The Great Unwatched - NYTimes.com 5/5/14 5:02 PM interesting post on the NYTimes about video. Personally, I've had some extremely good results with video used as pre-roll but this tends to be cut out of spots from a television shoot where the bulk of the work is run on football or basketball. A $3 Million production is pretty easy to justify when 40 million people are watching football on an average game. But justifying a six figure production for a video that will get a few thousand hits on youtube begs some questions about how a client's money js being spent. rob By DAVID SEGAL MAY 3, 2014 Some of the biggest names in Internet media have been gathering in New York City at the third annual Digital Content NewFronts, a pitch-a-thin where companies like Yahoo, AOL and Crackle â and, yes, The New York Times â trumpet their digital platforms to brands eager to reach consumers via online video ads. According to the standard spiel, ads in this medium are alluring because they can be aimed at specific audiences. They can roll in front of content that people want to see. They exist in the digital space where coveted demographic groups are spending more time. Itâs an enticing portrait, but one that glosses over an essential question: Is anybody watching? By many estimates, more than half of online video ads are not seen, either because they are buried low on web pages or run in tiny, easily ignored video players on those pages, or run simultaneously with other ads. Vindico, an ad management platform company, deemed 57 percent of two billion video ads surveyed over two months to be âunviewable.â âThe advertiser sees a report on an Excel spreadsheet that says, âYeah, these ads ran,â â says Matt Timothy, Vindicoâs president. âBut more than half of them ran without being seen by a human being.â At first glance, this seems a surprising problem for online video advertising. In theory, a brand could say âI want to reach men in their late 20s who have bought a car in the last year.â Then they could pay for impressions â the industryâs term for an instance when a video ad rolls â that aim at those people. The promise of such efficiency helped coax $2.8 billion from marketers for video ads last year, double what was spent in 2010. That figure is a small part of all digital ad spending, and it is dwarfed by the $74.5 billion spent in 2013 on television ads. But unlike television, online video sales are growing at a double-digit pace. Spending will top $8 billion by 2016, eMarketer projects. But getting what you think youâve paid for in this realm is harder than it appears. To understand why, consider what happened a few months ago at a meeting at Blue Chip Marketing, an ad agency in Northbrook, Ill. It was mid-December, and Blue Chip was in the middle of a campaign â for a client that doesnât want to be named â selling what the agency would describe only as âa mom-related product.â A few weeks earlier, Sarah VanHeirseele, an agency vice president, and her team had written what is called an insertion order. Itâs a document that lays out for a media buyer â the company that actually places the ads â exactly what a campaign should look like. Blue Chip stated in its insertion order that all the ads should be preroll, generally meaning the kind that run before a piece of video content â a sitcom on NBC.com, for instance. Ms. VanHeirseele wanted most of the videos to be on the large side, about 6 inches by 5 inches on a standard desktop computer. All were to be user-initiated, meaning that a viewer had to click on something to start the ad; none were to run on auto-play. Is that what Blue Chip got? Oddly enough, it wasnât sure. âYouâd ask a media company where an ad was running and theyâd say, âWe canât pull that list,â â Ms. VanHeirseele said. âOr they would give you a massive list but you had no way of telling if it was accurate.â So Blue Chip hired a video verification company called BrandAds to track the campaign for the mom-related product and find out where the ads were placed. At that December meeting, BrandAds delivered its report, and Blue Chip finally got a peek behind a curtain. âWe looked at this data and my jaw dropped,â Ms. VanHeirseele remembers. âAnd then I felt a little sick to my stomach.â Many of the ads were running in tiny players, 3 inches by 2 inches, on the sites. Some were auto-playing. But disappointment turned to rage when she read the list of domain names where the ads were running; it included pornographic websites. The team opened one site with an especially lewd name and gaped in horror. âOh my God,â some shouted. Others cursed. Ms. VanHeirseele picked up her phone to call the media buyer in a fury. The Perfect Spot on the Page Video ads have been around for nearly a decade, but big name brands started spending heavily on them in 2011, as cable and network television moved more content online and as sites that are largely about video, like Hulu, proliferated. âWeâre increasing our spend online every year,â said Scott Hudler, a vice president for Dunkinâ Donuts. âTo keep our brand relevant, we have to engage our consumers where they are.â But it is starting to dawn on marketers that the online video ad system has a few booby traps. Letâs leave aside the reality that many consumers feel bombarded by video ads and actively tune them out. There is the issue of outright fraud, courtesy of bots that are programmed by hackers to rack up impressions. In early April, an ad tech company, TubeMogul, reported that it had discovered three new botnets that were generating 30 million fake video views a day, earning as much as $10 million a month. TubeMogul said the culprits were well concealed and likely operating overseas. But just as troubling to advertisers are practices that are perfectly legal. The crux of the problem is that the number of video ads that agencies and brands want to run far exceeds the amount of quality inventory â that is, well placed video players on prestigious sites, like, say, Nationalgeographic.com. When the premium space fills up, media buyers start looking for video players in less coveted online real estate. As video ads started catching on a few years ago, âall you heard was âThereâs not enough, not enough, not enough,â â says Jonah Goodhart, co-founder of Moat, another video verification company. âSo you saw companies go out and embed video players in thousands of websites. And now, anywhere you go on the Internet, a video starts playing.â If youâre a media buyer tasked with acquiring 10 million impressions for a brand campaign, you will probably try to spend as much as you can on great sites with video players that are large and high on the page. But what happens if those sites are full? You aim a little lower. You place the ad on less popular sites, or sites with video players that arenât as well situated on the page. Maybe you allow some of those ads to run auto-play. Another option for media buyers is to enter the vast and complicated resale market, through what are called ad exchanges. Put simply, an ad exchange matches buyers and sellers â companies with ads to place and publishers with video players. Generally, these transactions happen in a matter of seconds, and without human intervention, thousands of times a day. When ads are sold, even the media buyer that was initially given the contract to place the ads may not know where they are running. Ms. VanHeirseele of Blue Chip said the media buyer she called after her expletive-filled meeting gave her some pushback. (She declined to name the company. âWe have to work with these people,â she explained.) âWe reminded our media buyer that we want zero inventory on auto-play. And they said, âYou donât have any inventory on auto-play,â â she said. âI believe they believed what they were telling us, because they had resold some of our ad inventory. Until we were able to supply them with detailed reports, their story didnât change.â Given the nearly $3 billion a year now spent on online video ads, and the 57 percent of them that are deemed unviewable, itâs safe to assume that American brands are now spending more than $1 billion a year on marketing that few if any people see. Of course, when someone buys an ad on television, there is no telling how many people watch it, either. Any advertising is at risk of being ignored. âHalf the money I spend on advertising is wasted,â John Wanamaker, the 19th-century marketing pioneer, famously said. âThe trouble is, I donât know which half.â Which gets to what is different about digital video: If an ad can be described as âunviewableâ â for instance, it is running low on a page, in a tiny player â itâs all but certainly in the half of an ad budget thatâs being wasted. Advertisers are beginning to catch on. At a recent industry conference filled with online ad executives on both the buy and sell sides, and hosted in upstate New York by the website MediaPost, one of the best-attended panels was titled âBuyer Beware: Video Ad Fraud Is Growing.â The problem is that dozens of businesses in an assortment of categories are earning huge sums from the status quo. âExcept for the advertisers, no one has a vested interest in spending less money,â said Jeff Semones, president of M80, a direct-marketing company, who was at the conference. âWhether itâs the publishers, the ad platforms, the agencies that manage these activities. Right now, it behooves almost no one to clean up this mess.â A Dutch Auction for Space The mess starts with the ecosystem of companies in the online video ad world, which is so complex that it seems designed to baffle. A common refrain among veterans in this field goes something like this: âIâve been at it for six years, and I still am learning how it all works.â A flow chart of this business would put advertisers on one side, consumers on the other and in between a series of chutes and ladders with a dozen different players â media-buying desks, demand-side platforms, supply-side platforms, syndicators, data management platforms, encoding and transcoding companies, ad networks, branded content distribution companies, video delivery management companies â the list goes on. To grasp how this thicket of companies makes the system opaque, consider some Oscar Mayer ads that could recently be found on The Daily Caller, a conservative Washington website, with 11 million unique viewers a month. Some of these Oscar Mayer ads were high up on the page. But many were posted so low that they were near the comments section of individual articles, in small players that rolled automatically when pages loaded. The seemingly simple question: How did that ad get there? Alex Treadway, the siteâs chief operating officer, said an answer would not be easy. âThere is so much junk between us and the companies that buy ad space on our pages it will blow your mind,â he explained. âIt would take us weeks of research to figure out which ad network provided that ad.â Mr. Treadway said he knew that the location and space for the ads â low, small and on the right-hand side â were determined by The Daily Caller. And he spoke candidly about the rationale for selling pixel turf that few advertisers would consider desirable. âWeâre trying to gin up as many ad dollars as we can, so we can pay our journalists,â he said. âWe donât want to waste space here. This is a money hunt so that we can pay for original reporting.â Mr. Treadway and his staff sell as many ads as possible in the choicest places â viewable as soon as the page opens, and large â directly to agencies and brands. The goal is to sell ads with the highest possible cost per thousand impressions, or C.P.M., as itâs known in the industry. When there is unoccupied ad space, a computer starts a sort of Dutch auction with a number of ad networks. The Daily Callerâs system canvasses these networks, asking âDo you have any ads for this space at the following C.P.M.?â If the answer is no, the system goes to another network, then another, then another, until a network coughs up an ad and some money. If there are no takers, The Daily Callerâs system lowers the price and the canvassing starts again. Generally, the further down on a web page, and the smaller the ad, the lower the C.P.M. For space low on the page and in small players, the C.P.M. ranges from 50 cents to $1. âOscar Mayer ran a selection of high-, medium- and low-level ads,â Mr. Treadway said. âThis isnât about the publisher making a choice at all. If Oscar Mayerâs ad team said, âWeâll only pay for above the fold,â then the ad down toward the bottom would not have appeared there.â So far, so good. But this presumes that brands, and agencies, get what they ask for when they write up insertion orders. As Blue Chipâs experience shows, that isnât always the case. An Oscar Mayer representative wouldnât say much about the Daily Caller ads, other than that they represented a âvery insignificant portionâ of its total digital campaign. Mr. Treadway was able to name the company that placed the Oscar Mayer ad high up on the Daily Caller page, because it has a contract to serve video in that spot. It is News Distribution Network. NDN, based in Atlanta, lacks broad name recognition, but it competes with Internet titans. A recent comScore report of the top United States online video content properties, ranked by unique video viewers, put NDN at No. 5, right behind Yahoo and AOL. (Google topped the list, followed by Facebook.) Youâre unlikely to ever visit NDNâs site â itâs essentially an ad for the company â but youâve no doubt encountered its video players. NDN aggregates news clips and distributes them to some 4,500 web publishers. The clips are accompanied by preroll video ads, some sold by NDN, some by ad networks. In essence, NDN allows content producers, like The Associated Press and The New York Times, to monetize video, and allows publishers to collect ad dollars by running content. Itâs a growth business, and NDN is reportedly in talks with Yahoo to be acquired for $300 million to $400 million. Itâs also, on occasion, a business with hazards. In November last year, NDN earned some unwanted publicity in a report by Digiday, a web publication, about video ads for Farmers Insurance that were found on a site called DrunkenStepfather.com (motto: âCelebrity gossip, hot girls, comedy, good timesâ). The ads ran beside video footage of a woman set on fire at a gas station. The ads were reportedly provided by NDN, though a company spokesman, Eric Orme, told Digiday that the Farmers ads probably came âthrough three or four different ad networks,â as he put it. He also said that no more NDN content would be served at DrunkenStepfather.com. Did NDN buy those Oscar Mayer ads low down on the Daily Caller pages? The company wouldnât say. Emails and phone messages left with NDN and its top executives were not returned. A trip to NDNâs satellite office in Manhattan, was no more productive. An executive vice president, John Vilade, who was sitting at a desk, rose to shake hands. Midway through the introductions, he grimaced and said, âWe have no comment.â In Search of New Standards Until recently, viewability wasnât a big part of the conversation about online video ads. But thatâs changing. The Interactive Advertising Bureau, an association and sort of nongovernmental referee in this area, has announced that starting at the end of June, a video ad will be considered a viewable impression if 50 percent of the player containing it can be seen for at least two seconds. In other words, if you visit a website and scroll down and the top half of a video player is in your view for two seconds, ka-ching. That counts as an impression, even if you didnât watch the ad. The coming I.A.B. standard, which sets a baseline for negotiations between buyers and sellers, is a marginal improvement over the current standard, which doesnât require the ad to be âviewedâ at all. But it was as far as the group was going to go. âEverybody had their own point of view,â says David Gunzerath, a senior vice president at the Media Rating Council, which oversaw the process on behalf of the I.A.B. âSome buyers wanted 100 percent of the ad and 100 percent of the screen. We had people on the sell side who thought that the current standard worked well.â The current standard is, in fact, quite profitable for many in the field. Just how profitable was demonstrated one recent afternoon by Kevin Lenane, cofounder of Veenome, a video verification company in Arlington, Va. He sat in the companyâs conference room, using a laptop to surf around live web pages of Examiner.com, a national news site based in Denver. He opened an Examiner.com report called âEgyptian Journalist Wants Israel to Pay Reparations for 10 Deadly Plagues.â As soon as the page loaded, he scrolled down and found a video ad running in a tiny player. The ad was for Digestive Advantage, a probiotic supplement promoting its âtwo-week tummy take-back.â It rolled before a video about a German soccer team getting ready for a big game. âThe key stat is this one,â says Mr. Lenane, pointing to the number 95 in a chart on his laptop. âThatâs the percent of pages with video ads running below the fold, on auto-play.â Certain types of auto-play ads â the sort that take over the top part of a page, and run briefly, without audio â are sought after, and publishers can charge extra for them. The Examiner.com ads arenât that kind. Some, in fact, are under other video ads that run at the same time, with the sound on. If Examiner.com charges $10 for every 1,000 impressions, which experts say would be a pretty low number for a news site, it is grossing more than $350,000 a month on these tiny, low-on-the-page, auto-playing video ads. Examiner.com would not discuss the ads or comment on financial figures. The chasm between the value of such ads to brands (negligible) and their value to publishers and ad networks (considerable) is the reason that many say this medium is at an inflection point. More brands and agencies are demanding a full, reliable accounting of where their money is spent, which explains the rise of video verification companies. Kelloggâs, the cereal and snack giant, hired one a year and a half ago, having figured out through some unpleasant experiences in the banner-ad world that money spent on verification was worth it. Kelloggâs found that, at various times, nearly a third of the ads it wanted to run in the United States were running in a foreign country, said Aaron Fetters, director of Kelloggâs Insights and Analytics Solutions Center. âWe sort of made the case to our marketing heads that measurement will more than pay for itself,â Mr. Fetters said. âAnd itâs been like turning on a light in a dark closet. Now the lights are on and we can see what we need to clean up.â A version of this article appears in print on May 4, 2014, on page BU1 of the New York edition with the headline: The Great Unwatched. © 2014 The New York Times Company
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