Step aside, MFA sites. Another debate is heating up in the world of advertising.

Advertisers and agencies are putting more pressure on publishers regarding how they label their video ad inventory.

Recently, The Trade Desk DSP excluded Yahoo's video ad inventory from their purchases. TTD stated that it was incorrectly labeled as instream, which sparked significant discussion in the market.

Now the industry is questioning how much incorrectly labeled video inventory is on open auctions.

Instream video ads are those that users expect to see when visiting a page to watch video content. They play with sound in the player. Outstream video is any other format that does not meet the instream criteria.

“Outstream video is essentially moving banner ads that annoy users,” says Scott Konopasek, media consultant at Pant Rhei Consulting.

Instream Shortage

In open auctions, the amount of outstream inventory significantly exceeds instream, leading to manipulation of labeling.

For example, one of the main characteristics of instream advertising is that the sound in such a video is enabled by default. However, according to advertising agencies interviewed by AdExchanger, only 5% of the video inventory labeled as instream and available on open auctions plays with sound. At best, the share of such video inventory with sound does not exceed 15%.

Scarce instream inventory is often bundled by publishers and SSPs with less attractive outstream placements, such as sticky video players with sound off. This combination allows outstream videos to be sold at a higher price, while lowering prices for instream, which harms both advertisers seeking premium placements and publishers selling quality instream inventory.

Experts told AdExchanger that most publishers and SSPs are not interested in accurate video inventory labeling. However, they believe that pressure from major agencies like TTD will help correct pricing issues caused by selling outstream as instream.

Why is there such demand for instream?

Advertisers prefer instream ads because they most closely resemble television advertising. According to IAB Tech Lab classification, users expect to see ads in the player, ensuring a better user experience.

According to Dave Morgan, founder of the advertising platform Simulmedia, instream is much more effective at engaging audiences than outstream.

When advertisers think of instream, they think of YouTube. When they think of outstream, they envision sticky video players without sound that annoyingly follow users as they scroll content.

“When buying video ads, I want people to be able to hear the sound,” says Konopasek, “and I don't want my ad to be relegated to some tiny corner of the page.”

Selling, Buying (and Labeling) Video Content

The problem is that publishers and SSPs must label the video inventory they sell themselves by filling out the appropriate fields in OpenRTB requests.

And although it has been more than a year since the IAB Tech Lab published new standards for instream advertising, some publishers do not comply with them. They continue to label outstream as instream because such ads are typically more expensive and their CPM can start at $15 and above, while outstream is usually half as cheap.

In April, the MRC recommended that verifiers consider the intentional mislabeling of outstream inventory as fraud (IVT). (I wrote earlier about the updated MRC standard)

According to Erez Levin, director of Emet Advisory, who worked at Google for 13 years, buyers now have grounds to demand refunds for such placements.

Meanwhile, SSPs combine outstream with instream displays because it helps agencies achieve their key metrics for video purchases, such as video completion rate (VCR) or visibility. And buyers see a higher ROAS when more affordable displays are added, which helps SSPs stay in business.

Therefore, many publishers and SSPs will continue to set higher prices for incorrectly labeled inventory as long as it remains unpunished.

Meanwhile, many publishers offering instream inventory also sell outstream. So they are unlikely to lower the cost of outstream for the sake of a smaller volume of instream.

In addition, buyers typically cannot know exactly what they are bidding on until the purchase is complete.

According to Rocky Moss, CEO of DeepSee.io, data log analysis can reveal many indirect signs that an ad video is genuinely instream. For example, whether the sound is enabled, the size of the video player and its position on the page, or the device on which the video was viewed. However, buyers generally do not receive such reports until after the auction is over.

According to Moss, DSPs, including The Trade Desk, can filter inventory based on criteria such as video playback with sound, a certain player size, or display on a specific device. However, this does not help buyers determine if the video content meets the criteria of being in-stream, which is another requirement for in-stream placement.

Verifiers, such as IAS and DoubleVerify, could contribute more to checking the accuracy of video inventory labeling before placing bids, Moss noted. However, the issue of incorrect labeling is not limited to verification technologies alone, he added.

The problem persists, firstly, due to the sellers' desire to sell more and at higher prices, and secondly, because advertisers prefer metrics that look attractive and that can be slightly tweaked by inventory providers.

Direct and Curated Deals

According to Morgan, “the best way to avoid buying poor quality inventory is to enter into direct deals.”

Ultimately, partly due to the limited amount of instream inventory, it is mostly sold directly.

“Whether it's PMP or PG deals, the industry is increasingly using these methods to acquire inventory, leveraging all the advantages of programmatic,” notes Morgan. “At Trade Desk, they are discussing the creation of a pre-sale video ad market that will operate like a futures market.”

DSPs can be more active in creating pools of reliable publishers whose inventory meets instream requirements.

For example, DeepSee recently worked with a client who used sound presence as a filter when purchasing instream inventory. They tested buying from the same publishers through two channels: The Trade Desk SP500+ and open auctions.

“The purchase metrics with the sound filter were significantly higher for the TTD SP500+ segment, likely due to targeting applied at the ad block level,” explains Moss. “This is important because even on the same site, in the same section, some articles may contain instream, and others may not. Ad block level targeting allows for more accurate determination of which video blocks are genuinely instream.”

And as the Yahoo incident shows, TTD is not shy about naming companies that do not meet MRC standards, says Levin. Their “message to major publishers and SSPs is: ‘Get your house in order and accept the financial consequences, or we will ensure you face not only financial consequences but also reputational damage.’”

Related materials:

• Why do viewers mute videos?
• Using AI in Ad Fraud and Disinformation
• Yandex Updated the Design of InStream Format
• Curated Auctions