Academy blog

The History of Video Advertising Measurement

The Super Bowl ads for 2020 were watched by an estimated 100 million people and cost $5.6 million per 30 seconds. The ads for the first Super Bowl (1966) cost $42,500. The biggest difference is not in the dollars and eyeballs, but in the context of the Super Bowl as an video advertising event.

Although in 2019 Linear TV budgets still dwarfed online video ads spending, in an era of increasing media fragmentation and changing user behavior, the future of video advertising is undeniably heading online, and the Super Bowl is set to become an impressive but ever-isolated bastion of traditional TV ad dominance.

This article will examine some of the key drivers, moments, and threads of advertising history that led us to the state of the online video advertising industry in 2020, from the very first video ad in 1941 to the challenges and metrics that will define the ads of the future.

 

Online Video Advertising: How Did We Get Here?

To understand the significance of today’s ads, and how we measure their performance, we need to go back to two of the most important ads in history.

 

The First Video Ad: America Runs on Bulova Time

The first recorded television ad was paid for by Bulova clocks and watches, and ran before the Brooklyn Dodgers played the Philadelphia Phillies in 1941 (recreated below). Those 10 seconds set off a complex and winding series of events that would bring us to today’s marketing landscape. The ad cost four dollars and went out to a maximum of 4,000 television sets – the total number that existed in New York at the time.

 

The First Banner Ad: You Will Click Here

The other advertising milestone we need to mention came a little later, but is just as important in terms of how we got to where we are today: the first online banner, published in 1994 in HotWired magazine (now Wired) by AT&T. The ad cost $30,000, looked like this (below), and had an estimated click-through-rate of 44%. There were no ad servers yet, so the ad was hard-coded into the HotWired website.

 

The History of Video Advertising

The first ever online banner ad.

 

These two ground-breaking moments eventually combined into mixing the vast advertising power of online personalization with the universal appeal and worldwide reach of television.

 

TV Ads – Exposure over Engagement

For a long time after Bulova went out across the airwaves, TV was the number one way to advertise. For awareness, branding, or just straight selling, it was the primary method of content consumption and brands treated it accordingly – ten years after the Bulova ad, in 1951, annual TV ad spending hit $128M. By 1955 it had reached the $1Bn mark, and continued to grow until 2017, when spending on TV ads fell for the first time.

Though we can look at this as the golden age of TV advertising, this period of near unchecked growth is curiously unscientific in how ad performance was measured. In 1950, following the lead of radio broadcasting measurement standards defined by Archibald Crossley, the founder of broadcasting ratings, A.C. Nielsen set up his TV measurement company, Nielsen, with metrics based largely on estimated audience size and composition, rather than engagement. In part thanks to the simplicity of these measurements, Nielsen would go on to dominate the television ratings industry, but the industry-wide reliance on these metrics led to a lack of precise insight into how these ads were being experienced by the viewer. Which in turn led to a lack of data-driven testing.

For example, until 1972 the unquestioned standard for TV ads length was 60 seconds, when Leonard Lavin, founder of hair and skin beauty care company, Alberto Culver, insisted on splitting his ads into two 30-second ads for separate products. Before then, nobody knew whether an ad would perform better or worse if it was longer or shorter than a minute in length.

Today’s Super Bowl ads can be seen as the culmination of the arc of TV advertising; one of the last TV events advertisers know their audience is in fact watching, and so are happy to pay the extreme price point for these views. But, outside of such exceptional cases – and for the vast majority of advertisers – this is no longer the case.

 

The Rise of the Internet; the Rise of Personalization

The History of Video Advertising

Personalization is the future of video advertising.

While the TV ad boom was ploughing ahead, the world was slowly moving online, and the measurement system TV advertising had relied on began to be outpaced by the internet’s rapidly developing ad ecosystem.

To name a select few developments, in 2000, the launch of Google Adwords was an important step for keyword-based user targeting (and search engine monetization), while the arrival of Facebook in 2004 brought unprecedented potential for customized advertising, giving advertisers never before seen insights into personal data. Finally, the 2005 launch of YouTube (sold to Google for $1.65 billion in 2006) set us on the way to bringing the video advertising experience fully online.

 

The Ad Exchange Model

Despite rapidly improving internet speed, image compression technology, and the possibilities for personalization, the increased volume of ads in the aftermath of the first banner was a problem. For publishers, dealing directly with advertisers was not scalable, and for advertisers the ecosystem was too vast to maneuver, and it was impossible for them to effectively track the performance of their ads alone.

This triggered the proliferation of digital ad platforms or networks like DoubleClick (launched in 1996) that offered brands a certain level of control and visibility over their ad campaigns. There were so many of these Ad Networks, in fact, that it led to Ad Exchanges, like AppNexus, Oath, and OpenX, (one of the first to launch, in 1998) that brokered between publishers offering ad inventory and advertisers placing real-time bids on the online real estate and audience they want to target.

So we can see the transformation of online ad space towards a technology-powered ecosystem where advertisers can – in theory – directly reach a much more specific audience at a custom price. This is key in understanding the switch to engagement over exposure – as ads became more targeted but much more common, how viewers interacted with those ads gained importance.

 

Definitions – How to Measure a Video Ad?

However, a critical sticking point for the growth of online video advertising is the lack of agreement over how exactly a video ad should be defined. What constitutes a view? What sizes or formats should ads be delivered in? These are questions that need to be answered for advertisers to be able to verify and measure performance of their video ads.

 

The Bid for Video Ad Measurement Standards

Faced with the need for defined boundaries in which to measure a video ad’s performance, in 2006 the Interactive Advertising Bureau (IAB) came up with a definition for video ads: “a commercial that may appear before, during, or after a variety of content including streaming video, animation, gaming, and music video content in a player environment.”

And in 2008 the IAB introduced VAST – a digital video ad serving template designed to enable advertisers to publish their ads multiple publishers by facilitating the communication between ad servers and video players. In 2019, the release of VAST 4.2 is the closest entity to an industry-wide protocol that exists, covering skippable ads, in-ad privacy notices, tracking capabilities, support for server-side ad stitching, ad verification, support for high-quality mezzanine files, and more. Alongside their Digital Video Ad Measurement Guidelines — which YOUBORA Ads (NPAW’s AVOD-specific analytics solution) adheres to in order to give video service providers visibility over their platform performance — the IAB’s templates are the closest the online advertising industry has come to standardization.

Although no one protocol is universally accepted or adhered to yet, defining an industry standard is a key step towards the final objective for the video ads industry: making the most of the mind-boggling potential of video advertising. This is not only crucial in terms of optimizing the return for the advertiser but also in resolving online video delivery issues which can ruin the end-user’s quality of experience and compromise the video provider’s business model.

 

The Future of Online Video Advertising

The History of Advertising

As the online consumer is exposed to more and more video content and the rise of OTT services and DTC video offerings including Ad-supported Video on Demand services (AVODs) increases competition for viewers, video ads are not going to go away, they are simply going to move online, away from a traditional linear delivery model. The future is multi-device, multi-platform, and, far from the rigidly defined 60-second ads of the TV age, multi-format. In fact, Video Ad Benchmark Research by Extreme Reach found that six-second ads grew by 300% from 2017 to 2018 and accounted for nearly 3% of all video ads.

The challenge for the online advertising industry will be to make the most of the improving technology around ad delivery, personalization, and measurement to define (and profit from) the new era of video advertising, and to create ad experiences that will make the 2020 Super Bowl ads look as outdated as the Bulova’s 1941 pre-game video.

NPAW, the video intelligence company, is dedicated to giving video service providers actionable insights to improve their platform’s performance. With our custom ad analytics solution, YOUBORA Ads, AVOD providers can have full, real-time visibility of how their end-users are experiencing the ads on their service. For more content on using ad analytics to drive the future of online monetization, read our article: AVOD Analytics to Drive your Video Service’s KPIs.

Johnny Crisp on February 13th 2020

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