Online TV ads to be traded in auction-style exchanges
ADVERTISERS will be able to bid for television-style ads online across multiple websites by the end of the year, though it could be up to three years before the market represents a large chunk of the $2.2 billion online ad market.
Downstream Marketing and the media-buying consortium Group M say the technology for trading ads placed before, during or after online videos will be in place by December.
Already a small but growing volume of online display ads are bought and sold through exchanges or demand side-platforms run by media-buying groups, or by larger networks such as Google.Advertisement: Story continues below
Television commercials viewed online is the next sector to become biddable – that is, when ads can be sold in automated, split-second, auction-style trades.
Media executives might be fearful, the media investor Daniel Petre says, but they will have to get used to it.
”As soon as the technology is there advertising will be wrapped in it,” Downstream’s chief executive, Steve Knowles, says.
”More and more people are demanding content online so whether it’s Apple TV, Google, Netflix, the television networks or Facebook that provides it doesn’t really matter. There will be advertising and it will be biddable.”
Rather than sell such ads on a traditional cost per thousand (CPM) model, agencies such as Downstream say they can draw on data such as the websites people visit, the forms they fill in and possibly even their purchasing history online to target specific audience niches with clients’ TVCs. Media agencies can specify a target audience and the maximum price they are prepared to pay for those eyeballs.
“It’s bringing rational pricing to [online] TV,” said Downstream’s chief operating officer, Justin Hind.
Although watching TV shows or films online makes up less than 5 per cent of total viewing, it is predicted to grow rapidly as more TVs are connected to a high-speed internet.
Online video advertising is currently a $33 million market – a relative minnow – but which Frost & Sullivan predict will be worth $180 million by 2015.
Danny Bass, the chief digital officer for the media buying consortium Group M, will sell video ads this way through its demand side platform by the year’s end. But he could not predict what volumes might be traded. “The more inventory that becomes available the more likely it is fall to an exchange.”
Downstream backer Mr Petre, the chairman of Netus, an investment company backed by News Ltd, said an auction-style trading platform did not necessarily mean rates would fall.
“There is a fear that everything that goes through an exchange will go to 50¢ a CPM but if you are delivering valuable content then that won’t be the case,” said Mr Petre, who also sits on the board of Nine Entertainment Co, which has a half-share in Ninemsn.
“People will resist it because they are fearful but in the end advertisers will love it because at last they will pay for advertising that performs well. At last the most appropriate ad is shown to the most appropriate audience.”