Can you still remember the internet without video content? A long-forgotten time – similar to the era of black and white television. Today, videos are the most sought after and therefore the most valuable property of a publisher. And videos are popular online: 50 million gigabytes of internet traffic stem from moving image content – a lucrative market for advertisers, publishers, and all other kinds of website operators. According to Statista, the sales volume of video advertisements online was around 363 million euros in Germany this year. The Privater Rundfunk und Telemedien e.V. Association is even more optimistic and predicts growth of 20 to 25 per cent in 2017 to approximately 500 million euros* for net advertising sales in the field of in-stream video advertising alone. In the USA, the advertising sales for moving image content is even forecast to be as high as almost ten billion euros in 2017**.
This is likely to create a gold-rush mentality in the video advertising market, which also has darker implications. The rapidly increasing range of in-stream video advertising available, irritating out-stream advertising, and users that block video ads using ad-blockers are only three reasons for the video drop-off rate increasing. We are seeing a trend that we recognize from classic display advertising: falling CPMs, and therefore an erosion of advertising revenue.
LaterPay for Video is the alternative
As of now, we are offering a way out of the downwards spiral of a growing inventory, shrinking CPMs, increased advertising expenditure, devaluation of the individual advertising formats, and user frustration. With LaterPay, video publishers can create alternative sources of revenue and reduce the proportion of ad-block users with minimal integration work required and the least possible inconvenience for the user. Videos can be sold directly from the video player, which is particularly well suited to high quality long-form videos, or users can turn off video ads with a single using the SkipAd function for a price of the publisher’s choice. Here too, the billing is done in the usual way thanks to our patented aggregation technology, according to the motto “use first – pay later”. Users who don’t wish to stop using their adblockers can also be prompted to pay, and therefore monetized, using LaterPay.
SkipAd is reminiscent of the well-known TrueView function on Youtube, however our solution is significantly more flexible as they can be configured on the back-end directly by the publisher via their LaterPay account. Depending on the target group, the range of videos and the advertisements implemented, the LaterPay purchase dialogue can be configured in various ways according to the following parameters:
The Price Model
- Single Purchase of an ad-free video for e.g. 5 cents
- Ad-free access to all videos in a range for a certain number of hours, days, weeks, or months by purchasing a TimePass.
- Subscription that allows all videos to be played ad-free and offers great convenience to the users thanks to the weekly or monthly subscription periods.
LaterPay’s video solution has been in use for the initial set of customers since mid-June and has shown promising results: no changes to traffic and additional revenue. For each 1,000 video views, there are approximately 1% of cases of SkipAd single purchases for e.g. 5 cents per video view. Thus, with 100,000 video views, this will give a CPM of 50 euros (100,000 x 1% x €0.05 = €50). In addition to the positive figures, LaterPay also leads to satisfied users, as they are offered an alternative to being shown ads or using an adblocker, which has been confirmed by the user feedback received.
Alongside the SkipAd function, LaterPay also offers the option for classic video sales. As such, publishers can become video dealers. Additionally, video-on-demand platforms and OTT providers can extend their existing sales funnel to include the steps “Try it out with LaterPay for Video” to “Take a peek with a Single Purchase or a TimePass”.
Technology and Outlook
The established LaterPay integration methods “Connector”, “Wordpress Plug-in”, and “REST API Connector” are also available for video sales and SkipAd. In order to make things as easy as possible for our clients and their end users, we are currently implementing plug-ins for foreign systems and are entering into partnerships with renowned video platforms, such as Ooyala. Then, the purchase options will be shown to the users directly within the video player.
We would be delighted to hear your feedback.