Online video takes a seat at the adult table

Just a few weeks ago, the advertising industry was knee deep in the annual TV Upfronts. And as usual, all eyes will be watching to see how ad spend for the big networks and TV broadcasters ultimately nets out. However, there is a notable trend happening and no, we’re not talking about the tireless debate of how many dollars online video will finally steal from TV this year. Rather, online video is becoming an important strategy for TV buyers, more a compliment to their marketing plan and less of an “add-on” line item on their TV RFPs.

Here’s why.

In our recent State of the Video Industry report, brands and agencies were asked to identify how much of their online video spend was going to be sourced during the TV Upfronts. On average, only 20% or less expected to buy their video advertising this year at an upfront, down significantly from 2011 – a whopping 24% down for brands. In fact, for the majority of both brands and agencies surveyed this year (70%), traditional TV Upfronts will make up 10% or less of their total video buy. But online video advertising continues to experience double-digit growth, which tells us that it’s finally taking its own seat at the media buying table, alongside TV.

Need further evidence? How about the growing support for the recently held Digital Content NewFronts? After seeing a 29% in ad spend last year, founding companies AOL, Google/YouTube, Hulu, Microsoft Advertising, Digitas, and Yahoo are back and attracting even more sizable audiences. Yes, TV will continue to command a large portion of media budgets – it’s not going anywhere . However new trends are showing us that online video is becoming an important offering in itself, as well as a strategic partner to TV. Upfronts? Newfronts? They’re all good.

Is it still too early for an online video “app” model?

The answer is no. In a recent AdExchanger article, John Ebbert hits the nail on the head when he says that the App model will “allow any buyer or seller to easily use” technologies and services from third-parties, without the “need for the buyer or seller to contract with each”. For years users (particularly agencies and trading desks) have had to cobble these technologies together for each campaign, requiring many hours of manual work: contract negotiation, configuration, testing and troubleshooting, and data integration. By automating many of these expensive steps, the platform is allowing agency teams to go back to what they do best: serving the client with media strategies and plans. Another way of looking at this is that this type of “API-level” integration may allow the digital ad industry to finally become efficient while remaining fragmented – much like the mobile space has done – and preempt the need for the industry-wide consolidation long predicted by the Luma Partners. Long live the LUMAscape!

Teg Grenager, Co-founder and VP of Product for Adap.tv

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