In 2012, OTV (online television), or distinctively pre-roll video, was the darling of the China Internet for brand advertisers that “discovered” it and began to invest at scale. JPMorgan estimates OTV ad revenue in China topped US$1.1 billion in 2012 (RMB6.6 billion) and will rise another 40 percent this year, to over US$1.6 billion (RMB10 billion), making OTV the fastest growing media segment in the digital channel. Ad revenue for Youku, China’s top online video content site would rank fourth among TV stations in China for 2012 – a clear sign of OTV coming of age in the country, ahead of the U.S. and other markets.
China has a unique OTV content ecosystem, where nearly all branded content (both foreign and domestic) is available online through multiple OTV web sites, such as Youku, iQiyi, Sohu, and Tencent, unlike in other markets. With this, alongside the rising costs of traditional TV, demand amongst brand advertisers to shift more ad budget and messaging into China’s digital video space has taken prominence and re-purposing TV commercials into fifteen second “pre-roll” advertising, i.e., placed directly preceding consumer-initiated content is a relatively uncomplicated way to achieve scaled investment in the digital environment.
Transposing audio-visual creative from TV to OTV has taken China by storm and stark similarities in advertising effect have been observed: OTV can appeal to advertisers by creating a viable brand-building context comparable to TV, which aids in the comfort around shifting media investments from television to OTV.
Early multi-channel campaign evaluations suggest that OTV (pre-roll video) can deliver brand impact similar to that of television when using the same creative copy: results from my company’s CrossMedia Research database evidences similar effects between television and OTV on key measures such as brand awareness, consideration, recommendation, and imagery. One general hypothesis is that the mindset of a user that watches a 15-second OTV pre-roll advertising preceding long-form content is similar to that of someone watching a TV commercial; in both cases content is consumed in a more passive, lean-back state (with OTV, it must be emphasized before consumer long-form content viewing is initiated).
Success has strengthened the call to seed TV creative into other media channels, like mobile phone, tablet, roadside, taxi, subway, office elevator, and residence elevator, simply to name a few options. The challenge is transforming 15 or 30-second creative originally created for dwell communication media (more time and opportunity to observe the full copy time) and transcending it to other more glance media.
Whilst effects of TV advertising and OTV advertising on consumers are relatively on par for the same ad copy, this may less often be the case when lifting the same advertising and screening it on other display media. Consumers simply are less inclined (or in the proper mindset, if you will) to take the time to stop and engage with a 15 or 30-second copy on an outdoor LCD screen when on-the-go or, for instance, in a crowded subway station.
A case can be made that online video viewing habits are moving away from PC or laptop and onto more modern forms, like tablets. Here the opportunity to leverage TVC potentially continues to be the same. In fact, 25 percent of Youku traffic is already mobile. Expanding inventory through mobile ad platforms will help to relieve the current shortage of OTV ad inventory in China’s tier one cities, where TV pricing is highest.
As OTV continues to grab share from television, brand advertisers in China will better leverage OTV advantages in demographic, contextual (content-based), and even time-based targeting. China represents a vast combination of developed and undeveloped markets, making the city-by-city demographic targeting OTV sites essential for campaigns to be effective. On the contextual front, advertisers are working with OTV sites to bundle advertising media buys together with content, associating their brands more closely with particular TV dramas and variety shows that reflect and amplify brand values, rather than just buying “run-of-site CPMs.” Advertisers are also prioritizing OTV “lean-back” times (evenings and weekends), when consumers are more receptive to advertising.
Leapfrogging ahead of its peers in developed markets, brand advertisers in China are pushing new frontiers and setting standards in OTV best practice that will be emulated globally as other markets begin to turn on to OTV.
By Chris Maier, head of media and digital solutions, Greater China at Millward Brown.
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