Hitchhiker's Guide to Streaming Media: Advertising Systems

The most common method of advertising in this way with streaming media is a pre-roll advert. This is a small item of content such as an audio or video clip which is played as the stream is started. Once this has played through the stream that was actually requested is played. Each of these pre-roll plays is logged and a small revenue for each play is collected from the advertisers whose videos are played.

Pre-roll advertising has a significantly higher CPM than web banner advertising: Users are most definitely looking at the video window or listening to the stream as they select it and it is at that moment the pre-roll is played. This close association drives pre-roll to be a premium ad revenue source.

Roadblocks to Success
In actual terms however there is a lot of discussion about how successful advertising models are actually proving to be on the Internet.

While it is clear how a model could work, there are two conflicting forces that are making the takeoff of advertising for streaming occur slowly. The first is scale: While advertisers have traditionally only had to deal with a few production companies and rights owners in order to secure deals that gave them high profile on relatively controlled mediums like TV and radio broadcast networks, now they are faced with an endless array of production companies and rights owners and these new entrants, thirsty for advertising deals, are finding it hard to meet and strike a deal. The dilution of advertising revenues across so many different new media outlets (with varying degrees of success in the campaigns) has also drawn from budgets that were previously allocated to broadcast TV and radio. This has caused an economic downturn for legacy broadcasters, and while it has created growth in the internet streaming industry as a whole, there are so many players in the sector now that only very few can aggregate enough junctures of “right content” with “right advertiser” to command “right premium” to really make some money and survive in business.

The second reason is part of the nature of multiple proprietary technology vendors with no commonality in how their services can be integrated. Many ad technology providers will promise a high revenue share on adverts played out as pre-roll (or even interstitially) in streams, and will then require integration of tracking and campaign management routines in the media player or web page. The revenue promise always comes first, then the website/streaming service providers always do the integration work—often compromising the look and feel of their website design since the advertisers are very proscriptive about placement and functions such as “click to play” (where a user has to press play before the advert is delivered to ensure the ad is delivered to watching eyes)—and then it’s back to the ad technology provider to bring in the ad sales.

This is where it is currently all falling down at the moment. Many such providers will then fail to sell any adverts. There is a dearth of real world ad-buying going on at the moment. Ad technology providers are relying on a promise of revenue share to get their technology onto as many services as possible. It is only when they have a large metric stating that they have “millions of page impressions of footprint” that they can seriously start to engage advertisers and be noticed among the dozens of competitors who are touting similar footprints. This process can take these providers many months and in that space a content provider with a popular streaming site could be approached by many other ad technology providers; these also require technology integration.

And such integration for the second ad provider often conflicts with the technical requirements of the first ad provider.

At which point the first provider potentially looses their footprint and their sales pipeline collapses.

Which leaves the content provider with an endless cycle of technical integration work—costing them time and money and providing no revenue. It also leaves the ad technology providers looking like dogs fighting for scraps when a deal comes up.

Until that status quo matures and the ad technology providers have technical integration standards for content providers to work towards (rather than endless proprietary ones) it is going to take a while for the ad industry to really help to monetize streaming media profitably as a mass media proposition with sensible revenues reaching the content providers.

Those traditional providers with longstanding sponsorship relationships with brand managers and advertisers are in the strongest position today to really draw good revenue from streaming projects.