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Youtube’s entry into online video overlay will be good for its competitors August 23, 2007

Posted by jeremyliew in ad networks, advertising, business models, Consumer internet, contextual targeting, video, web 2.0.

Google’s announcement yesterday of overlay ads in Youtube has prompted a lot of discussion about the format of the ads, and who invented overlay ads first.

As Henry Blodget and others have noted, some of the most interesting commentary on the overlay ad unit comes from Brightcove CEO Jeremy Allaire:

To our disappointment, there has been extremely limited uptake by the advertising community around [overlays]. There are a lot of factors behind this limited uptake, including:

– the advertising community buying video have been very focused on leveraging existing creative and buying patterns in the online video space

– most content publishers and media owners have been focused on getting the ‘basics’ up and running, and also responding to the RFPs from marketers and advertisers, which are almost 100% focused on basic short-form video commercials

– for premium brands and content, the basic pre-roll and companion banners are yielding extremely attractive CPMs and there is little evidence that :15 ads have any negative impact on end-user viewership behavior — in fact, our own metrics show that sites that run without any ads, and then introduce :15 pre-rolls and banners achieve identical usage and performance (e.g. no drop-off in users because of ads) on their content.

Nonetheless, we remain very bullish about ‘composite’ video advertising formats that combine overlays and unique and non-intrusive calls to action with deeper interactive marketing experiences. We’ve been pushing this for years and only now are starting to see the publishers and media owners that we work with begin to take an interest in these formats. I believe this is because we’re now entering a phase where content companies are looking at ways to maximize yield and revenue within their content, and they are introducing more mid and long-form content which require, by economic necessity, a different suite of formats to deliver a good user experience.

Jeremy’s experience is not surprising. As I have said in the past, new forms of advertising are hard. They take longer to catch on then you expect. Until standards emerge, it can be difficult to cross over from “early adopter” advertisers who are willing to experiment, into the mass market of advertisers. If the media buyer at the agency doesn’t see your sort of advertising as a line item, she can’t allocate you part of the ad spend.

That being said, Youtube’s entry into the market is a game changer. With Youtube representing 50% more market share than ALL other online video sites combined (according to Hitwise), and with Google’s existing relationships with advertisers, they have both the volume and the connections to be able to create a standard. And that is great news for VideoEgg, Brightcove, AdBrite, and all the other online video ad networks. Online Google/Youtube can create the standard that the industry needs to be able to really grow into scale.


1. Ty Graham - August 23, 2007

Standard? Please elaborate more on exactly HOW any competitor in this advertising space has ever created a standard for another? It’s seems a bit misguided to say that Youtube would do anything different that Videoegg hasn’t done. Videoegg has had more practice at the “overlay” idea, but then again, all activity still happens within the proprietary youtube widget. It’s far likely from defining any standard, just more of the same that is out there. Youtube didn’t define a standard in how video players operate. Sometimes I can’t even find the fullscreen button on their players! So to even say that Youtube would define any standard just doesn’t make sense when NO ONE has even touched the network-centric business model. It’s going to a really funny day when everyone got blip’d. Maybe some of you know-it-alls will be a bit more humble to my fellow underdogs.

2. jeremyliew - August 23, 2007

Hi Ty,

Perhaps I should clarify. I don’t mean a technological standard (eg how video players operate), I mean an ad unit standard (like “300×250 billboard” or “30 second spot”). I’ve seen these ad unit standards emerge as publishers and advertisers come together to make the proces of buying and selling advertising easier. For banner ads, the IAB took a leading role in brokering these standards and cut down the number of formats from over 100 to about 10 (now only 3 are common) and this helped greatly with the logisitics of both the creation and sale of banner ads. The key to that process was big publishers with volume as well as big advertisers coming together to converge a standard. With all due respect to other online video publishers, Youtube has a lot more volume and hence clout when talking to advertisers about what that standard might be in the future.

3. Ty Graham - August 23, 2007

So did Myspace back in the day, they must of sneezed on Youtube. Seems like Youtube got too close to Myspace corporate cold and as this “overlay” proliferates Youtube will no doubt feel ‘sick’ when jealous “me too” UGC producers want in on the action but aren’t big enough for Youtube to notice so they make a fuss about the system. Or worst yet, the wrong overlay will appear on the wrong video and someone is going to get sued. If it could happen in the search market for keywords associated with certain results, if it could happen with ebay, yahoo and facebook respectivily for nazi and other trash popping up next to paid sponsors it’s just inevitable for this overlay idea to be ‘pre-screened’ ala videoegg style (the manual review of the ad/suggested video by the network) and then you just got same o same o. Again, comparing this overlay activity to defining a standard is a huge stretch considering the limited number of advertisers youtube will actually engage with even in the best scenarios including the very obvious difference that a UGC video is owned a some random person who does even have a direct relationship with the advertiser let alone a giant web site with ad units x by x size all over the map. It’s like comparing page views of a site to widget interaction.
In the end, the network-centric ad model shrinks just like TV. Let us all remember that we go to the internet to choose what we want to watch and what brands we want to be associated with.

Again, Myspace must of sneezed on Youtube. Stand back before you catch the corporate cold.

4. Ty Graham - August 23, 2007


5. Will contextual advertising work for online video? « Lightspeed Venture Partners Blog - August 27, 2007

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6. VentureBeat » Predictions for the consumer internet in 2008 - December 3, 2007

[…] content targeting, demographic targeting or social ads) (ii) online video (contextual targeting, overlays or pre-roll) and (iii) in game advertising (rich media or product placements), but I am confident […]

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