Back when YouTube launched in early 2005, the online video industry barely existed. Some news sites hosted a few clips here and there, but there was no one place where one could upload a video and get it out in front of the entire world.
That changed in 2005. With the development of YouTube, there suddenly was one central place where any video could be uploaded and where people from all over the world could come to discover them.
The original idea behind the invention of YouTube came about when some of the founders were looking for clips of the infamous 2004 SuperBowl Halftime Show. When their attempts were frustrated and no clips were found online, they knew that they had found a niche.
And less than a year later, YouTube Launched.
(Little known fact: YouTube was originally a video Hot or Not clone, as can be seen here. But they quickly shifted to allowing video uploads of all kinds).
Clear demand, but hidden value
The inventors of YouTube might not have known at the time that there was this much demand for such a service, but they sure found out quickly.
The service exploded in popularity, rapidly becoming one of the most used services on the internet. And, in the process, it woke many people up to just how slow their internet connection really was (there’s not streaming with dialup or slow DSL!).
But while the founders of YouTube discovered massive untapped demand for online videos, they had a significant problem: Bandwidth.
For many, YouTube was like an unlimited source of America’s Funniest Home Videos – and it was consumed without moderation. While YouTube was happy to have the attention of millions of people, they were left paying for all of the bandwidth these videos used. With no revenue generated to pay for it.
Uploaders uploaded the videos for free, and viewers watched the videos for free.
The fact that use was free on both ends left YouTube on the line to pay for literally everything except their users’ internet connections.
Between the rapid growth in usership, its concomitant growth in bandwidth usage, and practically non-existent revenue, YouTube found itself in trouble. Barely a year after launch.
Video Advertising was hard
Naturally, YouTube tried various means of limiting their expenditure, such as the 10-minute limit implemented in 2006.
Unfortunately, their growth was so rapid and their ability to monetize so low, that the company couldn’t stop burning money. It fell into what is now a classic tech industry problem: high usership, but low monetization potential.
Online video advertising was a wholly undeveloped field at the time. YouTube couldn’t develop it fast enough to make up for the losses that they were experiencing through bandwidth usage.
They needed more time to learn how to monetize video streaming traffic effectively.
And they were given this opportunity when Google bought YouTube in 2006 for $1.6 billion.
Online videos endless expansion
The online video sector has grown almost ceaselessly since YouTube launched back in 2005. And while the field remains dominated by a few behemoths, namely YouTube, many companies have now
They’re doing this primarily in an attempt to keep up with the changes that are occurring in the way that people consume media.
People love video. In the USA, the average American now spends almost 6 hours per day watching various forms of video content. That means that watching videos is almost like having a second full-time job for many Americans!
Right now the majority of this time is still being spent in front of a television watching old-school cable TV shows, movies, and news. And time spent using these devices still appears to be growing.
But time spent watching online video is growing even faster. This is true on almost all form factors (computer, phone, connected TV, etc.).
Daily online video content consumption time broke through the one hour per day mark in 2018. It’s expected to increase by 25% by 2020.
Usage is mostly trending towards a future where the majority of video content is consumed online. Be it on a connected television, a laptop, a tablet, or a smartphone.
The younger demographic is especially ahead of the curve in the adoption of online video content. The average young American (18-34) only watches 1 hour and 54 minutes of traditional television per day, whereas the 35-49 demographic watches 3 hours and 43 minutes per day! (Statista).
They’re abandoning old-school TV in favor of connected devices.
It needed a new style of ad
So to get back to YouTube and the early days of online video. The medium was growing fast, too fast for its owners to monetize. Advertisers wanted in. And platforms wanted to stop losing money, but they didn’t want to charge for access.
Now, by 2005 this was already a proven business model for online content providers. Make the content free and finance it with ads. The problem was that traditional ad forms and means of distribution just weren’t cut out for this new style.
First, advertisers and publishers looked at the traditional ad forms used online: text ads, display ads, popups, etc. There were multiple problems here, but the biggest one was by far the use of fullscreen viewing. Video providers couldn’t very well get rid of fullscreen viewing; this would have had massively deleterious effects on user experience.
So most forms display and text advertising were immediately out.
But what about commercials?
One of the first things that publishers, platforms, and advertisers thought of when they came up as they were trying to monetize online video, was to monetize it the same way as traditional video.
A commercial could be woven into the beginning or middle of a given piece of content and advertisers could pay for this. The problems here were multiple, but the biggest was that it lost one of the most useful aspects of digital publishing: it’s temporary nature.
In integrating a commercial like this, the value of a video would have to be determined in advance, since it couldn’t be done per view.
With traditional television, ratings made it relatively easy to predict the value of an episode of the Simpsons or an event like the Super Bowl.
Online the situation was very different.
If a video went viral, the advertiser would get a considerable return for relatively little investment. If the video flopped, well, then he might get next to no views for what he paid.
Lastly, the ads would be permanently integrated. If someone went back to the video a year later, what good would an ad for last year’s phone model be? It would be a waste of bandwidth and money. The ads served on video had to be current ads from paying advertisers, otherwise the platform extracted no value from these
For these reasons, the idea of permanent built-in commercials has, for the most part, been ejected from the world of digital advertising. Well, there is one key exception: when the content creator puts it in himself.
On sites like YouTube, creators will sometimes close deals with third-party companies and directly negotiate product placement or commercial-style advertising done by the creator himself.
This allows the creator to make money even if he has been “demonetized” by YouTube or make more money on top of his YouTube revenue.
These ads, however, can be fast-forwarded, whereas most in-player ads have a 5 second or longer required wait period.
The genesis of the in-player dynamically served ad
By the advent of digital video, online advertisers had essentially settled on the pay per view or impression model of paying publishers. Unfortunately, this model wasn’t immediately adaptable to video as the ads would have to be displayed within the video player itself.
That meant that the video player would have to make a request for ads and an ad server would return the content, link destination, etc. An entirely new ad request template was needed. One designed specifically for online video.
The development this shared standard was particularly vital for smaller, and medium-sized sites.
VAST – Making mass in-stream video ads possible
Since YouTube’s launch almost 15 years ago, technology has changed significantly. Whereas in the beginning videos were generally served using Flash Player, today this technology is a relic. Video players have largely moved on to using the much more secure, much more versatile streaming capability built into HTML5 (YouTube made this switch in 2015).
But a player has always been necessary, regardless of the technology used to display the video. The video existed within its own space on the page.
To display an ad within this player, it had to make a request to an ad server. Like most ad server requests, the player makes the request for an ad through an HTTP URL.
Once the request has gone through, the ad server can return a set of instructions conforming to VAST. The VAST response will include all the information the player needs to display the ad to the user.
This information includes the video ad location, whether or not it is skippable, how many seconds before it becomes skippable, user tracking information, etc.
This is the real revolution that is VAST. It gives Ad Servers a standardized request/response structure. Without it, every Ad Server would be using its own ad hoc system to manage requests and bids.
This standardization was necessary for mass ad adoption of in-stream digital video ads to be possible.
Like OpenRTB and various other adtech interaction standards, this one is written in XML.
VAST and mobile
VAST standards also address another problem: different form factors. If the video is being viewed on mobile, on a tablet, or on television, the ad might need to change – be it in form, content, interactivity, length, or a host of other attributes.
VAST gives publishers, advertisers, and platforms a standardized means of displaying ads across form factors. This is one of its most important features.
The IAB
The Interactive Advertising Bureau, or the IAB, is an independent organization that designs and builds advertising standards. It is the organization responsible for the development of the OpenRTB standards. The IAB is also developing things like the Universal ID system.
The IAB is the organization that spearheaded the development of VAST and which has maintained and updated it.
Conclusion
Traditional online ads and those that appear within a video player have relatively little in common. At least insofar as how they are served. An Ad Server needs to have a standardized means of receiving requests and returning responses specifically within the context of in-stream in-player ads. This standardization is provided by the VAST standards produced, maintained, and regularly updated by the IAB.
These standards have contributed in large part to the massive growth of digital video advertising in general. This is a segment that already makes up over a quarter of US video ad spend, and it’s expected to grow by a whopping 44% by 2021 according to eMarketer.
Quick Recap
Online video is a bandwidth-heavy medium. This makes it costly to host content, and even more so unpaid content. To monetize video a set of standards were needed to allow video players to communicate with ad servers.
The most widely adopted standard by far is the Interactive Ad Bureau’s Video Ad Serving Template or VAST. These standards allow servers to communicate with digital video players using standardized XML requests and responses.
First released in 2008, VAST has proven to be an effective means of facilitating the development of digital video advertising.
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