By John Borelli, Senior Account Executive

212 NYC hosted a panel of industry leaders – heads of video investment from Group M, UMWW and Digitas – to discuss the future of online video. They outlined notable innovations within the industry, important trends, growth opportunities and major challenges prevalent in the online video ecosystem.

Interactive and Shoppable Videos

Interactive video is an emerging trend that will become more ubiquitous as brands and agencies acquire the technical acumen to properly execute them. The idea of creating “fully immersive consumer experiences with brand alignment” is a natural next step in the evolution of video. For example, “Play Catch with Elmo” is an interactive feature of the Sesame Street app on Microsoft Xbox.

In the same way that videos will become more nuanced branding devices, they will also become more effective purchase drivers as “shoppable video” comes to market. Shopper-enabled online videos will expand the role of video to include direct response-esque calls to action in addition to performing its traditional job as a branding vehicle. (BrightLine was called out as one vendor that is excelling at shoppable video.)

Trends: Premium Content, Binge-Viewing, Search Optimization

Agency leaders noted the significant increase in supply of premium video content available from publishers like Hearst, Conde Nast, Meredith and WSJ, which are all examples of publishers who’ve responded to the increasing advertiser demand for quality online video content.  Furthermore, TV-level talent is becoming a more common feature of original online programming, as online video strives to win out over Netflix and other streaming services in the battle for consumer attention.

Unsurprisingly, binge-viewing was noted as a trend of late. Understanding the best way to couch brand content into binge-viewing sessions (that often take place at a single online destination like Netflix or Hulu) remains quite the challenge for advertisers.

Google Preferred is a new method that combines search engine algorithms with social data. The top 5-8% of all YouTube content achieves “preferred” status, which provides search optimization. The success drivers for this algorithm are drawn from social conversations and consumer engagement with the content itself. This bottom-up approach can be seen as the democratization of search optimization for video and further emphasizes the need for advertisers to produce content that has the potential to go viral, at least mildly, and to be shared across social platforms.

Growth Opportunities: Big Screen = Big Budgets

In order for online video to experience explosive growth, it must tap into advertisers’ TV budgets. To do this, true apples-to-apples comparisons must exist across video. Nielsen OCR is growing in popularity as a measurement tool and is currently in use by 40% of advertisers. XER, the next-generation product that measures across screens, will likely become more widely used in the future.

Challenges: Non-Human Traffic, Viewability, Content Alignment

The deluge of Non-Human Traffic (NHT) that’s found on exchanges is a significant challenge for advertisers and agencies. Fraudulent traffic (which leads to ads being served to bots instead of human beings) is a clear waste of advertising dollars. And NHT constitutes a substantial portion of all internet traffic.

Privacy, Please

The best way around the NHT conundrum? Private exchanges. Group M plans to migrate all 167 of its US-based brands to private video exchanges, in which a small number of advertisers and publishers convene within a contained marketplace. The benefits of private exchanges for advertisers are multifarious. First, the premium publishers who populate private exchanges are far less likely to be plagued by fraud and viewability issues. Second, content alignment is an essential part of video’s branding power; positioned next to the right content will reinforce a brand’s message, but nested within the wrong site has the potential to completely obscure messaging. Finally, private exchanges create a better market with less competition and clutter and smoother supply and demand curves. Group M went so far as to say that bidding on open exchanges is a “dis-service” to clients and could be considered “malpractice.” Moving forward, the value of private exchanges and the challenges they alleviate make them a compelling option for advertisers.

The Path Ahead

Online video has grown rapidly in scale and sophistication but many challenges still remain. Fraudulent traffic, divergent measurement methods and multi-screen living rooms all make navigating the maelstrom of online video a difficult task. But one overarching message resonates through the dialogue: the need for genuine, authentic engagement with consumers. As Group M put it, “an ad that isn’t viewed has no value.”