Future of TV Briefing: The implications of IAB Tech Lab’s in-stream vs. out-stream video ad guidelines
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This week’s Future of TV Briefing looks at how IAB Tech Lab’s recent definition of in-stream video advertising affects the online video advertising marketplace.
- In-stream vs. out-stream
- WTF is the difference between in-stream and out-stream video ads?
- HBO Max’s new name, Pinterest’s creator fund and more
In-stream vs. out-stream
The key hits:
- IAB Tech Lab’s guidelines require that ads be attached to videos that a viewer requested to watch and play with the sound on by default to qualify as in-stream inventory.
- The change effectively recategorizes the wide swath of publishers’ online video inventory as lower-priced out-stream impressions.
- The change may benefit not only people’s user experience online but also publishers’ video ad businesses.
The distinction between in-stream and out-stream video ads has changed, and it is poised to shake up publishers’ online video ad businesses.
“A negligibly small portion of the [online video] landscape meets this new industry standard. What that means is the overwhelming majority — over 90% of online video — now fails the in-stream standard,” said Chris Kane, CEO of programmatic consultancy Jounce Media.
“Somewhere around 99% of what we considered in-stream in the past on the web is now going to be considered out-stream,” said an ad tech executive.
In August, the IAB Tech Lab issued guidelines for digital video and connected TV ad formats that defined in-stream video ads as “played before, during or after the streaming content that the consumer has requested,” with the additional caveat that the ads “must be set to ‘sound on’ by default at start.”
In short, to qualify as an in-stream video, a person must have taken some action to signal their intent to watch a video — like clicking to play it — and then the video must play with the sound on immediately. Digital video ads, such as the online video ads running on publishers’ sites, that fail these requirements are then categorized as out-stream ads. Scroll down for a video breaking down the differences between in-stream and out-stream video ads.
Of course, IAB Tech Lab’s guidelines are only that. It will be up to advertisers, agencies and demand-side platforms to adopt the new definitions for in-stream and out-stream video ads to incentivize publishers to follow suit.
“If the industry does this right, publishers will have healthy incentives to create great video products, which will give marketers better ROI but will also just make the open internet a place where people want to go,” said Kane.
“I’m going to go back to having click-to-play video now because of this,” said one publisher who had been running videos that played automatically with the sound off.
The Trade Desk notified publishers of the change so that they will, in turn, properly label the in-stream and out-stream inventory they make available to the demand-side platform by setting the inventory type in bid requests to “in-content” instead of “in-stream” for the affected impressions, said a second publisher. “It affects pre-roll video that is audio-off by default, which is all of our video inventory,” said the publisher.
As a result of the change, a portion of publishers’ digital video inventory that was previously considered in-stream is now relegated to the lower-priced domain of out-stream video ads, such as those appearing in the middle of text articles or clinging to the corners of web pages as people scroll through unrelated content.
Out-stream video ad impressions typically fetch 15% to 20% lower CPMs than in-stream video ad impressions because the latter provides “a more engaging environment” for advertisers, said Ross Coombes, programmatic commercial director at Mindshare. Furthermore, some advertisers like luxury brands prioritize sound-on video inventory, he said, because they are running brand awareness campaigns and the audio can help to attract audiences’ attentions and get a brand’s message to stick in their heads.
In addition to advertisers being better able to better distinguish between in-stream and out-stream inventory, the sound-on criterion for in-steam inventory means that advertisers should now have a better grasp of which ad creative to use for in-stream and out-stream video ad campaigns because — assuming inventory is labeled properly — they will be able to ascertain whether an ad will play with the sound on by default or not.
The addition of the sound-on requirement is “quite a significant change,” Coombes said.
Unnerving as the change may be for publishers, the industry executives interviewed for this story largely cheered the new distinction between in-stream and out-stream video ads. Their reasoning is that the shift should disincentivize publishers from producing videos — such as clips stitched together from image slideshows, stock footage or user-generated videos — that are strictly designed to carry pre-roll ads and justify the placement of video players on web pages that have no content-related justification for featuring video.
“All of our video players are made for our advertising. They are not user-first experiences. They are not why someone clicked on the article in their search results, to read about a subject just to have some video stuffed in their face so that you could run a pre-roll against it,” said the first publisher.
And while recategorizing some what was previously considered in-stream inventory to now be out-stream inventory would seem to undercut publishers’ video ad revenues, the opposite could prove to be true.
Out-stream video ads tend to perform better for advertisers than in-stream video ads with respect to view-thru rates and completed video views and can be more cost-effective because out-stream ads are typically bought on a cost-per-view or cost-per-completed-view basis as opposed to on in-stream ads that are bough on a CPM basis, according to Coombes.
That dynamic is proving out for publishers as well, especially as advertisers prioritize cost-efficient, performance-based ad formats (ex. out-stream) over pricier ad products geared toward brand awareness campaigns (ex. in-stream). The first publisher said, in light of advertiser demand, recently the ad prices for their in-stream inventory sold in the open programmatic market have been half the rates of their out-stream inventory.
“We think the change is going to be good for both publishers and advertisers because ultimately we’re increasing the value of out-stream and true in-stream, or click-to-play video players, in the future,” said Eric Hochberger, CEO of ad management platform Mediavine. “Between the two, publishers should be able to make more money, and it’s going to be more transparent and fair to advertisers to buy what they truly believe they were buying.”
What we’ve heard
“There’s been so much content in the last five years, and people’s biggest problem is people finding it and people watching it. It’s too much. So you’re seeing the industry recalibrate in terms of everything consolidating and companies buying less.”— Production executive on the TV and streaming programming market
WTF is the difference between in-stream and out-stream video ads?
Numbers to know
18 million: Number of paid subscribers that NBCUniversal’s Peacock has.
6%: Subscriber churn rate for the top 10 U.S. streaming services in September.
0: Female creators who made YouTube’s list of top 10 U.S. creators for 2022, which ranked creators based on number of U.S. subscribers gained this year.
61%: Percentage share of U.S. households that had a pay-TV subscription in the third quarter of 2022.
$475 million: The maximum amount of money that AMC Networks expects to write down to cut costs.
8%: Year-over-year decline in traditional TV ad spending in October.
What we’ve covered
Why YouTube’s focus on competing with streamers may have hurt the platform as brands focus on TikTok:
- YouTube’s ad revenue declined year over year in the third quarter of 2023.
- The Google-owned video platform’s emphasis on streaming may have led it to cede ground among social video-minded advertisers market to TikTok.
Read more about YouTube here.
CNBC to test increases on its subscription prices next year:
- CNBC plans to test a price increase for its CNBC Pro subscription product in the first quarter of 2023.
- The decade-old CNBC Pro allows subscribers to stream its live TV feed for $300 a year.
Read more about CNBC here.
What we’re reading
HBO Max’s new name:
Warner Bros. Discovery is considering the name “Max” for its upcoming streaming service that will combine HBO Max and Discovery+, according to CNBC.
Rhett and Link’s media empire:
The creator duo parlayed their YouTube stardom into creating a media company called Mythical Entertainment that Spotify, Roku and Candle Media are in talks to invest in, according to The New York Times.
Pinterest’s creator fund:
Pinterest has shut down its creators rewards program that paid creators for posting “Idea Pins,” which can be videos, that perform well on the platform, according to The Information.
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