Doug McFarland on Online Video Advertising with ScanScout
Doug McFarland, CEO of ScanScout, compares the excitement around online video to the early days of television. But McFarland notes that in this new world, it's the users who are in control.
What online video has done right now is to take a sort of multi-point/multi-point model and extend that out over a period of time. And right now we re still sort of grappling with how the best way to monetize that with advertising is. The predominant models: pre-roll, mid-roll, and in-roll are being under some challenge right now. And at the same time, you don't have the measurement statistics that advertisers are looking for ROI, so I think it's really about rethinking the model in the same way when you had a migration from radio to television, you had to stop thinking about people reading script and having the brand manager hold up a product and talk about it. You had to find new ways of creating. And I think one of them right now is, along with the ROI, is you really have to begin to start proving the efficacy of online advertising within video–the same way that banner advertising and click advertising have shown their own efficacy over the last few years.
I think by this time this year there will be a huge leap in the industry and changes. A lot of additional companies are playing pivotal roles in terms of measurement — measurement data that's out there and different alternatives that advertisers can look at.
The original television message was a sponsorship that then went to 60 seconds and then to the 30 and now the split 30, which are the predominant forms. So we really need to think about what the audience engagement is in online. Too often we talk about advertisers and publishers, and in this multi-point to multi-point medium it really is the consumer that's in control. That's the area we have to focus on — what they want to hear and what they want to see.
If your only form of media…say 10 years ago was a television set in your home and you wanted to know the weather at 11 p.m., you waited till 11:25 to get the local weather. So that's a very single point broadcast out to many. And now when I want to know the weather, within moments, within fractions of a minute I can get the entire local weather, I can get the weather to wherever I'm traveling. It s sort of multi-point to multi-point, many different sides, many different content providers to many different people, allowing them to customize it.
If you look at the early forms of online advertising, advertisers did a good deal of testing, so they would allocate budgets they test, and then they would spend months. Right now, it's not so much test budgets, though sometimes major advertisers and advertising agencies are looking at it that way. Right now they re really making a commitment to those dollars, as they've seen the efficacy of television began to diminish fragmentation of audience. If you're dealing with fragmentation, you might as well deal with it in a more compelling, meaningful way online than in broadcast where you have much less control.
When you-re seeing click-through rates from anywhere from 3-5% for advertising within video, that's a very compelling story. There may be some drop in those click through rates, but it's still very compelling and very engaging for an advertiser.
The most exciting thing for me right now, from the very beginning, I got into online in 1991, before Internet was used, and it's really being a part of a growing and ever-expanding medium. I remember talking to a lot of guys who were in the early stage of television and listening to their stories. And I tell people, as an industry, we're still just sort of making it up, and that's the most exciting right now. And video is, well, not the last frontier, but it's one of the last major areas for online in terms of its development — both in terms of content and in terms of advertising. I truly believe that this is the very first medium where the consumer is in absolute control, and that's what we all have to learn to understand as we develop content and advertising to associate with that content.