The Allure of Online Video

When marketers aren’t contemplating social media buys and scrambling to return reps’ phone calls, many are fixated on online video. The topic is more relevant than ever as research continues to show an upward trend in online video usage among consumers.

A recent report from the comScore Video Metrix service found U.S. Internet users viewed more than 12 billion online videos in May, an increase of 45 percent over May 2007. Among the top sites to attract consumers were Google’s YouTube, Fox Interactive Media, Yahoo sites, and Microsoft sites.

If that isn’t enough to convince you that Internet users are drawn to video like moths to a flame, witness the rapid rise of Hulu. The site is a joint venture between NBC Universal and News Corp. and offers full-length broadcast TV shows and movies free of charge. Although Hulu was only launched in mid-March, it ranked 10th among Nielsen’s top 10 video sites in April, with 63 million video streams and almost 2.5 million unique viewers — and knocked Google Video off the list in the process. In May, it took the 10th position again, this time on comScore’s list of top U.S. online video properties, with over 88 million videos viewed.

Indeed, studies indicate that video is now an integral part of many consumers’ online activities, particularly for those below age 30. Last December, a Harris Interactive survey revealed 65 percent of American online adults have watched a YouTube video, and 42 percent visit the site on a regular basis. Over one-third of online video viewers and half of those aged 18 to 24 said they enjoy discovering a “cool video online” and discuss the videos they view with their friends.

As in most instances where a medium cultivates a large following of consumers, video has created some interesting opportunities for media buyers. We essentially have two options to choose from.

Aligning With Aggregators

Some of us go for volume and align our clients’ brands with video aggregator or repository sites (like dominating property YouTube), where videos and potential customers are available in abundance. Major brands like General Mills and Pepsi have expressed their commitment to advertising with YouTube, and many more were in attendance this February when Google held what amounted to an informal advertising upfront to woo advertisers and play up the attributes of its video empire.

According to “The New York Times,” advertisers like General Mills view YouTube as “a natural bridge from what has always worked for us (through TV advertising) in the past to what we believe will work in the future.” In response to this mentality, Google executives emphasized both the similarities and differences between YouTube and TV: YouTube’s partnerships with content creators deliver premium video content that goes beyond the CGM (define) clips most people associate with the site, and YouTube users are “more engaged” with the clips than consumers are with traditional television offline.

Buying the Brands

The alternative, of course, is to buy on sites that create their own video content. This approach capitalizes on a site’s existing brand and the affinity that users have with it. Just as ads surrounding branded site content in text form benefit from the positive association and trust consumers feel for it, advertising alongside a publisher-developed video has some palpable benefits.

On the other hand, publisher-created videos are generally in very limited supply, making it more important for advertisers to select the right type of video format — namely, one that won’t prompt a high abandonment rate among site users. Some ideas include employing :15 ads instead of :30 and opting for alternatives to pre-roll ads. Although pre-rolls remain the industry standard, they’ve been found by some video sites to incite an abandonment rate of around 70 percent.

Determining the best strategy for employing video can be a challenge for marketers, regardless of their dedication to the medium, which sites they work with, and what types of formats they choose to use. Next week, I’ll offer up some best practices and insights into what planners and buyers are doing to make video work for their campaigns.

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