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InContext / An inside look at the business of digital content

Facebook did the digital publishing industry a favor

October 10, 2016 | By Charlie Tillinghast, President and CEO—Mixpo

For more than a decade, desktop pre-roll video has been the one safe ad format for publishers facing a market full of ad products with declining CPMs. TV-based digital properties have prospered while those lacking video content have struggled to participate in this lucrative market. With the shift to mobile, however, the game is changing for everyone – but in a positive way for once.

While Facebook is seldom viewed as a solution to publishers’ revenue woes, it has done the digital publishing industry a big favor with its video ad products. Rather than adopt the pre-roll ad model, Facebook adopted an inline video product optimized for mobile and convinced advertisers it is as valuable as pre-roll.

For years, in-banner video on desktop was considered inferior to pre-roll largely because the video ads were disassociated from video content. Using its market leadership, Facebook was able to decouple video ads from video content while overcoming the perception that inline video ads were worth less than pre-roll. If a user watches a video ad, does it matter what they watch or read next? The enormous success of Facebook video has proven it doesn’t.

For digital publishers, with or without video content, this shift in ad buyer perception has created a massive opportunity to participate in video ad market. A number of ad tech companies and publishers themselves have responded with new video ad formats that run independent of video content and are optimized for mobile – outstream.

Outstream video advertising is defined by the IAB as anything that takes place outside of in-stream video content, which includes native video, in-feed video, in-article/read video, in-banner video, and interstitial video. Outstream solves for pre-roll’s shortcomings on mobile by providing a better user experience-a thumb-friendly, mobile-first ad format-while opening up premium video inventory.

Rather than running in fixed ad positions on story pages, some outstream ads appear dynamically within the page body, causing the content to split above and below the ad.  While the page separation may be a little annoying for some users, frequency controls can regulate the how many ads appear on a page or are served to the same user. When no ad is served, there is no ad position on the page, providing a superior user experience and eliminating low quality, low priced remnant ads.

BuyingOutstreamThe outstream market is established enough to provide publishers with the confidence to adopt the format, but still new enough to command a premium. Last month, Mixpo surveyed 68 advertisers and agencies and found that 27% of advertisers and agencies currently buy outstream ads, with another 18% planning on buying next year, with premium inventory being cited as the top benefit the format provides. While adoption isn’t yet widespread, 71% of advertisers and agencies see the adoption of outstream video ads increasing in the next year. Digital ad spend is projected to surpass TV this year, but with the continued hunger for video and a new crop of video ad formats popping up, we can expect to see the shift from TV ad spend to digital faster than expected, into formats outside of pre-roll.

Mobile users on tight data budgets have driven the rise of ad blockers to avoid the literal cost of watching a pre-roll video ad. Recent stats from eMarketer show that 30% of ad blocker use is specifically to block pre-roll video ads. Outstream helps publishers improve the video ad experience by enabling users to simply scroll past the ad, with the video stopping when the ad passes from view. Importantly, the outstream ad is not forced in front of the content, but stats can be collected to show advertisers how many users watched the entire ad.

While pre-roll’s position is safe, outstream will provide the inventory to absorb the unmet demand for video advertising. The two will soon rival for the most valued video ad format on the web.

Charlie (@ctillinghast) is a strategic and resonant leader with over 30 years of industry and management experience at start-ups, large corporations, and joint ventures.  Prior to becoming Mixpo’s President and CEO, Charlie served on the Mixpo Board of Directors for two years. Charlie held management positions at MSNBC Interactive News (msnbc.com), the last eight as President and CEO of the former joint venture between Microsoft and NBC News.

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