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Online Video,Online Advertising

An Overhaul For The AVOD Model

Concerns over ad blocking prompted several major media companies to fight back this year, in the courts in Europe as well as on-screen worldwide.

In the US for example, online videos from CBS and Hulu will only play if ad blockers are switched off.

At the same time however, visible consumer resistance to online advertising raises bigger questions about how ad-supported sites can attract and monetize audiences that are spoilt for entertainment options online.

The more viewers take on-demand for granted, the more likely they are to disapprove of preroll and midroll ads getting in the way.

Ad blocking is mainly a desktop problem for the moment, as popular extensions and apps such as AdBlock and Adblock Plus are designed for browser-based access, rather than going online by other means, such as via apps or connected TVs.

Nonetheless, the latest iPhone system upgrade, which enabled mobile ad blocking on Apple’s Safari browser, heightened the sense of urgency, especially in markets where digital represents a sizable slice of advertising.

Video focus

“We are concentrating on the ad blocking around video to begin with because it’s the highest revenue and yield generator for us,” says Tom Cotter, chief information and product officer at New Zealand broadcaster Mediaworks.

“When we look and try to get a sense of the scale of the problem we believe its 15-20% of our inventory that is being blocked at the moment – whether it’s a static or a video ad,” Cotter adds.

That figure varies by demographic, with some form of ad blocking on 70% of browsers visiting one Mediaworks property targeting younger viewers.

It’s a problem with a two-step solution.

The first is technical, helping untangle different technologies used to deliver advertising by bundling together ads and video so they are delivered together in a single stream (a process dubbed server side insertion).

Buffering, or even the video player itself freezing up, is often down to glitches in the automated communications between a video platform and the multiple ad serving systems it is plugged into.

Dispelling these gremlins can help make online video playback as smooth as traditional broadcast, and perhaps help capture higher engagement and higher CPMs in the process.

Simplifying delivery in this way also speeds up innovation, by making it easier to get the player onto new screens.

“All you have to do is make sure the video gets to the device,” Cotter says. “The ads are embedded within the stream.”

There’s a bigger business question to address too, about making advertising less intrusive for a sector competing with affordable, ad-free SVOD services.

Online video sites as a whole already carry less advertising than traditional broadcast channels. It’s likely to stay that way, with publishers focused more on pushing up rates, rather than ad minutes.

“We want to keep the ad load low,” Cotter says. “We want to optimize customer experience on online devices for many reasons, but the major one is to grow the audience in that space.”

ad loads & formats

In Australia, ad blocking for Tenplay, the catch-up service from free-to-air broadcaster Network Ten, is less prevalent, at less than 10% of users.

Nonetheless, the company has still deployed the same technology (from video ad tech supplier Brightcove) as Mediaworks.

Larger audiences and longer view times can give Ten a bigger slice of a market where demand for premium video is high, exceeding supply.

Better delivery is the first step.

Chief digital officer Rebekah Horne is already running tests around different ad loads, and wants to follow up by looking at the ads themselves, and the role they play on different screens, from video viewed on a mobile to a smart TV.

“The next part to that is testing different types of creative, and trying to understand how we might be able to improve the overall experience beyond just less ads versus rather than more ads,” she says.

“We are thinking about it more broadly than absolute numbers but certainly there needs to be improvement. What we’ve done is take a broadcast model and put it on the internet.”

While Ten can implement its own changes on areas such as sales and distribution, it needs industry allies if it wishes to change current approaches to online monetization.

“The reality is that in a market the size of Australia, you are only going to get so many permutations, so many clients that are willing to spend the money to optimize,” Horne says.

“It’s about understanding what’s possible, and starting to work with some clients and testing some different formats.”

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