The big news this week may be YouTube’s introduction of the overlay video ad format, but it’s not the first company to offer it. Adap.tv (www.adap.tv) introduced its own version earlier this year and is working with a few major publishers on it. While YouTube’s overlays play underlying video ads, the majority of adap.tv’s advertisers play clickable banners, a lower cost format that works well for smaller advertisers, Adap.tv’s broad client base. Sean Behr, adap.tv’s VP, discusses the new form of advertising the company offers in this week’s iChat.
iSPOT: Can you describe adap.tv’s video advertising format?
Behr: Delivering an ad on video is pretty easy, it’s technically easy–all you need is a Flash player. What’s really difficult is playing the right ad at the right time. That’s where adap.tv’s core strength is. If we play a video about a trip to Rome, it’s the perfect opportunity to put up an ad about airline tickets, hotels and guidebooks. We have proprietary technology that delivers the right ad at the right time.
iSPOT: But the actual format is an overlay ad.
Behr: Correct. We realized early on that pre-roll and post-roll ads weren’t working. At best we didn’t think they were very effective and at worst we thought they were hurting user experience at some level. When we first looked at this opportunity late last year, we saw most video sites were relying on pre-roll ads and we said there’s got to be a better way to do it. We feel InVideo is the viewer-friendly way to monetize video content. It’s less intrusive and it works on all kinds of video in all sizes. If you have short-form video, pre-roll isn’t very effective, and InVideo works perfectly. We do a Flash overlay on the video, it can be expanded and move and do different things that Flash is capable of. Usually it’s on the bottom third or fifth of the screen.
iSPOT: It might move along the screen, but basically it’s a text type ad. Is there any way a viewer can click to go to an underlying video ad?
Behr: Yes, our technology allows you to click and open another video window. Our technology supports that, but the vast majority of our advertisers are on the product listing and keyword side. We are able to do fancy video within video Flash windows, but we have support for CPC advertising that brings the core benefit of monetizing all video views. If you think about expensive CPM InVideo ads, there isn’t that much inventory. If you look at Google’s announcement they have 20 advertisers so if they each have two campaigns, that gives you 40 campaigns. If you look at adap.tv, we have 100 million ads in our potential to put on video, keyword ads. The second big benefit is the degree to which we lowered the barrier of entry for advertisers. Small advertisers to date haven’t been able to do video because they don’t have a Flash engineer or video production company. They can’t put together a 15 second pre-roll or a video on video ad, but they have a keyword feed or a product listing feed and this service takes advantage of the work they put into their keyword listing and moves it into a fast growing medium like video advertising.
iSPOT: How do you analyze the results of the campaigns?
Behr: We’re focused on two core values for advertisers, one is smart and one is safe. We believe we can deliver a great lead to the site because we’re using relevance by putting up smart ads which are more likely to convert to sales with the user interacting after they make the click. So it’s a smart system, and it’s a very safe system. Advertisers have specific concerns about where their ads appear and adap.tv says what kind of content do you want to be on, professional or user generated. And do you want to be on G rated or PG rated content. One of our core benefits, delivering the right ad at the right time, sometimes means not delivering an ad at all when there is inappropriate content. We’re smart enough to not deliver an ad at that point.
iSPOT: How do you analyze content to determine what ad to play with it?
Behr: The truth is there’s not a silver bullet here. What we’re doing is a multidisciplinary approach. We’re using everything we can find, a series of 10 or 15 different properties on each video that include speech recognition and the title and description and metadata and tags. We pull all the data back and use algorithms to figure out which parts of the metadata are important and match it to advertising.
iSPOT: Does this happen instantaneously so ads can be targeted on the fly?
Behr: It’s a very quick process but the first time we see a video on our network, we don’t serve an ad, we do an analysis on it. The second time it gets viewed, we show the ad. The system runs its learning and analysis component the first time before ads play.
iSPOT: What’s the revenue share?
Behr: It’s variable. We share a majority of the revenue with the publisher and we keep a share. We monetize most of the video on the site so we can generate high revenue for them.
iSPOT: If a publisher uses your overlay format, can they continue to use pre-rolls and post-rolls?
Behr: We’re flexible. Let’s say they run pre-rolls on 20 percent of their videos. They can get incremental revenue on the other 80 percent and in addition they can use InVideo to make more money on the videos that play pre-roll. In addition, we allow them to sell their own ads into the system. A publisher may say I just signed a big deal with an advertiser, can I place some of them in InVideo? They can do it.
iSPOT: Do you sell the ads or are they sold outside?
Behr: We do both. We sell then and allow publishers to sell them.
iSPOT: The overlay format you developed is similar to others from YouTube, VideoEgg and ScanScout. How does your version differ from the others and how do you think the development of this format is changing the way video advertising is working?
Behr: I’ll take the second part of that first. InVideo is clearly the best and most viewer-friendly way to monetize video content. If you look at the popularity and growth of online video I think if a site like YouTube or any other site played a pre-roll before every video, it wouldn’t be nearly as popular as it is today. They realize that user experience is critical, especially for the viral user-generated content sites. InVideo is clearly a way for publishers to balance the revenue versus user experience trade off they need to make. When you couple in relevance, all of a sudden it’s better than that. Instead of a random ring tone or mortgage ad if you can actually say this user is watching New York Mets highlights and here’s ads for tickets and Mets gear, the user that’s watching the video is saying if I have to have advertising, this is advertising that will work. The differentiation question is a great question. The space is super crowded with new ones cropping up every day. A huge fast growing market attracts competition. What differentiates adap.tv is the fact we’ve been able to lower the barrier for advertisers. The second thing on the publisher side everyone talks of high CPMs which get the headlines, but the truth is that the sell through rate on those ads is fairly low. If I have a million views on the site and someone offers a $20 CPM, they don’t sell it across a million views; they maybe sell it across 50,000 views. Adap.tv is the perfect product for monetizing all the video views on the site. It’s a great space and we’re excited to be a part of it.
iSPOT: Can you mention some publishers and advertisers you’re working with?
Behr: We work with many publishers. The two I can speak about are Metacafe on the user-generated side and we have a partnership with thePlatform, a Comcast company that provides video technology to many professional content sites. Through that partnership any site can take advantage of adap.tv. On the advertiser side we’re working with companies like Shopping.com, which has thousands of retail advertisers and we have partnerships with Amazon and keyword search providers. They can all provide advertisers for us.
