Online Video Has Arrived, But Challenges Remain

With major portals investing in video, independent video networks proliferating, and user-generated video sites popping up every other week, it’s fair to say that online video has arrived. The challenges for advertisers now are to better target their message, measure results and explore new advertising models, all without disrupting the user experience.

“Marketers are using video as common practice to create more emotionally compelling engagements, and consumers using it to create more entertaining experiences,” Dan Goodman, senior partner and managing director at OgilvyInteractive, told ClickZ. “I think we’re seeing video moving quickly on its way to being ‘mainstream,’ for whatever that means for digital.”

Video ads are best utilized in one of three ways, Goodman said. They can deliver an emotional experience to deliver depth and duration of brand engagement; they can be used as an engaging ‘shortcut’ to convey complicated chunks of information in easily digestible chunks; or they can emulate entertainment content so that the content itself becomes the marketing message, he said.

“As we improve our ability to deliver video, it’s time now to improve our ability to deliver ads near the content or otherwise embed a brand,” John Cate, VP and national media director at Carat Fusion, told ClickZ. “Consumers are ready. They’re devouring video. What’s holding things back is the user experience.”

The biggest threat to a good user experience with video is pre-roll ads, Cate feels. Pre-roll, while valuable as a first step, risks hindering user acceptance of video, and can rush the creative product to squeeze the message into a :10 to :30 window, he said.

“The pre-roll model is valuable, but it should not be the primary way of thinking about video,” Cate said. “Carat Fusion will execute over 1 billion pre-roll impressions this year, but we’re also looking for ways to do more embedded and post-roll ads, and sponsorships of other video content.”

Measurement can be a challenge once advertisers look beyond the usual two-dimensional metrics familiar to online marketers, Cate said. “What we don’t have is organic data that tells us we’ve moved the brand,” he said. “The challenge for portals is to show that you can accomplish as much branding with online video as you can via broadcast or network TV.”

While many video ads outperform other ad units on the measure of clicks alone, it is important for marketers to focus on other metrics to get to the real value of video ads, Goodman said.

“They need to move beyond CPM and click metrics and ask questions like: ‘Can video create efficiencies by delivering my entire brand experience off my site and in an environment where my consumers naturally visit, thus reducing the burden of driving clicks in the first place?’ ‘Can video accelerate users’ decisions about my products or services such that they’ll act on those decisions faster?'” Goodman said. “The more we think about video in this light, the more we’ll value it based on its unique capabilities and relevance in the communication mix and less on standard performance metrics which were never created to accommodate the wide range of value video can bring.”

Other frustrations of marketers include the lack of targeting schemas available, lack of competitive separation, and lack of syndicated research covering online video, according to David Cohen, U.S. director of digital communications at Universal McCann.

“Without the research, we don’t have a firm handle on delivery or ratings. It’s a challenge for us to be able to compare apples to apples,” Cohen said.

Cohen said comScore’s long-standing research product has limitations, especially with Flash video, and Nielsen//NetRatings’ offering is too new to have made an impact yet.

Some of the biggest advertiser concerns center around keeping customers engaged with the ad, using repurposed or original content, and tracking and measuring video ads, according to an informal survey of media buyers by interactive agency WebAdvantage. Lesser concerns expressed by respondents included worries about finding quality inventory, optimizing ads, and sourcing placements.

“The recent buzz about online video advertising has been astronomic. You would think that everyone is suddenly and expertly doing online video advertising,” said Hollis Thomases, WebAdvantage’s president. “This survey reveals this not to be the case and that, though promising, there are many immediate concerns about this form of advertising that need to be addressed.”

Successful video advertisers generally fall into two camps, Cate said. There are those with a large broadcast budget and plentiful commercial assets to move to pre-roll ads. “It’s a similar model, so it’s not hard to convince them of the benefits. Moving them to user-generated content and video communities is not as easy,” he said.

The second group includes advertisers with authentic brands and a loyal customer base. “Companies that have advocates and evangelists of their brands can make a good transition to the community sites,” Cate said.

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