Recent innovations in video reveal some solid opportunities for advertisers to get in on the channel.
When large brand advertisers consider online video, they typically think of it as an extension of their TV campaigns.
As with the boob tube, they want the digital video content they advertise against to have high production values and long-form programming. And that's limiting, to put it mildly, according to Chris Allen, director of video innovation at Starcom USA.
"If you're only looking at long-form television content, you're only considering about 1 percent of the total reach of online video," he said.
Direct marketers and smaller companies often experience no such qualms, a decided advantage in the Wild West atmosphere of Web video. An examination of recent innovations in video reveals some solid opportunities for advertisers of all sizes to get in on the channel - and suggests marketers are finally beginning to leverage its unique attributes.
Video Ad Networks Rush In
Starcom's Allen manages video media strategies for big advertisers like Coke, Kellogg's, and Procter & Gamble. His agency estimates 40 percent of online video consumption consists of user-generated content on YouTube; another 30 percent is adult content; and most of the rest is short-form and semi-professional video designed for the Web. Historically, his clients don't want any of it.
But that's beginning to change. Since short-form professional video content can be fragmented and hard for individual marketers to aggregate through direct media buys, a number of video ad networks are attempting to fill the gap.
"If you're not taking advantage of short-form content on video ad networks, you're missing an opportunity," Allen said.
The list of prominent video ad networks includes Tremor Media, BBE, BrightRoll, SpotXchange, and YuMe. As a rule, they make money by aggregating video ad inventory on both broad-based consumer sites and niche special-interest sites. For instance, BBE's network includes MSN, Yahoo, MLB.TV, and Parenthood.com, among other properties. While these companies may offer a range of ad formats - including overlays and in-banner video - their focus is typically on pre-roll advertising.
By several accounts, the current field of video ad networks has found traction with major brand advertisers. "They are of growing importance," Allen said. "They make [video advertising] more turnkey for us."
The ad networks' own spending estimates bear out that reality. YuMe said its 2009 revenue was more than six times higher than the previous year. Last year, it served 110 advertisers represented by 80 ad agencies, with an average insertion order coming in at around $60,000. Another prominent video ad network, Tremor Media, served 394 advertisers. It declined to share revenue trends but said it's seeing considerable growth in the number of large campaigns reaching six and seven figures.
All video ad networks contacted for this story said the majority of their customers are brand advertisers, but they also shared evidence that a growing number of direct marketers and small and mid-sized businesses are also showing interest.
One indicator of the direct marketing potential of online video ads is the rise of video ad retargeting.
The practice is a variation of display ad retargeting, an approach by which online retailers and other direct marketers use first-party cookies to deliver ads to shopping cart abandoners and other non-converting site visitors while they're surfing other sites. The practice is common on large ad networks and exchanges such as ValueClick, Advertising.com, and Right Media.
But it hasn't been widely offered by video ad networks. Until recently, that is.
A number of video ad networks contacted by SES Magazine have begun offering video ad retargeting. They include YuMe, Tremor Media, and SpotXchange. Google does not yet offer retargeting in its video ad network, but an executive told us it may do so in 2010.
Every video ad network with retargeting capabilities offers its own flavor of the tactic. For instance, Tremor Media provides retargeting for in-stream ads, like the others. But it can also retarget using other formats - such as video ads in banner units - after exposure to an in-stream ad.
"Most marketers are using in-stream for branding and therefore there's more demand for audience targeting than retargeting when it comes to in-stream," a Tremor rep said. Another video ad network, YuMe, said demand for its own retargeting solution has increased. But it too acknowledges the bulk of its customers are brand advertisers. Less than 10 percent are direct response marketers, it said. (Brand advertisers generally don't care about retargeting since they're not driven by short-term goals to convert prospects.)
Jill Groebl, VP of digital marketing at Kansas City-based MMG Worldwide, said retargeting has helped her travel-focused agency increase interaction rates with video ads. MMG is more video-focused than many agencies, with 15 to 20 percent of its spending going to the channel. Clients include Colorado Tourism, Barbados Tourism, and Holiday Inn.
Groebl has been pleased with the retargeting abilities of SpotXchange, though achieving much audience reach is hard. She said one of the benefits of SpotXchange is its "detargeting" capability - that is, setting frequency caps to avoid serving retargeted ads to individuals who are not converting.
"The retargeting that we have done has been extremely beneficial," she said. "Just to look at some recent numbers, we've seen anywhere from 5 to 10 percent increases in interaction rates."
YouTube's Promoted Videos
You can't discuss online video without mentioning YouTube, now the second largest U.S. search engine, according to some analyst reports citing comScore qSearch data.
For large brand advertisers, YouTube's various video ad opportunities have failed to gain much traction - except for its home page, which was often sold out during the last half of 2009.
"Clients are still not terribly interested in YouTube, other than posting their own content and to some degree doing branded content," Allen said. "We can't get clients to move. There's this fear of the unknown and potentially airing in an environment that they don't think is pristine."
Yet after struggling for years with conventional approaches to monetizing YouTube, Google may have hit on something big with a year-old ad that closely mirrors search advertising.
Advertisers with video content can place keyword-targeted ads that appear against relevant queries.
For instance, the maker of an oral hygiene gadget called OraBrush has achieved considerable success with comic videos targeted to keywords like "bad breath." According to YouTube, 6 million of OraBrush's roughly 8 million video views have come from promoted videos.
More recently, Google began distributing YouTube's promoted videos ad listings on its AdSense content network. Because of this evolution and the ability for advertisers to create promoted videos directly in the search interface, what began as a sponsored search format on YouTube has lately begun to look like a lynchpin of the video giant's monetization scheme.
The numbers prove the approach is working. Clicks on promoted videos have doubled from Q3 to Q4, according to YouTube spokesperson Aaron Zamost.
"We now have thousands of businesses using promoted videos campaigns every day," he said.
This column originally appeared in the March 2010 edition of SES Magazine.
On the heels of a fantastic event in New York City, ClickZ Live is taking the fun and learning to Toronto, June 23-25. With over 15 years' experience delivering industry-leading events, ClickZ Live offers an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!
Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects.
Hong Kong, May 5-6, 2015
Gartner Magic Quadrant for Digital Commerce
This Magic Quadrant examines leading digital commerce platforms that enable organizations to build digital commerce sites. These commerce platforms facilitate purchasing transactions over the Web, and support the creation and continuing development of an online relationship with a consumer.
Paid Search in the Mobile Era
Google reports that paid search ads are currently driving 40+ million calls per month. Cost per click is increasing, paid search budgets are growing, and mobile continues to dominate. It's time to revamp old search strategies, reimagine stale best practices, and add new layers data to your analytics.
May 6, 2015
12:00pm ET/9:00am PT