Online video advertising has become 'a tale of two markets'

When it comes to Web video advertising, Silicon Valley technology and Hollywood-style deal-making mix like oil and water. The online video ad business is bifurcating into two markets -- one for high-end, long-form content, the other for shorter Web videos paired with less-lucrative ads. That's according to the CEOs of several mobile ad start-ups, who were in San Francisco recently for a tech investing conference hosted by Goldman Sachs.

In both segments of the business, the shift of Web video viewing from desktop PCs to smartphones and tablets is having a huge impact on prices. In fact, per-unit rates for ads served onto tablet computers, which had been equal to or less than rates for desktop ads as recently as 2013, are now more expensive by far. "Tablet rates are twice desktop rates," says Rajeev Goel, CEO of PubMatic, which operates one of the largest mobile ad technology platforms. "Smartphone rates are some discount to that."