STEPHEN BACH: Are the Days of the Video Syndication Middle Man Over?
This post was originally published on Medium.
I was having a conversation with the head of a large video syndication business earlier this year and I was stunned by what he was admitting to me.
The days of a company existing solely by putting video players on publisher web sites are over, he said.
That is to say, a company whose entire business model is taking video from content owner X, mixing it with advertising, placing it on publisher Y’s page, and keeping a big percentage for themselves… that’s not going to work anymore.
He was describing his own business, I thought. It’s over?
He went on: desktop video advertising demand for these platforms is vaporizing quickly. Nobody is good at monetizing all the mobile web views. Browsers are cracking down on aggressive auto-start behavior.
“There’s no oxygen in that model,” he said.
I spent nearly 10 years in that model. I thought it was a pretty good one, at least for a while. But there are a number of challenges that may be insurmountable for these aggregator-syndicators to survive, let alone thrive.
Challenges to the Legacy Video Syndication Model
Transparency and Control
First, advertisers are more concerned than ever about quality and brand protection. The Wild West days of below-the-fold-right-rail-autostarting video were at first reined in by concerns over viewability, player size and other performance metrics. But a syndicator can only enforce so much good behavior on their publishers — and their incentive to do so is sort of compromised because “better” behavior directly and negatively impacts their own revenue.
In more recent years, bot traffic, “zombie websites,” and suspicious domains have resulted in millions of dollars being spent on fraudulent platforms. IAB’s ads.txt initiative has successfully introduced some sanity to the ecosystem, ensuring that ad dollars are going to the sites where advertisers actually expect them to go. This certainly complicates matters for the syndicators, requiring that they place an ads.txt file for every possible demand source (dozens, hundreds of lines maybe) on each publisher site and that they confirm these files stay updated to keep the dollars flowing.
Content owners have also long lamented the opacity of the middle man syndicator model. There’s still a sense of sending a MRSS feed of videos into the atmosphere, crossing your fingers and (maybe) getting a report back a month later of where and how your video was used. Even with the strictest list of approved publishers, video would often end up in unexpected places.
The Economic Compromise
But more important than transparency and control, there’s an economic issue here. Now that content owners have the technology (ahem… Vemba) to go direct and build their own network of distributors, how can one justify paying a large share of revenue (25–50%) to a middle man?
Finally, the legacy model required much compromise from the publisher actually displaying the video on their site. Syndicators have typically offered a very containerized package of advertising, video and analytics. For a long time publishers shrugged at the notion of having an entirely different video player for licensed content. They received no credit on measurement platforms like comScore for their activity. They could not easily participate in the sales of licensed video. Those days are over for sure. Pubs want flexibility and the tech is here to achieve that.
What’s Next for Syndication
I have a couple of predictions:
- With so many more options for spending money on premium video — OTT, branded content creation, YouTube, Facebook, Instagram, Twitter — we’re going to see a reduction in either CPM or sell-through rate (or both) for the video syndication marketplaces, which means there’s not going to be a big enough pie for content owners, syndicators and publishers to all get a slice (not to mention agencies, DSPs, SSPs, ad verification platforms, etc).
- Syndication in general isn’t going anywhere and it will remain a critical part of the content owner strategy. However, instead of going through a legacy aggregator-syndicator platform, you’ll see more direct transactions between content owners and publishers (e.g. smaller, contained networks like CNN’s Video Affiliate Network) plus experimentation with new types of deals: see “Cheddar’s Next Platform Is The Gas Station Pump.”
So, are the video syndication middle men toast? It’s going to take some time, and the smart ones will diversify their businesses and adapt to the new conditions. But if they don’t, I agree there is very little oxygen left in that model.
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