally or more effective than traditional TV ads, with 90% agreeing that digital video ads had equal or greater impact than display ads.2 The format’s growth is also attributable to an influx of new participants. As recently as 2013, 40% of video ad impressions came from advertisers new to digital video.3

The result? CPMs for digital video ads are now 5 to 10 times higher on average than CPMs for traditional display ads.1 These are economics that publishers simply can’t ignore in an ultra-competitive industry.

Together, these factors create a sizable opportunity for publishers to provide the high-quality content and advertising inventory that advertisers crave. But monetizing that content is not simple. It requires publishers to master the fundamentals, measure performance in meaningful ways and find the right monetization strategies.

THE MOMENT TO MONETIZE

SHIFTING ATTENTION

Advertisers are clamoring for digital video ad inventory because this is where viewers are moving.

More consumers are watching video on tablets and mobile devices.

Among 18-to-34-year-olds, digital viewing was up 53% in the past year according to Nielsen.4

Among those aged 35 to 49, rates of digital viewing were up 80% over the same 12-month period.4



Monetizing digital video successfully depends on attracting a consistent, reliable stream of high-quality traffic. Publishers that can deliver high-quality impressions will find no shortage of advertisers willing to pay for them. What follows are three steps publishers need to take to maximize the quality and volume of traffic for digital video.

Engage Your Audience From the advertiser’s perspective, engagement refers to how many ads viewers see and how much of each individual ad they watch. From the publisher’s point of view, an engaged audience visits a site more often, stays on it longer and watches more video content. An engaged audience is naturally inclined to view more ads because they see them as a fair trade-off for the quality of the content they are enjoying.

High-quality content is critical for engagement. Yet, even if publishers have compelling videos to offer, other factors can affect how deeply the audience is engaged. Consider the following:

• Duration. Shorter content tends to dominate in digital video, where users frequently “snack” on clips of six minutes or less. Longer content may work, but only if the audience expects it. If they don’t, they will leave—and the resulting metrics will not meet advertisers’ expectations.

• Continuous Play. Continuous play automatically serves up an ad after a video and then moves on to the next video (and the next ad) unless the user clicks away. According to the head of advertising operations for a large global news organization, continuous play leads to viewers spending more time actively looking at the video player and engaging with more ads. One nuance to consider: Autoplaying videos, which start automatically when the page loads, can hurt ad performance. Users who are not in the mood to watch a video may quickly mute or pause the player. Or, users may leave the video playing and, because it is not in their viewport, they are not paying attention.

• Content Bundles. Bundles combine ad inventory from various types of content on a publisher’s site—including videos, articles and data—related to a category that advertisers tend to value highly, such as luxury. They are an important part of the “traffic first” mindset and, by virtue of providing engaged, highly desirable audiences, can support higher CPMs. Bundling can be difficult to do on a large scale and across categories, however. Smaller publishers can license news, photos or videos to increase the amount of content available to bundle.




Select the Right Technology To ensure that an audience stays engaged with both the content and the advertising, videos need to play quickly, without buffering. Depending on a publisher’s technology budget, development skills and site architecture, it can either purchase an off-the-shelf video player or develop one independently. Each approach has its pros and cons.

Off-the-shelf platforms allow publishers to embed video content directly into mobile and web properties. These platforms include a variety of familiar names. This approach is usually faster and easier, and the available players offer many choices in terms of functionality and support for different video formats.

Building a player independently typically requires a larger capital investment, but allows publishers to customize the player for specific needs. Publishers may want to skin the player to match their branding, for example, or support certain analytics programs. Publishers also may choose to develop a player in HTML5 or synchronized multimedia integration language (SMIL), both of which are markup languages offering broader applications for website development.

Other options include Adobe Flash, the software platform used for creating multimedia that can be played with the Adobe Flash Player, and Microsoft Silverlight, an application framework with capabilities similar to Flash. Publishers interested in mobile may choose to avoid Flash because of compatibility issues with the iOS and Android platforms.


YouTube is the second largest search engine in the world and a giant social network in addition to its status as a free content host. Its player supports virtually all video formats.

Adobe Flash Player is a popular platform for video delivery, supported by one billion connected desktops.8 However, iOS and Android do not support Flash, which has implications for publishers looking to monetize mobile video.

FLV Player is a streaming video platform that only supports FLV.

JW Player is an open source media player that supports both HTML5 and Flash.

Flowplayer is a basic player that supports FLV, one of the primary Flash file formats, as well as MP4 and F4V.

QuickTime is the multimedia player that is built into Mac OS X. It is also available for Windows.

PLAYER PROFILES

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Optimize the Viewing Experience Because advertiser demand is so high and inventory is so low, a great deal of digital video advertising is sold on websites with less-than-ideal visual presentation. These include everything from poorly designed sites that situate video content at the bottom of the page to those that autoplay videos on mute in an effort to boost impressions to those that use “bot traffic” to defraud advertisers.

All of these examples indicate the size of the video monetization opportunity. Advertisers are spending so much on digital video ads that the market is drawing in those who have no real interest in building an audience or delivering high-quality video.

This gives publishers a significant opportunity to stand apart from the competition—and command premium CPMs—by creating a better overall viewing experience.

“An autoplay ad that sits below the fold is not a high-quality experience for the viewer,” says the head of advertising operations. “It’s tempting for publishers, because some of these tactics will deliver more impressions. But it’s only temporary. The metrics won’t be there in the long term, and advertisers will not renew. You will have to earn new business every time.”

Publishers are better off delivering high-quality video content and making sure ads meet emerging standards for viewability. There are no shortcuts.

Another way to optimize the viewing experience is through companion ads. These include text, display ads, rich media or skins that wrap around the video experience, running alongside the video or the ad–or both. Companion ads create a more cohesive experience for the viewer and give advertisers more sustained visibility. These ads benefit sites with smaller embedded players because they provide a secondary, more visible branding message that makes the site more attractive to advertisers.

Aligning ads with the content on the page is another useful tactic—for example, placing ads for credit cards on a page about financial services. Ads should also fit well with audience demographics. This helps publishers serve ads to qualified users who are primed to view the ad instead of being surprised or confused. (Think about a site that serves young professionals showing badly targeted ads for reverse mortgages or retirement homes.) Unifying content and advertising also reduces the risk of unintended thematic conflicts, such as a fast food ad running before a video about healthy eating.

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Until recently, there were no standardized criteria for assessing an ad’s viewability. This is no longer the case. In the summer of 2014, a combined effort by the Interactive Advertising Bureau (IAB) and the Media Rating Council (MRC) established the first guidelines for viewability of in-stream video ads.

These guidelines define “viewable display ad impressions” as those in which at least half of the pixels in the ad are on an in-focus browser tab on the viewable space of the browser page for at least two continuous seconds. Other user interactions, such as a click on an ad, can validate the ad’s viewability as well.

Publishers can download the complete document at mediaratingcouncil.org.

A NEW ANGLE ON VIEWABILITY

2 secs


When publishers engage audiences effectively through a combination of superior content, reliable technology and a seamless viewing experience, they can attract and retain high-quality traffic. In the world of digital video, measuring the potential value of this traffic requires metrics. To monetize digital video effectively, publishers need to understand and use metrics.

Find What Works First, publishers should use metrics to identify how best to engage audiences with ads. Test different advertising formats to understand how pre-roll ads stack up against in-stream ads. Test various configurations, such as multiple pre-rolls, multiple mid-rolls and multiple ads in between videos in a playlist. Test skippable and non-skippable ads. All of this data will help publishers offer the right mix of inventory that will keep viewers—and advertisers—coming back for more.

“Pre-roll is not the only answer,” says the head of advertising sales at a major news site. “Think mid-roll, too. As more and more people stream live TV over the web or simply watch more short videos in a row, mid-roll ads work just like traditional TV commercial breaks.”

Quantify Your Performance Next, publishers should use a video analytics program to measure the performance of their own content and the attendant ads. These programs are available from a variety of providers, including comScore, Adobe Marketing Cloud, Ooyala, Brightcove, Anvato, Visible Measures and Google Analytics. Key metrics include: • Video page views (views of the page where the video lives) • Video views (total and per visitor) • Total hours viewed per visitor • Percentage of visitors watching video • Unique visitors watching video • Average number of clips watched among all site visitors • Average number of clips watched among visitors who watch video

With a solid understanding of which types of content and ads perform best, as well as an engaged, high-quality audience, publishers can sell to new advertisers more effectively, build a stronger case and increase both first-time and repeat sales through reliable performance.

PROVING PERFORMANCE



PROVING PERFORMANCE

Narrow the Focus Publishers that have the metrics to back up their claims about digital video performance have an automatic advantage over those who do not. One point to remember, however, is that while metrics are vital for getting publishers and advertisers on the same page as to what constitutes success, they can also be a source of frustration, according to the head of advertising sales.

“Advertisers get overwhelmed with metrics,” he says. “There are so many things to consider. They don’t always know what to look for or how to use metrics to understand viewer behavior.”

Publishers will be well-served by making life easier for advertisers. Publishers should focus on the metrics that matter most to clients and build a compelling case for higher CPMs that takes the advertiser’s point of view into account. Four of the metrics publishers should focus on:

• Completion Rate. This refers to how much of the ad was viewed; it is a metric that gets advertisers’ attention. Specifically, advertisers want to see completion rates of at least 50% and sometimes as much as 75%. While it’s true that creative ads naturally achieve higher completion rates, publishers need to do their part. By creating digital video experiences that are seamless and cohesive, publishers will insulate themselves from advertisers’ attributing low completion rates to site quality.

• Click-through Rate. This metric is a carryover from web-based display advertising for which the click-through was the most desired user action. Advertisers still favor this metric, even though it is only relevant for ads that are click-through enabled.

• Viewability. According to the head of advertising operations, viewability is an “up and coming” metric because of the recent standardization efforts of the IAB and MRC. While not all advertisers expect to see these standards met today, publishers that can demonstrate compliance will be better positioned for the long term. Meeting standards before they become mandatory also signals to advertisers that publishers are forward-thinking and understand the difference between a low-quality and high-quality viewing experience.

• Frequency. This refers to how often a viewer sees the same ad. If publishers have limited inventory and want to close a large ad buy, they may wind up selling a large chunk of inventory to one advertiser. Viewers then see the same ad repeatedly, which can compromise the experience. For smaller publishers, this may be a chicken-and-egg situation, but those who can demonstrate lower frequency rates will be more attractive to advertisers.



When publishers have the fundamentals in place and have the metrics to prove it, the next step toward successful monetization is building a robust sales strategy. Generally speaking, there are two paths to follow: direct and automated ad sales. Each has its advantages and drawbacks, and most publishers will likely use both. The challenge is finding the right mix of techniques to maximize revenue in the short term while building strong, long-term relationships with advertisers.

Direct Sales Direct sales methods deliver a higher CPM than automated solutions because they do not involve revenue sharing with an ad network or exchange or any other third party, such as a marketing data provider. These higher CPMs come with an obligation to deliver the impressions promised to advertisers, thus direct sales are a better fit for publishers that have a large, well-defined audience.

For publishers that can deliver the audience, the next consideration should be the amount of video inventory available for sale. Too little inventory can lead to the frequency issue mentioned earlier. Showing the same ad repeatedly can compromise the viewing experience, which can affect performance metrics, causing a chain reaction that makes it even more difficult to meet impression targets and get repeat business. As long as publishers understand how these factors influence one another, they can make better decisions about selling on a CPM basis.

Sponsorships For smaller publishers that are still building an audience for video or do not yet have a sizable number of impressions to sell, sponsorships are a sensible strategy. Because sponsorships give advertisers a 100% share of voice on a site, they can deliver a highly effective brand experience to a smaller but often more passionate audience. The key difference from selling on a CPM basis is that sponsorships don’t require publishers to deliver a certain number of impressions.

For larger publishers, sponsorships don’t usually make as much sense. They may generate a great deal of revenue, but they limit the site to too few advertisers. Larger enterprises are better off selling on a CPM basis to ensure a greater variety of ads and to avoid viewer fatigue.

SUCCESSFUL SELLING



SUCCESSFUL SELLING

Content Bundles Similar to sponsorships, content bundles help create more attractive and efficient offerings for advertisers. Again, bundles combine ad inventory from all the videos, articles and data connected with a specific ad category. These bundles allow advertisers to achieve a higher total number of views and combine metrics from different types of ads into a single, predictable, blended CPM. Bundles also make it easier for advertisers to find the best fit for their brand without having to assess the value of each piece of inventory.

To streamline bundling for publishers, the Bloomberg Content Service offers video and other content packaged in highly desirable verticals such as business, technology, investing and luxury.

Automated Sales Automated solutions for selling digital video ad inventory include ad networks and exchanges. These offerings make it much easier for publishers to move available inventory, but they involve revenue sharing. This is an important trade-off to consider, especially for publishers that are growing rapidly. The key is finding a happy medium between leaving too much inventory unsold and selling all the inventory on a site but not maximizing profitability.

In general, automated selling solutions are geared toward publishers that lack the large internal sales teams required to move large volumes of inventory. However, in some cases, they can be helpful for large publishers that have so much inventory that they can’t sell all of it quickly enough.

The Interactive Advertising Bureau (IAB) is an industry-led organization devoted to helping media and marketers make the most of digital channels. To promote in-stream digital video advertising, the IAB’s Digital Video Committee published the IAB Video Suite, a set of technical specifications for in-stream video ad formats that allow compliant ads to play smoothly on compliant publisher sites. The suite includes:

Video Ad-Serving Template (VAST), a universal protocol for serving video ads that enables ad servers to use one ad response format for multiple publishers and/or video players.

Video Player-Ad Interface Definition (VPAID), a common communication protocol between ad units and video players that facilitates richer experiences and more detailed reporting.

Video Multiple Ad Playlist (VMAP), a protocol that helps content owners describe where ad breaks should be placed in content for instances when they do not control the video player.

NEW DIGITAL VIDEO STANDARDS

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SUCCESSFUL SELLING

Ad Networks Ad networks aggregate inventory from multiple publishers and provide an easy way for advertisers to bid on that inventory, often at a rate that is greatly discounted from a publisher’s direct sales rate. Well-known ad networks include the Google Advertising Network, BrightRoll, LiveRail and SpotXchange. Publishers may find that working with several of these networks can help fill available inventory more efficiently.

Ad Exchanges Ad exchanges, also known as programmatic ad buying, apply the same concept but give publishers more control over prices, inventory blocks and acceptable advertisers. In other words, not just anyone can buy the ads and not at prices that publishers deem too low. Exchanges do require publishers to set up a supply-side platform (SSP) capable of serving inventory to the advertisers that bid on it. Some of the more well-known exchanges include Google’s Invite Media, MediaMath, Turn, DataXu and [x+1].

Programmatic Reserves Surging demand for digital video inventory among advertisers is creating new options beyond these exchanges, according to the head of advertising operations.

“Advertisers want to buy programmatic video but it’s often unavailable to them,” she says. “So the industry has developed programmatic reserves, where an advertiser agrees up front to buy whatever inventory the exchange can find.”

Programmatic reserves deny advertisers the opportunity to pick and choose audience targets, but many are willing to make this compromise. The dynamic works well for publishers, because they can avoid offering inventory programmatically and then watch it go unsold because it didn’t meet the advertiser’s specific demographic needs.

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THE TIME IS NOWThere has never been a better time for publishers to monetize digital video. Demand for ad inventory now far exceeds supply—to the point that industry experts believe CPMs may soon reach an all-time peak. To make the most of this moment, publishers need to master the fundamentals, measure results to demonstrate performance and find the right mix of direct and automated selling solutions. Underlying all of this is the need to deliver high-quality video. Creating compelling content is not easy, which is why inventory remains limited. With quality content aligned with the right brands, publishers can add a reliable, high-value revenue stream and compete more effectively.

CHOOSING THE RIGHT MIX OF DIRECT AND AUTOMATIC SELLING IS VITAL FOR SUCCESSFUL MONETIZATION

Requires sales force

No revenue sharing Revenue sharing

No sales force required

Sales burden on publisher Sales burden on network/exchange

Direct contact with advertisers No contact with advertisers

More process control Less process control

Better for larger publishers Better for smaller publishers

Higher CPMs

No revenue sharing

Lower CPMs

Direct Sales Automated Solutions

vs.


bloomberg.com/content-serviceThe data included in these materials are for illustrative purposes only. ©2014 Bloomberg L.P. All rights reserved. S534486253 DIG 1114

> For all inquiries, visit bloomberg.com/content-service

GET STARTED TODAYMonetizing digital video is easier with the right content. The Bloomberg Content Service licenses high-quality video, news, data and photos covering topics attractive to advertisers. To learn more, visit bloomberg.com/content-service.

About the Bloomberg Content ServiceBloomberg Content Service is a leading provider of global business and finance video, news, photos and data for more than 1,000 media outlets in 60+ countries.

Endnotes:1. K. Olmstead, A. Mitchell, J. Holcomb, and N. Vogt, “The Digital Video Advertising Market,” Pew Research Journalism

Project, March 2014. http://www.journalism.org/2014/03/26/the-digital-video-advertising-market/

2. eMarketer Digital Video Roundup, July 2013.

3. Insights from DoubleClick, “Video advertising momentum,” DoubleClick by Google, Spring 2013. http://www.thinkwithgoogle.com/collections/video-advertising-momentum.html

4. J. O’Neill, “Online video consumption up, TV viewing down among Boomers, too,” Ooyala Video Mind, September 2014. http://www.ooyala.com/videomind/blog/online-video-consumption-tv-viewing-down-among-boomers-too

5. Ooyala Global Video Index Q2 2014. http://go.ooyala.com/wf-video-index-q2-2014.html

6. Adobe Flash Statistics. www.adobe.com/products/flashruntimes/statistics.html

7. IAB Interactive Advertising Wiki. http://www.iab.net/wiki/index.php/Companion_Ad


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