Visual computing expert Mike Sullivan published a piece last week through MediaPost that ought to get every TV executive’s attention. “Why Now Is The Time To Shift TV Ad Dollars To Online Video” is a serious look at the burgeoning market for online video advertising, and it’s straightforward in its advice to advertisers that now is the time to switch. I want to talk about this, because those who aren’t prepared for it have precious little time to get ready. We’re back to talking about digital dimes again, unless we get serious about the whole business.
There is a giant turd floating in the punchbowl of online video advertising that we simply must acknowledge and do something about. It’s called the pre-roll ad. This is one of those “counterintuitive” arguments, so I’m not expecting any great response from the industry of media. As long as we think we’re in the content business supported by advertising, what follows here is meaningless, because our history is to do anything we can to maintain that illusion (hint: we’re in the advertising business).
First, let’s review Mike’s article. He cites new research from Nielsen revealing that during April 2011, Americans streamed 14.7 billion videos, a record for the most streams in a month. YouTube, he notes, likewise had a record month in April. These numbers are headed north in a hurry for reasons often discussed here.
Media buyers commonly believe that online videos can’t be measured with traditional TV metrics such as Target Rating Point (TRP) and Gross Rating Point (GRP). Recently, new technology has emerged that can provide the same rating points and can also accurately determine the content of the video, offering a chance for ad buyers to take early advantage of the 90% of non-premium online video inventory, yet to be claimed.
He goes on to note that targeting options are improving at light speed, and that advertisers can be as specific or even more so than on television broadcasts. Gone are the days when advertisers had to worry about their ads appearing next to questionable content.
Now advertisers can have total clarity about online video content and total control through custom channels that allow them to select the exact online videos where they’d like to advertise. From specific subjects such as extreme sports or wine tasting, to exact channels such as ESPN and TNT, advertisers can now target their ads and engage audiences with the same precision for online video that they have with traditional TV spots.
This poses two significant problems for broadcasters. One, the cumulative money we get for broadcast ads is far more than what we get for online videos and video clips, and replacing that is problematic, at best. Two, most of our online video ad business comes from a corrupt pre-roll ad strategy that’s going to bite us in the butt, if we’re not careful.
The problem is that pre-rolls “work,” but the average is 15–30 seconds in length. People turn away before seeing our content, so the money-making apparatus is significantly borked.
Mark Robertson, writing for ReelSEO.com, a top online video marketing resource, notes that pre-rolls outperform everything else in the online video ad space.
For clients targeting commercial views, pre-roll is by far the best value on a cost-per-view basis. In fact, in-banner video is often 10 times or more expensive on a cost-per-view basis, unless of course it is auto-played which comprises the comparison. For clients targeting clicks, pre-roll delivers five to 20 times the click-through rate of comparable banner or sponsorship units. Lastly, multiple studies of online video have further demonstrated that pre-roll scores strongly in measurements of brand recall and brand lift.
But here, Madison Avenue has its biggest challenge. Despite the fact that they “work,” they are annoying as hell, and that doesn’t sit well with people who want to watch those video clips.
Many studies reveal a depth of anger over pre-rolls. In February, for example, YuMe — a company serving an average of 30 million video ad impressions per day on behalf of the 600+ publishers utilizing its advertising management platform ACE — reported that pre-rolls were the fasting growing segment on its online universe and that ad completion rates, while significant, are no where near 100%.
Format and Completion Rates
- Pre-roll continues to be the dominant ad format, representing 96.7% of YuMe’s volume in Q4.
- 15 second pre-roll remains the most common ad length making up 57% of impressions served in Q4.
- The Female audience continues to have a higher video completion rate at 74% versus 67% for Males.
Over one-fourth of women exit before the ad finishes along with one-third of the men, and that includes 15-second ads. No ad view. No content view. Pissed off people. This is not a scalable strategy, folks, and publishers need to step forward, because Madision Avenue doesn’t give a crap and has no reason to want to change.
Many years ago, Microsoft studied responses to pre-rolls for MSN. The result was accidentally published by Mediapost in an article about online advertising. The optimum length for pre-roll was 7–12 seconds, according to the study. A day after it was published, however, the article was edited to show that 15–30 seconds was acceptable. When I investigated, I was told by Microsoft that 15–30 is what advertisers wanted, and Microsoft had not intended for the 7–12 second reality to get out. Nice.
The problem, of course, is that publishers simply cannot permit ad agencies to dictate whether people view our content. It’s suicide. You can say a lot in 7–12 seconds, and the bonus is nearly 100% fulfillment and satisfied “viewers.” Yet, we insist on forcing what is a broadcasting paradigm on a medium for which it was not intended, simply to take easy money from ad agencies.
There’s a fortune to be made, if we get this right, but, like I said, I don’t really expect any action over this. We’ll once again toss our future to the winds of fate — which is where the disruptors are having a ball — as we try and hold our ground. The Web — the Great Horizontal — is all about people, and people are no longer simply “consumers.” They refuse to be treated like a bunch of captives anymore, and the evidence shows that pre-roll ads are an unwelcome time-waster. If we don’t learn that lesson, we’re doomed.
It’s another form of death by a thousand cuts, something for which media companies are becoming quite famous these days. This is our fault, and yet we are silent. The wounds, it seems, are self-inflicted.