Video Snacks as the Main Course - Part I - Jaffer Ali - MediaBizBlogger

We are a nation of snackers in every way, especially when it comes to video. In fact, video snacking now consumes more of our time and bandwidth than any other online activity. So unless you've been living in a grass hut the past couple of years, you know all about this genuine cultural phenomenon. EVERYBODY is snacking on their favorite video treats.

But there's a flaw in the recipe. The economic models that experts have touted and applied to cash in on this behavior just don't work. Advertisers have been tricked… lied to… and bamboozled. The entire video-snacking ecosystem has already gone stale. It's time to put some new ingredients into the mix. It's time to elevate video snacking to its rightful place as the Main Course.

The basic ingredients in the online video menu include content or “video snacks”, distribution (or snack network”), audience (“video snacker”) and of course the advertiser who picks up the tab for the entire meal. Unfortunately, too many cooks have spoiled the broth, each with his own narrow view on how to handle a hungry video snacker.

Content owners think and act from their perspective; publishers from their perspective; advertisers from their perspective; agencies from their perspective; and technology providers from theirs. Each step in the online video food chain pays lip service to the audience, but in reality few pay attention to – let alone know how to profit by – the video snacker’s growing appetite. Video snackers are treated like the kid in the old Life cereal commercial… “Mikey…he’ll eat anything.”

In the same manner that the original “food pyramid” has become literally inverted as we learn more about nutrition, perhaps it makes sense to address what passes for conventional wisdom in the online video ecosystem with a more discerning palate.

Myth #1 Website demographics play an important role in video snacking

The main culprits in this idiotic conspiracy are the agencies. They’re so used to buying site demographics they can’t see the forest for the trees. They’re too busy chasing string to THINK. They don’t understand that the advertiser is better off associating with the video snack than the website. A Liberace video snack has a decidedly different audience than a Will Farrell video snack, yet both can be found on the same website.

Think of the Web as a giant video snack vending machine. The advertiser should be more concerned with satisfying the snacker than where the machine is located. Put another way, the candy company doesn’t care WHERE you buy a Snickers bar, just as long as you BUY it. Different audiences consume different video snacks. Yet agencies insist on buying video the way they buy banners. AND THAT DOES NOT WORK.

It is mystifying that agencies still don’t realize that “celebrity halos" from video snacks are far more effective for advertisers than the rub-off affect any website can deliver. Tiger Woods playing in a golf tournament is much more important to the advertiser than which channel is carrying the tournament.

Myth #2 Pre-Roll Is An Effective Way To Break Through The Clutter

We have purchased and used hundreds of millions of pre-roll impressions for our own company and sold hundreds of millions of pre-rolls to others. The one thing that has been consistent with buying and selling pre-roll has been futility. IT DOES NOT WORK.

Ask yourself: Why in the world would anyone welcome a commercial online that they are willing to pay extra to avoid offline? They don’t, and the stats bare this out. With a :30 pre-roll, twenty-two percent abandon immediately. Imagine if you owned a television station or network, and each time a commercial aired, 22% of your audience abandoned you. This is the main motivation behind the push for fifteen second pre-roll commercials.

But fifteen second commercials offer a double dose of what doesn't work. With only :15 to break through the clutter, it violates all logic and understanding to suggest you can achieve this in a shorter time frame. Click through rates of less than 1% for fifteen second pre-roll spots clearly bear this out. Once again, THIS DOES NOT WORK!

Myth #3 Overlays On Video Snacks Themselves Can Work

In search of an advertising format that will actually work, technology folks have introduced the overlay. This too annoys the snacker. We tested this advertising form for three months and discovered that video views per visit declined 17% when overlays were used.

And because the predominant payment was per-click, the miserable click through rates garnered revenue per thousand that was less than the cost of streaming the video snack. In other words, OVERLAYS not only repel viewers, they lose money for those desperate publishers out there.

Myth #4 Video Portals Can Survive

Without an economic model, video portals themselves cannot survive. Presently pre-roll, banners, and overlays cannot support their economic infrastructure. Licensing costs remain unrealistic and oppressive (see Myth #6). User Generated Content (UGC) is the default video snack only because it's royalty free, and with few exceptions will forever remain a risk unworthy of attracting sufficient ad dollars regardless of format.

There is a German chess term called Zugswang. Colloquially it means no good move. Video portals from YouTube to HULU are in Zugswang but have not yet realized it. They may be great aggregators or curators of content, but once prevailing mythologies are exposed, they run into one economic reality after another.

Savvy advertisers like Just For Men, Coke and Lexus are already disintermediating video portals by playing video snacks on their sites. “Disintermediation” is quite a mouthful to describe the simple idea of “getting rid of the middle man”; a philosophy that has been a staple of business since commerce first began.

Video portals have done an outstanding job of aggregating content and audience, but because they have not created what advertising guru Bill Bernbach referred to as an “environment to buy”, video portals do not have an economic model.

That is why they will wither away.

To be continued...

About Jaffer Ali Jaffer Ali is CEO of the Vidsense Video Snack Network. With more than 100,000 advertiser-friendly video clips licensed from major film and TV studios, the Vidsense Video Snack Network of tens of thousands of safe-for-work websites delivers millions of qualified visitors directly to advertiser websites on a pure Pay-Per-View (PPV) basis.

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