Video Ad Explosion
By: Kathi Black and Diane Anderson
Marketers move online to get their ads in motion on the small screen.
In early August, Foster's Beer announced two changes. First, they'll no longer try to be "Australian for Beer" and, second, they're moving all their television ad spending online.In early August, Foster's Beer announced two changes. First, they'll no longer try to be "Australian for Beer" and, second, they're moving all their television ad spending online.
Although the decision only affects a $5 million ad budget, it's a bellwether: Companies are flocking to online video ads as the way to reach customers.
Recent reports claim advertisers will spend $74 billion to buy airtime on TV in the U.S. for 2006. The online ad spend is set to reach $26 billion or 9% of the total US market.
"This [online video ads] could very well become the dominant form of online advertising ... probably within the next 18 to 24 months," says Bob Hanna, senior vice president of sales at Burst Media, which offers a network of publishers for advertisers.
A recent local online advertising report by market researcher Borrell Associates expects local video advertising to become a trackable category in 2007. And the biggest online ad opportunities currently revolve around real estate and automotive. Combined, these two categories comprise slightly more than one-third of all local online advertising, which is expected to grow 31.6 percent to a $7.7 billion category in 2007.
For its new online video ad push, Foster's Beer is on Heavy.com, the online video site geared toward young males. Prior to Heavy content, which ranges from videos of scantily clad young women to spoofs on America's Funniest Home Videos, you can find video ads for candy, beer and cars. But the edgier and more risqué videos run without pre-roll ads.
ONLINE IS NOT TV
Heavy's motto, "Because TV Sucks," is instructive. For five years, it has been said that online content is constitutionally different from television: Advertisers will have to change their approach to creating video ads. A panel of online advertising, media and Web executives at the OMMA conference in New York in September agreed the most effective online video ads should be 15 seconds in length or less. The panel also promoted the idea of creating spots specifically for the Internet and digital media rather than repurposing existing television advertisements. That way the ads can be developed to enable consumers to click through to gain additional product information.
Advertisers may also have to be more open about where these ads end up as demand increases.
McKinsey Quarterly, an online business journal from consultant group McKinsey & Co., recently determined that in 2005, 80 percent of online video ad inventory was being used.
"The maximum supply of video ads is currently about $600 million a year - far less than future demand, which we expect to reach $1.4 billion to $3.2 billion in 2007," the article "A Reality Check for Online Advertising" states.
Still, Randy Kilgore, chief revenue officer for Tremor Network, says, "The juggernaut called online video advertising is here to stay."
And content providers are rising to the challenge. In August, Google, Viacom and YouTube made announcements about video advertising solutions. Two months later, Google purchased the lessthan- two-year-old YouTube for a whopping $1.65 billion.
YouTube, which shows about 100 million videos daily, won't disclose its advertising fees for visible ad spots. Google, at the end of June, also started testing an advertising model that features some video ads in a sponsored section. Google would also not disclose the fee for those video ads.
Not only are publishers opening up space, but technology solutions are also increasing; for example, Burst Media is now facilitating streaming video within banner ads, and Klipmart, a video ad solution heralded for interesting innovations in video ads for movies, was acquired by DoubleClick in June. DoubleClick is also the parent company of affiliate network Performics. EyeWonder and e-line Technologies are also in the space.
Despite television screens getting larger and flatter, viewers are enticed by the flexibility of on-demand viewing that the Internet enables.
One source for online video placement is on television network sites. Fox is streaming more than 40 episodes of prime-time shows online, with Toyota as the sole sponsor, and other networks are following suit.
That's because most Internet users have watched online video; 25 percent watch regularly, at least once a week. Users regularly see online video ads and, according to the Online Publishers Association, 44 percent have taken some action after viewing an online video ad. Much of this reach comes during times when people wouldn't normally be watching TV, given online video's growing domination of the day-part audience.
And broadening the marketing window into daytime hours can be put to profound use. Thursday-night TV is no longer the last, best opportunity to influence consumers going into the weekend - that title is now held by the Internet on Friday mornings and afternoons.
Within these online shows, pre-roll, mid-roll and post-roll advertising is offered: just like on television. For instance, Heavy.com runs a static ad for Virgin Mobile for five seconds before one of their "Behind The Music That Sucks" shorts. There are also longer, more elaborate ads for Nike and Coors with production quality that is indistinguishable from television ads - and these ads are arguably as good as the content they precede.
Viewers are sometimes unable to fast-forward through "pre-roll" ads. Mid-roll ads crop up in the middle of a video. This format of advertisement would not be practical in a video short but makes sense in a streamed TV show. And, because content is limited, some companies offer ads at the end of videos - post-roll.
NEW OPPORTUNITIES
One benefit of streaming prime-time shows and live sporting events is ad opportunities go to marketers who would traditionally advertise with these shows as well as new advertisers who could not afford network television ads. But online video, except in cases like Fox's shows or news shows like Evening News with Katie Couric (which is being streamed online), doesn't look like television and should not be treated like television by advertisers.
The bread and butter of sites like AtomFilms, Heavy and Yahoo Video is short video. Most video online is less than five minutes long, and advertisers can't run one-minute commercials they've shot for television.
Companies who have a difficult time understanding that are "trying to apply an old media solution to new media," says Forrester senior analyst Brian Haven. "In the long run, that's just not going to be a very successful way to approach online [video] advertising."
DoubleClick's vice president of rich media, Ari Paparo, notes that for online video ads, less is more. "You aren't going to be able to repurpose TV ads - a 30-second ad doesn't work online. Fifteen seconds is the maximum for a single ad unit." Paparo suggests a new model: a short preroll spot of three seconds and then the content, then a long post-roll spot. Continued on Page 2...
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