Why the up-and-coming format is such an important development.
The :05 video ad format is rapidly gaining momentum, so today I'll call out the reasons it's such an important development.
The :05 standard is beginning to take hold in broadcast TV because of the DVR. DVR users frequently fast-forward through advertising. Being human, they typically fast-forward too far into the content. So they rewind. Research shows they're seeing the last five seconds or so of the last ad in the pod.
Logically, the last ad is becoming more valuable. The new trend is for networks to place a :05 ad at the very end of a pod. Expect to see more :05 ads in that position.
The Annoyance Factor
When it comes to broadband video, there are even more compelling reasons to begin investigating the :05 format, especially when you consider new video consumption in emerging media such as portable video players.
We've done significant research into video ads' consumer annoyance factor. One of our strongest findings is consumer tolerance for ads lasts five to seven seconds then immediately turns to annoyance:
Given the very short durations of typical broadband video, this format provides a short brand and message exposure opportunity within a consumer's tolerance range. This should drive video consumption in a streaming Web page scenario as well as acceptance of video advertising. We're currently doing research on consumer acceptance of :05 video ad pods within longer-form content. I'll probably be able to share results with you in the coming months.
When you extend the video annoyance factor to other video media, such as mobile phones and portable video players, we believe (and should have data in coming months to back up) that video ad tolerance will be a significant hindrance factor to growth. Certainly other factors must be addressed, such as counting, tracking, and cross-media frequency of video messages.
Frequency by the Numbers
I'd also like to see research on the value of the :05 format as it relates to frequency. When a consumer's exposed to a :30 brand message in broadcast and the advertiser's goal is a reach of 3-5, is there enough impact in extending those frequencies through online video?
What about long-form video content (e.g., TV shows) offered either through streaming Web views or in portable video scenarios? Will consumers tolerate a :30 pre-roll ad, followed by content with several :05 ads by the same advertiser (and perhaps others) spread throughout with extensions of the original message? We saw ABC inserting just a few ads in primetime content offered streaming from its Web site. It denoted in the player exactly where the ads would show up. But it limited the number of ads to just a few.
Clearly, ABC is monetizing online content less effectively with only a few video ads, compared to the 20 or so ads per half hour of content on TV. Say the publisher is getting $40 CPM (define) for a primetime commercial. It has 20 commercials in a 30-minute show (a conservative estimate) and reaches 10 million households. That breaks down to about $400,000 per ad, or $8 million per 30-minute show.
If that same show ran online with the same number of ads, we can expect a $35 CPM for premium broadband video pre-rolls. If there's just one pre-roll and 5 million additional people watch the show online, we get an incremental $125,000 in revenue for the network for that show. With four additional ads inserted, that's $625,000.
What happens if we sell pods of :05 ads similar to the broadcast experience? With a conservative $10 CPM, we get $150,000
per ad in incremental revenue for the network. It's also a more palatable user experience. What if we turned those :05 ads into ads with enhanced targeting or with the ability to let the user telescope into a long-form ad? If we just get a 50 percent CPM lift, this would turn into about $225,000 of incremental revenue per ad per episode. It turns a dud of a show into a much more interesting investment. With targeting and enhanced ad formats, we could easily double revenue.
The industry must focus on pushing the :05 format to increase the amount of inventory available to advertisers and they can start creating short edits of ads for use in other media. Right now there are very few 1:05 video ads available to run on broadband, let alone :05 ads. We need creatives to master this format.
We must also lock down the definition of this short-form ad format. There's work going on in the EU toward an :08 standard (about half of a :15). If we're going to go short, we should do it in a way that will make consumers happy while retaining brand value.
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