Truth About Video Online

There is no doubt that online video advertising holds a great deal of promise. It’s immersive, rich and potentially highly engaging. Traditional brand advertisers innately understand online video with its parallels to television advertising. Coupled with the possibility of interaction and sophisticated targeting capabilities, it entices advertisers with the tantalizing promise of the 30-second spot — only better.

A 2007 eMarketer report, Video Advertising Online: Spending and Audience, projects that the online video audience will hit a mass-market benchmark this year as more than 50 percent of the U.S, population will watch video online. eMarketer also projects that 2008 will see $1.35 billion spent in online video advertising in the U.S., which is expected to grow to $4.3 billion by 2011.

Yet, the promise of online video advertising recalls the heady days of the early digital advertising industry. There is a great deal of hype, propagated by publishers over-promising on the abilities of the media vehicle. Advertiser exuberance and heightened expectations are predictable but will inevitably result in disappointment as online video advertising proves much more difficult to execute and deliver than anticipated.

Let’s take a look at some of the most common myths about online video advertising and examine the realities.

Myths 1-2: Pre-roll vs. in-stream; commoditized vendors

Myth #1: Pre-roll is more effective than in-stream ads.
Reality: The truth is, it’s simply too early to declare any one video format the “winner.” Certainly, pre-roll is hard for audiences to ignore and impossible to skip. Yet some video vendors claim they’ve seen pre-roll abandonment rates as high as 70 percent on some videos. Others have found pre-roll to be much more effective than in-video ads because the audience is already accustomed to the format through television. There is clearly a need for more research, as well as metrics to define effectiveness.

Another possibility is allowing consumers to control the advertising they see, as well as the format, as Hulu is now doing. During certain shows, viewers are able to choose which commercial they want to watch. Additionally, consumers can also decide what format they prefer — do I want to watch a two-minute ad (usually a film preview) before a show or movie with no other commercial interruptions, or do I want to watch the more traditional 15-second or 30-second spots intermittently throughout the show?

Clearly, allowing consumers to choose their advertising and maintain more control over the experience should gain traction as video advertising increases.

Myth #2: All video vendors are the same — it’s a commoditized business.
Unfortunately, not all vendors are created equally. The excitement of running an online video campaign is quickly diminished as marketers face the unpleasant reality: many vendors can’t deliver a consistent stream quality or bit rate yet. Thus innovative video buys are quickly rendered ineffective when actually executed.

The best way to avoid problems with the stream quality is to request maximum streaming specs before a buy is negotiated. Most vendors have set caps and ranges for different placements, so an advertiser or agency should be able to negotiate stream quality upfront, rather than discover post-buy that the execution is compromised by low bit rates.

Myths 3-4: Easy to track; should use TV metrics

Myth #3: Online video is easy to track, evaluate and optimize.
Reality: While the IAB has made great strides in determining online video ad guidelines, there are still no standards for format, delivery or reporting. While many video ad units are clickable, there is also a segment that is not, particularly for pre-roll ads. As a result, advertisers need to deliver adjacent ads that provide an opportunity for interaction, typically a flash or GIF unit. Often, these two ads, though part of the same campaign, are delivered by different servers — one for the video ads and one for the adjacent units. While DoubleClick and other companies claim to offer centralized serving products for video, the technology has not quite caught up to the need.

So, while an advertiser can create a single video ad unit to run across multiple vendors, there is still no standardized reporting. Even the most rudimentary tracking and reporting is extremely difficult — and central serving, rather than simplifying the process, exacerbates the problem due to very wide discrepancies in reporting impressions. Thus, while inventory is sold and video advertising is hyped, the reporting technology and trackability lags behind advertiser adoption.

When an advertiser uses multiple video vendors, the problems are compounded since each uses a different reporting platform. The fact that some offer clickable pre-roll units while others don’t makes it extremely difficult to create benchmarks for performance across the entire campaign. Agencies complain that providing a basic campaign post-mortem requires too much work and, given the manpower required, is difficult to justify. 

Myth #4: Online video advertising should use the same branding metrics used for television.
Reality: Traditional branding metrics only tell a small piece of the story. Online branding is not just a measure of awareness and affinity. Advertisers are blessed (and quite frankly, cursed) with the ability to track a great deal more in their units than impressions and clicks. Marketers should use engagement and ad interaction to not just evaluate direct response, but also measure branding. Site-side behavior post-impression should also be used as a measure. Site-side behavior can be used to deduce branding — metrics such as usage intensity of visit, repeat sessions, page views, frequency and time spent. These should be used to quantify the brand impact of an ad.

Myths 5-6: On par with old media; TV better than web

Myth #5: Quality content is king, and old media is finally on even footing.
How many times have we heard this myth and yet, time and time again, are proven wrong? Great branded content behind a walled garden reduces its value dramatically. The belief that people will continue to switch platforms and follow the content simply isn’t true. YouTube still trounces the sites of traditional media companies that offer “exclusive” content. Old media remains extremely proprietary about content, but still hasn’t found a way to legislate, litigate or propangandize the problem away. In all likelihood, they never will and will eventually need to recognize that consumers control content online.

YouTube allows democratically-created channels, creates communities and draws in users for extended viewing sessions (via related content, response videos, etc). No other video vendor has been successful at offering those features, though many have tried to replicate them. Content owners need to realize they don’t own the audience anymore. Additionally, there is a huge world of new content for which there is no offline analogue — it’s distinct from TV. There is a huge supply of user generated content that is generating its own demand. Rather than reject this type of content, advertisers need to embrace it.

Myth #6: TV offers a better broadcast environment and higher quality than the internet.
While TV is certainly moving towards high definition, online is also moving quickly down that path. There is already HD content available online, including video games and movies. Most computers that have a 1280×720 or higher display resolution are already capable of displaying HD content. Nielsen estimates that broadband penetration will surpass 90 percent this summer. For the typical internet user and TV viewer, the quality difference won’t be that significant. Additionally, the internet obviously offers more interactivity than television — compensating for the slight disadvantage the internet has in broadcast quality. Marketers promoting products that tend to be more immersive, such as movies, video games or automotive, should use the highest quality video formats available (and expect to pay a premium, natch).

Myths 7-8: Repurposed spots are ok; no way to integrate

Myth #7: Using my 30-second television spot on the web will work just as well.
As one executive at a popular video-sharing network remarked, a straight transfer of a TV ad to the web is the “path to hell.” Viewers expect more from their online video advertising. The current advertising marketplace is highly disruptive. In this environment, marketers cannot be complacent. If they are, it won’t be long before more agile competitors that are creating better interactive experiences outmaneuver them. Some advertisers are using their B-roll to create internet-specific ads, which is a good start but marketers need to offer a much more engaging experience than a 30-second spot has typically offered.

Myth #8: Integration between video advertising on TV and the internet is too difficult. 
While advertisers should not take their 30-second spot wholesale from TV and deploy it online, they also shouldn’t create standalone spots for the internet that are distinct from the overall campaign. They certainly should be taking advantage of the interactivity offered by online video. As content owners are slowly discovering, the internet offers consumers the opportunity to engage in ancillary content, and the ability to drive users back and forth between platforms. Advertisers should buy advertising as integrated campaigns as media companies create more complementary content for their offline properties. Content companies and television networks are finally realizing their audience can be found in multiple places — online, watching TV, browsing video content on their mobile devices. There is an opportunity for agencies to play a strong role as intermediaries as they broker integrated campaigns to bring brands into interactive broadcasting environments.

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