Why are video platforms still selling ads in the age of ad blockers?

#VIDDO 6 stakeholders that online video is hurting and why

When you’re scrolling through your social feeds watching bits of videos, or swiping through a roll of instastories, do you ever feel like you’re not so far off from a Blade Runner 2049-esque world? The constant flood of videos spliced with pre-roll and interstitial ads is already overwhelming. What if it gets to the point where the massive 3D holograms and overlapping surround sound jingles of Officer K’s world bring your feeds to the next level of ad overload?

616 million devices with ad blockers installed, and thousands more installed every day, is an indication that more and more viewers feel the same way. Ad fatigue is creeping in.

Ad fatigue’s death knell for video platforms

The combination of ad blockers, ad fatigue and digital marketing is the lead up to a sure tragedy.

The direct result is a drop in conversions, which hurts advertisers and forces them to pay more for the same number of shoppers. On the other side are the viewers themselves, who are tired of ads, and increasingly distressed about platforms selling their information in the wake of GDPR and recent data scandals.

But the plot thickens when we consider other stakeholders, and the entire industry, built on this house of cards.

Most of the leading video platforms, including YouTube and DailyMotion, rely almost entirely on ad revenue for income. When viewers are blocking ads and advertisers convergence continues to decline, the faucet will run dry. YouTube has been running at a loss for years, and is financially dependent by its parent company, Alphabet.

In short: Video platforms that rely on ad revenue as their main source of income are running at a loss, on an unsustainable business model.

The death toll doesn’t stop there

A video platform depends on creators and distributors to ‘make the stuff’ and ‘get the eyeballs.’ At the end of the day, these doers are the least compensated.

99.9% of creators are paid a fraction of the cost of content production; barely enough to make ends meet, let alone make a profit. These payouts are calculated through a complex system where views and clicks are just two factors. And of course none of them take into account the loss suffered by creators through stolen content and copyright infringement.

As for the eyeball earners, the foremost among these are called influencers. The more successful are ‘micro-influencers’, who are more credible influencers with smaller, loyal and high-converting audiences.

However the same opaque payout system that short changes creators make it impossible for micro-influencers to fairly monetise on their distribution power. Today’s platforms have no way of compensating small follower bases, despite the fact that they’re more efficient than celebrity influencers.

Going cross-eyed from all this pain? Let’s recap.

Users are tired of watching ads, defending themselves with ad blockers and even morphing into evolved beings with ‘ad blindness.’ Proliferating data scandals and GDPR is fueling a demand for more compensation and power over personal information.

The price of conversions is rising steadily, and advertisers are forced to increase digital ad spend to reach the same amount of shoppers.

Video platforms don’t compensate the large majority of content creators with enough to cover the cost of production, let alone make a profit.

Even though micro-influencers have the highest credibility and the most convertable audiance, they are unable to properly monetise their content due to their smaller follower base.

Online video platforms themselves can’t cover the high cost of streaming and storage, seeking to remediate profit loss by selling even more ads.

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https://medium.com/viddo-io/why-are-video-platforms-still-selling-ads-in-the-age-of-ad-blockers-86a56eb920e5