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The online video ad business, like any infant, is still discovering what works and what doesn't.
So it's no surprise that executives from video ad companies say it's too early to predict what formats will end up generating the lion's share of ad dollars.
For now, though, one thing is clear, the pre-roll ad -- despite being disliked by users and maligned even by some who sell it -- has staked out an early lead.
"Most of our business is in pre-roll, because it continues to dominate in performance," says Tod Sacerdoti, founder and CEO of video ad network BrightRoll.
The San Francisco-based startup, which says it has served one billion ad impressions on more than 100 publisher sites since its founding in July, 2006, raised $5 million in a Series B round last month.
Sacerdoti made the comment during a panel discussion at the NewTeeVee conference in San Francisco this week, and most of his fellow ad execs echoed it. (Click on the video embedded in this post to hear Sacerdoti explain some of the challenges that are slowing down video ad adoption.)
"I believe in the pre-roll, it's the monetizing unit of choice," said Matt Wasserlauf, founder and CEO of video ad network and syndicator Broadband Enterprises. The New York-based firm, founded in April, 2004, says it serves up 800 million monthly video streams to 1,700 publisher sites.
The pre-roll has staked out its early lead almost by default over
rival formats, such as the post roll and the overlay, because many
advertisers are merely repackaging existing TV ads.
"We're getting tired of seeing re-purposed TV ads," Wasserlauf says.
And many consumers are turned off by the pre-roll, especially ones that last for more than 10 seconds or more.
After panel moderator Jeremy Liew noted the irony that the most disruptive ad technologies are often also among the most effective, Matt Sanchez, CEO of video ad platform VideoEgg, concurred.
"The pre-roll is the most disruptive and it depresses traffic, which is why publishers are looking for an alternative," said Sanchez, whose startup works with 150 partner sites and serves up 80 million ad impressions a month.
Still, Wasserlauf predicts that advertisers are learning to improve the format, and that "we'll see a lot more great pre-roll content next year."
And for now, even newer entrants into the crowded online ad marketplace see the pre-roll as their bread and butter.
"We support 10 to 15 different types of ads, and 95% of our business is pre-roll and overlay," said Jayant Kadambi of YuMe Networks. The Redwood City, Calif.-based startup, which allows advertisers to insert ads into downloaded content, launched in April with game maker Eidos Interactive as its first customer.
In September, YuMe's technology was chosen by Microsoft as the ad-serving technology for its beta run of Media Center, Microsoft's Internet TV service for home PCs.
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