TV for the Twenty-First Century: The Video Ad Model in Transition

Abstract

Historically, advertising has been evaluated and transacted on a placement basis. We have used location, context, time of day (and other proxies) as ways to target audiences. Passive exposure and intrusiveness were the underlying components of this ad model. The Internet, and more broadly digital distribution’s two-way path, allows for a transformation, one where advertisers can purchase specific audiences with limited waste, a much more efficient approach relative to the “placement as proxy” model. The innovations, lessons, and new methods of the Internet are now making their way to other digital distribution channels and are beginning to impact mainstream content – particularly video content. Moreover, while video (TV) advertising was primarily a branding vehicle, new advertising technologies are making video advertising on TV and online, actionable. This interactivity, combined with the on-demand nature of the new distribution, changes the dynamics of the traditionally passive ad model and demands a new approach to video ad formats, emphasizing invitation and engagement. The implications of these changes – being able to deliver advertising to a defined audience, and making that advertising directly actionable – will profoundly alter the media/advertising ecosystem. This chapter sets forth some context for how the media/advertising ecosystem works today, describes the changes currently extant and their implications, and make some informed speculation about what those changes mean for the industry and consumers.