Online video lacks 'standardised currency and transparency'

Arvind Hickman
By Arvind Hickman | 7 April 2016
Sizmek CEO Neil Nguyen.

The shift towards online video advertising is being curtailed by a lack of transparency and a standardised currency, the leader of an ad management platform warns.

Neil Nguyen, the CEO of Sizmek, says that on the whole more clients are investing in online video advertising than before, a market that YouTube dominates with 75% of online video content consumption. 

And while he expects this trend to continue, some clients are shying away from the format and spending more on traditional formats such as TV because it is perceived as more trustworthy and cost-effective.

“There is a lack of currency and transparency in digital video for marketers who have trusted TV for 70 years. Online video CPMs have gone up quite a bit,” Nguyen told AdNews.

“They are north of paid TV cable platform CPMs, which is pretty amazing. Clients are working out where they can get their best bang for their buck, or ROI. However, these problems will be solved. I think the shift from traditional media to online platforms will continue to flow.”

Nguyen's observations are largely based on the US market, where he is headquartered.

In Australia, there hasn't been any noticeable shift away from digital. However, Omnicom chief executive Leigh Terry says some clients are scrutinising whether they have moved too much into digital and pulled too much out of traditional media.

Pre-roll inventory within catch-up TV, he adds, is relatively limited and highly demanded, driving up the price of CPMs.

“I think you have almost a blended scenario where you are buying some catch-up TV, some quality YouTube and somewhere between the two you end up with a blended CPM that can be cost efficient,” Terry says.

MediaCom CEO Scott Seamer says clients are investing more in digital as part of their media mix, underpinned by the agency's digital and analytics business.

But digital's reputation can easily be tarnished, particularly if programmatic buying isn't managed well.

“With the right processes in place, the right technology, checks and balances, those sorts of things are minimised,” Seamer says.

Nguyen believes digital needs to find ways of living up to the standards it set itself, particularly around currency and trust.

“In a certain regard, digital has done it to itself,” he says. “It created and professed that it had the immediacy and transparency of digital capabilities, and issues as such as viewability and verification were borne out of that. Television doesn’t have that.”

The Sizmek chief believes that “big heavy war” is brewing for digital advertising dollars, with the walled gardens of Facebook and Google versus everyone else, including a growing number of new players such as telcos and internet service providers.

“It will be interesting to see if the telecoms, traditional media, and data companies will have enough capital infrastructure to compete,” he says.

“I look at the advertising industry and see it as a half-trillion dollars market. That’s the real war. I don’t see it as a battle for pockets of the digital industry. And the big players want it all.”

Yesterday, Sizmek unveiled its new ad management platform.

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