Changes are in order for in-stream video to reach its revenue potential

In-stream video is a massive — but still not fully developed — source of income for online publishers. According to one nationally recognized online research firm, streaming video revenue in the U.S. will double over the next three years to more than $7 billion annually. Chances are it would grow even faster, were it not for the reservations of many advertisers and ad agencies.

Today, the majority of online video ad spending is concentrated on a small number of “safe” websites. ABC, NBC, CBS and Hulu, with a small number of other sites sprinkled in, are where most major advertisers spend their online video ad dollars.

Why isn’t video spending spread more equitably across the broader Web marketplace? BrightRoll, in its 2011 survey of ad agency media buyers, found that 22.3 percent of respondents felt that “limited reach” was the top factor restricting the growth of online video. Another 15.2 percent cited “lack of targeting capabilities,” while 9.8 percent pointed to “poor inventory quality.”

Clearly, leading advertisers and their representatives are seeking the same kind of accountability and transparency in online video buys that they enjoy in display advertising. Yet no commonly held, trusted framework exists to provide assurance for video placement.

The reason is that online video buys — a purchase that demands consistent, responsible and identifiable attributes — are anything but standardized. Adjacent site content, physical placement and viewer targeting are just some of the variables that make in-stream video the untamed Wild West of online advertising.

On every website with video playback capability, programming surrounds the video frame that may or may not complement the advertiser’s content. It may be irrelevant, unsuitable or even objectionable. Then there is the issue of location. Is the frame above the fold? Is it placed within a banner? Many sites offer video placement as part of a game or within a social media context. It may be auto-play, continually streamed, or on-demand. It may be high-definition . . . or of only moderate quality.

Ironically, many site publishers are eager to self-report on their suitability for major video ad buys. Online ad networks offer some help with this, through limited pre-buy analysis and centralized, server-based video delivery methods. But without a unifying standard for both video run quality and suitability of content, such attempts — for the media buyer, at least — are cumbersome at best.

To fix the situation, advertisers need a virtual seal of approval for online inventory. An industry-standard metric, recognized by parties on all sides of a purchase, will create the accountability that major brands must have to justify their investments. With such a standard in place, video advertising revenue can finally reach its potential.

To be useful, such a standard must cover qualitative as well as quantitative variables; a site’s audience profile, content suitability and click analytics must be combined with player type, rendition quality, pass-along tracking and many other attributes. It should give publishers objective data they need to provide assurances of site quality and audience reach, and it should support the creation of new services such as inventory segmentation and improved targeting capabilities.

Finally, results must be made available to both agency and advertiser through a convenient dashboard that supports comparisons against campaign targets for adjustment and optimization, all in real time.

Another advantage of an independent, universally accepted rating system is that it will provide pricing efficiencies. For the first time, advertisers can confidently stratify their purchases through pricing tiered for both reach and quality. If budgets are adjusted, buyers can quickly move to those sites most effective in achieving campaign goals.

Such auditing and evaluation standards for online video are sorely needed — and long overdue. The Web is arguably the most powerful, pervasive and targeted medium ever created.

With online video rating sources now coming into existence, ad networks and site publishers would do well to encourage the use of such standards as a uniform and defensible mark of quality for their offerings. Moreover, media executives should encourage their use for the benefit of their agencies as well as their clients.

About the Author: Brian Mandelbaum is the founder and CEO of Clearstream, a video evaluation platform for advertising agencies and marketers.