Adam Cahan is the CEO of Auditude, a Palo Alto, Calif.-based technology company that provides an ad platform for video management and monetization. He has also worked at MTV Networks (NYSE: VIA), Google (NSDQ: GOOG), NBC Universal (NYSE: GE) and McKinsey & Co.

The world of online video is abuzz with the concepts of TV Everywhere and On Demand Online, with their promise to significantly increase the amount of television content on the internet. What’s missing is much of a business model – and without that, of course, the companies behind these concepts are much less apt to be able to deliver on that promise. 

Answers are within reach, but first we have to puncture some myths. Here they are:

MYTH:  Content owners should be the only ones to sell their content online.

Channel conflict, defined as two ad sales teams selling the same brand or product, is definitely something to be avoided, but limiting the sales rights to one party is not the solution. The answer lies in permitting flexible sales rights between publishers and content owners, while implementing rules that prevent channel conflict.

Traditionally, content owners have commanded the highest premiums against video online by selling their brands, so all parties benefit when content owners have a right to sell.  But there’s a risk to letting only one party sell.  Let’s call it “no one sells,” which is when only a single party has the right but leaves a significant amount of that inventory unsold.

The solution – and it can lead to better sell-through and higher effective CPMs – is to let each party package and sell the inventory in ways that take advantage of their respective strengths or expertise. For example, content owners may restrict the right to sell on “brand” to themselves, while permitting third parties to sell across demographics or categories such as “premium video.” Much of this can be achieved through ad-serving technologies that can share inventory in real-time between content owners and publishers, dynamically generate different targeting models, and prioritize ads based on price, brand and other variables. 

We’ve mostly solved this in the offline world with, for example, the inventory sharing that happens between a cable company and a media company: One party sells local and the other sells national. 

MYTH: The only way to increase online ad revenues is to increase the number of ads.

The current debate focuses primarily on the number of ads, basically framed as: Too many ads and lose your audience, too few ads and lose your business. True, but there is more.

As an industry, we need to learn to optimize the ad experience just as we do the content experience. The goal is to create an ad experience that takes behavior into account. For example, ad patterns can be built based on a user session by asking:
• Where did the user come from? (search, browse, etc.)
• How much content have they consumed? (time, chapters, etc.)
• What type of content are they watching? (episodic longform, clip, music video, etc.)

We have seen great innovation in the approach to ad patterns.  For example, ad sequences or builds can target user sessions across an entire site.  These patterns trade off content consumption and ad delivery, creating an ad experience that is programmed for the unique combination of user, content and context.

MYTH: Every advertiser wants something custom so there is no ability to scale video advertising.

It seems like every day there is a request for a new set of ad products in video. We have seen Flash and interactive elements that do everything from overlays to full-page takeovers. The challenge for a publisher is to balance the expectations of an advertiser looking for “something new” and the publishers’ own ability to deliver these innovative formats without redesigning their site every day. 

There are three things we can do to anticipate innovation and maintain scale:

First, offer a Dell-like model for mass customization. Video ad standards exist in the form of VAST and VPAID that enable tremendous creativity.  These standards help define how ad units are rendered at video run time.  Video ad servers adhering to these models are potentially “plug-and-play” for new formats, instead of getting stuck in the custom builds.

Second, keep your premium inventory premium by managing ad rules and placement criteria. Publishers can leverage technology to enhance their existing targeting criteria and offer elements like category exclusivities even when multiple parties are selling, or offer premium spot placements in an advertising break that features multiple ads. For example, an advertiser may want to be the only automotive ad and be the first advertiser featured after the close of an inning in a Major League Baseball game.  By focusing on the delivery and placement as opposed to the new creative unit, we can create premium opportunities that don’t require site overhauls.

Finally, automate much of the rest. When it comes to other forms of monetization such as commerce, ad networks, cost per action (CPA) or cost per click (CPC), automation is the key to realizing sales efficiency and yield.  Serving the right ad at the right time is a computer-science opportunity, enhancing what has been exclusively an ad-trafficking challenge.