Why Online Video?

Pioneering advertising agencies, both traditional and interactive, are increasingly exploring ways to leverage web-based video for their clients at different stages of the customer interaction — determining what works, what doesn’t and what they still need to learn. Whether it’s a video banner, an interactive long-format video or a web-based commercial, many agencies are being charged with building, branding and managing custom web-based video interactions for their clients. But do they truly know how to make it work?

Brand marketers know that customers live 24/7 and globally on the web, and many are already re-deploying advertising dollars from traditional media to the web. In fact, investment bank Piper Jaffray says global online ad revenue will jump to more than $80 billion in 2011 from $32 billion last year, noting that the internet is now regarded as a mainstream media outlet.

But why online video?

In the early days of web advertising, brand advertisers had little interest in web banner advertising — they considered it ineffective and a waste of advertising dollars. Traditional advertising agencies never really embraced internet advertising and lacked confidence in banner ads. And with good reason — text and graphics-based banner ads aren’t emotionally engaging or exciting in the least.

On the other hand, television commercials have proven extremely effective at selling products and establishing a strong emotional connection between brands and consumers. However, traditional television advertising has come under attack in the past few years as DVRs allow consumers to skip ads and millions of ad-free TV shows are now sold on DVD. In addition, the medium has historically raised rates even while audiences declined and audience fragmentation by cable makes it more difficult to buy spots and target the right audience.

The interactivity of the internet is being combined with the trend toward on-demand and anywhere TV viewing. This change is increasingly referred to as “Television 2.0.” Without a doubt, video is the most powerful way to tell a story, capture the imagination, argue a point and entertain and inform a population that has grown up with a preference for watching and listening over reading.

The proliferation of online video programming has opened new doors for advertisers and they are poised to jump in with both feet. Online video advertising efforts, whether to attract, engage or persuade the consumer audience, will be a significant new source of online advertising revenue as an increasing portion of the $54 billion U.S. television advertising market is spent online.

Online video has the potential to deliver far better targeting than traditional methods and provide life after the 30-second commercial. In fact, industry pundits are estimating that worldwide internet television ad revenue for 2011 will be between $5.8 and $10 billion.

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