New Video Ad Classification Will Alter How Marketers Direct Budgets

The Interactive Advertising Bureau Tech Lab has updated the technical specifications for digital video ads, designed to provide media buyers with more choices and introduce more transparency, whose definitions will help determine the flow of billions of dollars in advertising budgets.

The new framework’s primary revisions concern splitting the existing two formats of in-stream and out-stream video ads—which have been used to classify digital video for over a decade—into four: in-stream, accompanying content, interstitial and no content/standalone.

Historically, in-stream advertising referred to any video ad that accompanied editorial video content, while out-stream referred to standalone video ads, unattached to editorial video. In-stream inventory, which runs against videos that users have chosen to watch, can fetch CPMs 15% to 20% higher than out-stream.

It will take a few months for publishers to set their video inventory using these new values, which will then prompt supply-side and demand-side platforms to follow suit, said Paul Bannister, the chief strategy officer for CafeMedia, who participated in the working group.

“I am optimistic that by the end of Q2, a pretty good number of publishers will have set the new values,” Bannister said. “If 60% to 70% of the inventory is labeled correctly, then the buy-side will take action.”

While the updates require time and resources to implement, ultimately, they should improve the ecosystem, said media analyst Scott Messer.

“The less obfuscation, the better,” Messer said. “If you were making a bunch of money from running sticky-video floating players, you should count yourself lucky and be happy that now you get to create a better ad experience for your users.”

With the changes, media buyers can choose their video ad inventory with more precision, adjusting their choices based on the goals of their campaign. 

For instance, in-stream offers an expensive, scarce vehicle for brand advertising, while no content/standalone presents an affordable option more likely to generate engagement. Accompanying content and interstitials offer a mix of both.

The updates come as a response to a series of standards released in August called the Video Ad Format guidelines, which sought to narrow the definition of in-stream inventory but did not introduce additional categories. 

Under the August specifications, more than 90% of what once constituted in-stream inventory would be considered out-stream. This posed concerns for publishers and video vendors, many of whom rely on the revenue generated by in-stream advertising.

The guidelines released this week also refine the definition of in-stream—reducing the volume of eligible inventory to less than 10% of digital video, according to the IAB Tech Lab—but by introducing other categories, they mitigate the disruption publishers feared would come as a result of the August update.

Your guide to digital video’s new taxonomy

In the new classification system, each category can be evaluated by the presence or absence of user intent and the presence or absence of editorial video content.

In-stream inventory remains the most selective tier. To qualify as in-stream, the ads must appear alongside editorial video content, just as under the previous guidelines. 

The video can prove user intent through one of two methods—by being set to sound-on by default (a condition introduced in the August guidelines) or by having explicitly clear user intent to watch the video content (a new condition).

Playing a video with the sound on serves as a proxy for user intent, Bannister explained. 

But Google Chrome prevents videos from playing with the sound unless a user has changed their settings, so the “explicitly clear user intent” clause serves as an allowance for that fact. For instance, someone watching a video using subtitles, rather than audio, clearly demonstrates intent despite not using sound. 

The next category, accompanying content, must also play alongside editorial video content, but it does not require user intent. This category was created to reflect the vast chasm in relevance between premium, in-stream video and standalone video ads, said Jenn Chen, the chief revenue officer and president of video vendor Connatix.

The third tier, interstitial, deals with only a handful of scenarios. These ads do not accompany editorial video content, but they take over the entire screen, often during a mobile video game. Because they commandeer the screen, the IAB Tech Lab created a carve-out to distinguish them from the fourth tier.

Finally, no content/standalone, as the name implies, includes standalone video ads with no editorial content and no clear user intent.