Online Video Advertising is a Fool’s Errand

Many years ago, the tech community and its investors were pushing broadband connectivity with a promise that more bandwidth would lead to a more video-centric web. As broadband grew, so did hopes for business models steeped in video, which tickled the ears of the established video players, especially television. The idea was that old media video companies (a.k.a. television) knew how to monetize video, and therefore, they would simply let the market come to them. Media companies built on the model of ads interrupting viewing absolutely refused to entertain what was really taking place with consumers, and the resulting chasing of the wind has left the mass marketing gurus making often ludicrous claims in order to justify their own existence.

Despite growing numbers of viewers and viewing, the promise of online video has yet to be realized, because the revenue simply isn’t there. This perplexing reality isn’t discussed by those who create the content that is streamed either in short bursts or in longer-play programming. It’s the fruity turd in the online media punchbowl from which we’re all trying to steer clear, and yet, there it is in all its foul glory. Old school video advertising on digital platforms simply doesn’t work, and collapse awaits those who insist that it does.

(Bonus quote. Clay Shirky: “Institutions will always try to preserve the problem for which they are the solution.”)

Media company web ‘pages’ are so cluttered with intrusive advertising that it can often block scrolling and make it difficult to connect with the actual content of the page. There’s pop-ups (what an old fossil), pop-unders, interstitials, moving images, everything on the page competing for attention. It’s ridiculous. Some video ads play automatically, often hidden at the bottom of a page, so that users can only turn the sound off. Even lesser offenders still block access to content through pre-rolls, causing many people to simply exit out completely even though the media company claims that the ad has still been “viewed.” Links to media company video content are always a false promise, for they don’t lead to content; they lead to advertising. Companies who measure human interaction through data based on what their servers are telling them are distorting the truth by using it to paint an absurd picture of how well it’s all working for them and their clients. The claim that this data is unbiased is ridiculous, yet media companies sell it to bolster the idea that they are still relevant in a world that has utterly passed them by. Nobody watches online ads all the way through. Nobody. And even if the ad did play fully, the user’s attention was likely elsewhere. Yet I’ve seen data suggesting that two-thirds of all video ads are viewed completely. What utter nonsense! Now we’re hearing people pressing for longer than 90-second videos, because that qualifies them for – are you ready? – “mid-roll” advertising. It’s unbelievable.

I trust no advertising facts from agencies or media companies anymore, because they are designed to deceive. Besides, the more damaging disruption is coming from the reality that the people formerly known as the advertisers – those people who used to need to be adjacent or interrupting “content” – are now video purveyors themselves. They’ve become their own distribution points, and this is growing rapidly.

So let’s put this into perspective. Media companies provide artificial data to advertisers to convince them to spend money on their platforms, so that the advertisers can find and recruit customers. Meanwhile, those advertisers are taking a lot of the money that used to go to media companies and making their own content to distribute digitally, thereby competing for the very eyeballs that the media companies pretend to have. Using mass media metrics like “reach” and “frequency” doesn’t really work online anyway, because those are needed in tandem in order to work. Media companies online may have reach but they don’t qualify for frequency, because the reach numbers are cumed over a period of time – say a month – and there is no frequency attached to that reach. A large percentage of online reach numbers only visited once during the month, which doesn’t make them part of any sellable “audience.”

Subscriptions

I’m a vocal supporter of YouTubeRed. To someone who values his time, this is a bargain for me on many levels. I spend a lot of time on YouTube, often simply to just listen to music. For $10-a-month, I get no ads and music from thousands of playlists, including my own. I also watch a lot of bluegrass performers and even more concert videos from my entire musical lifetime. I’m also a big comedy nut, a fan of Irish dance and Irish music, a student of documentaries on just about anything, a subscriber to my brother’s banjo channel, which he updates often, and a slew of other seemingly obscure channels. I watch what I want, when I want it, with no advertising, and it costs me only a ten dollar bill each month.

I subscribed to CBS All-Access and pay another $10-a-month for ad-free viewing of Star Trek Discovery and, if I choose, the rest of the CBS line-up. I can tell you that I will cancel it sooner or later, because while I’m sure it seems cheap to CBS, there is no comparison for me with all that’s available on YouTube. It’s just too much money for only a single network, and this is the glitch that executives at the networks – and elsewhere – just can’t or don’t wish to see.

CBS is a television network. YouTube was created as a repository for online video. They are very different animals with entirely different value propositions. In attempting to use television network values to secure an online audience, CBS is trapped in a non sequitur. Viewing online doesn’t have the same value as viewing over-the-air or even via cable, especially if you own a DVR. Mass marketing is dying, but there’s still too much money to be made to experiment with new revenue models, although how long this will be viable is questionable. Companies like CBS-owner Viacom are stuck trying to control a medium they didn’t create and do so with methods that are by now archaic. Today, with a Republican FCC – one that is vastly more interested in the lobbying money from the cable and telecom industries than the rights of the people to their airwaves – rules are being reversed and set aside that will lead to business interests controlling the American internet (how oxymoronic of them). This will essentially turn the web into cable with preference going to those with the deepest pockets, and with All-Access, CBS has set the value it believes its programming will garner in such a marketplace. The problem networks face when trying to adapt to the changing market is their previous revenue levels from that same kind of programming. Watch the credits of any TV show, and you’ll see the real problem. It’s a cast of thousands. There’s no incentive to reduce cost when profits are guaranteed with audience size, but YouTube doesn’t have this problem. A video view online is a video view online; it doesn’t matter how much the production of that video cost, and so while it makes great sense for CBS to charge $10-a-month, it makes little sense to the public. Star Trek Discovery – at $8-8.5 million per episode – is one of the most expensive series in broadcast history, so the network’s expectations are understandable. By charging $10-a-month for ad-free access to its library, CBS is applying what it believes to be real market value to its All-Access app. While that value may be real, it doesn’t matter when it comes to an online experience. If the networks were smart, they’d create a joint app, for that would greatly increase the likelihood of subscribers. I’m not holding my breath.

Net Neutrality

Of course, all this changes if Net Neutrality rules are overturned. The web will become a vast cable sy

stem that’ll be dominated by existing players, which is exactly what the current expensive programmers want. Prices and profits will skyrocket, the thinking goes, because there’ll be no one representing the needs of the people who own the airwaves involved. Quartz.com recently published an article revealing what’s happened in Portugal, where there is no Net Neutrality and the net is being split into packages.

Lisbon-based telecommunications firm MEO has been rolling out mobile packages (link in Portuguese) that provide users with data plans limited to specific apps. Customers will be charged more for using data for apps outside the package relative to those in the preferred packages. It was not clear if companies paid to be included in the packages.

“[That’s] a huge advantage for entrenched companies, but it totally ices out startups trying to get in front of people which stifles innovation,” wrote Silicon Valley congressional representative Ro Khanna on Twitter. “This is what’s at stake and that’s why we have to save net neutrality.”

The companies pressing for overturning Net Neutrality say they need the revenue to build out the net to better serve the poor. This is the same bullshit provided by the drug companies who say they need all that money in order to research and discover new drugs. Sorry, but only a fool would believe the hyperbole from corporations with a fiduciary responsibility to shareholders and, therefore, their executives’ own excessive compensation. The rich believe the government should help them get richer, and that’s clearly what’s going on here. Republican FCC Chairman Ajit Pai says he’s concerned that existing companies are “disincentivized” to provide service “in low-income, urban and rural areas.” Yeah, right.

Net Neutrality is a vastly more important domestic issue than most people realize, for it will impact how the network serves not only us but our future. This means that our children, grand children, and beyond will deal with the consequences downstream. A vote is scheduled for next month, and it’s not too late to get involved.

Facebook Video

Facebook wants to be YouTube, and because it has a captive audience within its gates, executives believe they can do what they wish in terms of downstream revenues. Their goal is to provide users with a one-click video experience, because that’s the preference of people for whom time is a tangible currency. The company will continue to do whatever it can to assure that YouTube videos don’t play within its walls, or if they do play, there will be some distraction that makes them less desirable than (they hope) the same video playing on Facebook. And don’t worry, the pre-rolls and mid-rolls are coming.

Facebook has an audience of at least 2 billion people, making it incredibly appealing for publishers and brands. Facebook lets users easily share third-party content with their friends while avoiding the extra steps of posting links to an outside service like YouTube. It is within this environment that Facebook presents itself as a one-click solution to the problem of online video from multiple platforms. It will continue to press this difference.

But the problem is that nasty user data. According to an Adweek report, Facebook’s 3rd quarter data reveals that “70 percent of video ad breaks of up to 15 seconds in length were viewed to completion on Facebook and Facebook Audience Network, mostly with the sound on.” Nice, huh? Unfortunately, the people posting those videos – the people formerly known as the advertisers – have different numbers. According to their data:

  • 85% of Facebook Users Watch Videos With the Sound Off
  • 80% of users are annoyed when videos auto-play sound,
  • Average length of viewing a Facebook video is 8 seconds

Meanwhile, YouTube reports that 94% of its videos play with the sound on, which is to be expected, because, after all, people go to YouTube to watch and listen to videos. That’s what the site was built to do. Duh. Facebook was not.

In conclusion

The point of all of this is that online video revenue schemes based on old media marketing metrics are destroying the players involved. This is exacerbated by companies with skin in the game stretching the truth in the production of data that shows everything is just tickety boo.

It’s not, folks, and it hasn’t been for a long time.