Why Online Video Ads Should Be in Your Media Plan -They rock!

It’s been nearly two years since I wrote the column, “Online Video Advertising FAQ” and four years (!) since I surveyed agencies about the topic. Much has changed in online video advertising since 2006, particularly with respect to the availability of broadband and video ad inventory.

Related industry stats continue to excite: comScore reports that in May 2010, 183 million U.S. Internet users watched nearly 34 billion videos (averaging 100 YouTube videos per month per user…so guess where you’re going to get the most eyeballs). And eMarketer forecasts that spending for online video advertising will make the format the second biggest recipient of new ad dollars from 2010 to 2014: of the more than $13.6 billion incremental dollars that will flow into online advertising during that five-year period, 33 percent will come from video ads, representing a 30 to 40 percent increase in the sector. EMarketer predicts that most of this growth will come from “brand marketers looking for greater targeting shifting a portion of their TV budgets onto the Web.”

Gotta Love Performance

There’s even better reason for media planners to incorporate online video ads into their campaigns: they work! Online video advertising works for brand campaigns as well as traffic-generating ones. In April 2010, Nielsen found that premium online video ads actually outperformed traditional television ads in recall, branding, messaging, and likeability.

Released last June, DoubleClick’s Benchmarks Report showed online video ads astronomically outperforming average click-through rates (0.1 percent vs. up to 5.0 percent, depending upon the size and type of video ad). TubeMogul places the figure a bit lower at 3.0 percent, but that’s still a huge boost.

Online video advertising also outperforms when it comes to engagement and conversion, particularly when compared to other rich media ad formats. DoubleClick found 13 to 20 percent increases in ad interaction rates of video ads compared to non-video rich media ads. Video ad network BrightRoll conducted a study that found a five-month-long online video campaign for a major CPG company raised in-store sales over 6 percent.

A Performance Analysis

If you run the numbers using the effective CPA (eCPA) methodology I explained in a previous column, below you can see how even a campaign combining static .GIF formatted ads with online video ones can, though initially appearing more expensive, yield better return:

.GIF-Only Campaign Results
Impressions 4,000,000
CPM (network buys) $5.00
Total cost of buy $20,000
Combined CTR 0.19%
Clicks achieved 7,600
eCPC $2.63
.GIF conversion rate* 1.0%
Conversions achieved 76
eCPA $263.15
Combined .GIF + Online Video Campaign Results
Impressions 4,000,000
CPM (network buys) $15.00
Total cost of buy $60,000
Combined CTR 1.94%
Clicks achieved 77,600
eCPC $1.54
Video + .GIF (CVR)* 2.5%
Conversions achieved 1,940
eCPA $30.92

*CVR = Conversion rate and an average from an agency case study

If you take into account the pass-along value of videos through e-mail and social media, you can see impressions rise and the potential for an even further-reduced true eCPA.

An Interactive Advertising Bureau study has been helpful in shedding light on performance within the online video sector itself. For example, among its findings:

  • While quality video ad creative is able to increase awareness metrics across all placements and lengths, when the campaign goal is to persuade consumers to take action or change brand perception, the 15-second length and user-initiated placements can be more effective.
  • “The 30-second length is better than shorter lengths at conveying a complex or emotionally resonant message, but works best in user-initiated placements, where online viewers display more patience for longer messages.”
  • The 5-second length, particularly compared to longer units, struggles to “break through” and be understood.

Online Media Planning Food for Thought

And while topics like HTML5, the iAd platform, 3D, and integrated online/offline programs grab headlines, according to Bryan Hjelm, online video and rich media solutions provider at Unicast, the real issues still lie in helping the market through format innovations, IAB standards, and revenue targets. Hjelm acknowledges improvements in the past five years and far more online video ad inventory. Still, he says, advertisers are short-sighted when conceptualizing online video campaigns differently from broadcast television ones and too many silos impede efficiencies and buying power. Media planners, he says, also need to work on their comprehension of online video standards and tracking/measurement abilities.

It’s time to take online video advertising seriously. How comfortable are you with the medium?

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