All about online video ad-serving in Asia

However, Asia’s diverse online video landscape has made standardising the industry difficult, and has done little to allow traditional ad-serving agencies access into online video serving.

1. Just as all ad networks operate, video ad-serving networks link advertisers to the video sites that offer advertising opportunities.

They have three main functions: first, they provide infrastructure to manage sites’ online ad inventory; second, they manage video and banner ads; and, third, they sometimes provide their own services to create video.

These networks evolved as TV audiences began moving to online video sites. Agencies first shifted advertising onto these sites via display ads, then multi-media ads and now video ads. Aside from placing ads on the actual videos, networks can help brands track the performance of campaigns. Marketers can learn how long viewers watch clips, whether they are passed along or embedded, if ads are watched and where viewers are located.

2. Video ad-serving networks recently found direction when the Internet Advertising Bureau’s (IAB) Digital Video Committee developed guidelines for online video ads.

These identify best practice for advertisers to get their campaigns online, using both linear and non-linear video. Nick Fawbert, managing partner of Third Space Consulting and secretary of the Singapore branch of the IAB, says the rules primarily help standardise video and audio.

Video comes in many forms — those familiar include Flash, Quicktime or WMV video — which all handle data differently and are streamed at different speeds, called bit rates. And handling audio can be challenging. “It can all be quite tricky, and it’s up to the IAB to take the complexity out,” Fawbert says. “The goal is to create guidelines that help clients implement online solutions and launch campaigns.”

3. Few video ad-serving networks have appeared where online video is not mainstream, but China looks to be the first to defy this trend.

One of these networks is AdChina, which recently engaged in deals with CCTV’s CNTV.cn and HunanTV.com to manage their ad inventory. According to AdChina’s director of product and strategy Philip Kuai, networks in China are slowly finding their feet as they face different problems to their numerous counterparts in the US. “A major player in America is Hulu, which hosts premium TV and movie content and can attract high-quality audiences,” says Huai. This sort of inventory can attract even higher ad revenue than television. In China, we’re looking at a Hulu-type model which is, from our perspective, more promising. Right now across the market it’s a bit of both. There’s user-generated content on sites like Youku and Tudou, but both of these are spending millions and millions on copyright content because the Government is taking this seriously.”

4. These changes will drive up prices for brands looking to advertise on online video in China.

Kenny Bloom, CEO of VisiTek Holdings and leader of the China Online Video Standardisation Executive Committee (COVSEC), says ad-serving networks may have to bid for premium spots on popular sites, and these slots will get more expensive because their hosts will spend more on content. That’s not factoring in costs associated with sites’ maintenance, such as bandwidth. This will prompt networks to learn how to budget for their campaigns. “As sites begin airing more expensive, legalised content, large amounts of money will have to be spent to acquire enough content to satisfy their enormous user-bases, as there is no other loyalty proposition,” Bloom says. “Recent reports claim over US$100 million will be spent on content, just between Youku, Tudou and PPlive.”

5. Wider standards for Asia won’t come anytime soon, and this will create a niche for market-specific networks.

Fawbert says the main reason for this is that slow internet connections prevent many web users from receiving video in places like Southeast Asia. Kuai points out that Japan’s video sites hold their own market niche and can charge subscriptions.

What this means for...

MARKETERS
> With the proliferation of online video sites, more ad-serving networks will spring up to offer spots across well-trafficked websites. With this, ads will find their way more easily into videos with relevant audiences.
> In markets like China, which is cracking down on illegal content, the purchase of more expensive legalised video will make advertising more expensive. Analysts predict this will lead to bidding wars and squeeze out companies that don’t have the budget to compete.
> Standards put in place by regional digital councils, such as the IAB, will make it easier for marketers to create their videos for sites to support.

AD-SERVING NETWORKS
> As online video gets more sophisticated, be prepared for increased competition. More networks means less available inventory, at a more expensive price.
> Understanding market-specific conditions will help clients. If the Chinese Government cracked down on illegal video, prepare customers to pay more for their ads. In emerging markets, while broadband penetration may look promising, understand who is still using dial-up connections and how that will affect ads.

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This article was originally published in the 11 February 2010 issue of Media.