Online Video Advertising: is it worth it?

Online ad network operator BurstMedia has released a study about online video advertising.

Given that major advertisers are increasingly putting money into online video ads and that many publishers are reaping the rewards in the form of high CPMs, studies like it should be of great interest to both advertisers and publishers in this developing market.

BurstMedia's research provides some good news and some bad news. The good news is that consumers are in love with online video. Of the 2,600 respondents who participated the study, 72.1% view online video content and 58.8% view online video content at least once a week.

Perhaps of greatest interest to some advertisers will be the fact that typically elusive 18-34 year-old males are the heaviest consumers of online video. Given all this, online video ads are going to, unsurprisingly, appeal to a considerable number of major advertisers.

The bad news, however, is that ads in online video content do not appear to deliver significantly greater recall than ads in other mediums. 53.6% of respondents recalled seeing "in-stream (pre, mid, post-roll)" ads when watching online video content.

Unless my reading of BurstMedia's announcement is incorrect, the study does not seem to indicate that the respondents were asked to recall a specific brand and as such this number doesn't seem too impressive (the specific brand recall is what really matters and would logically be lower than the number reported by BurstMedia).

Even worse, however, is that the presence of advertisements in and of themselves was a turn-off to 78.4% of respondents. Just over half of them reported that they stop watching an online video when they see an advertisement and 15.3% even indicated that they leave a website altogether when a video ad is seen.

I found BurstMedia's study particularly interesting for two reasons:

1. Younger respondents (those 18-24 years of age) were more tolerant of the video ads but reported the lowest recall. This seems to lend some credence to my theory that young, tech-savvy consumers have become adept at mentally "blocking out" advertising. If this is indeed the case, the implications for both advertisers and publishers who target these demographics are obvious.
2. Only 21.4% of respondents indicated that they "pay more attention to the in-steam advertisement than they do to standard creative units on the same web page." Given that the CPMs some of the premium publishers are charging are exorbitant, advertisers may need to ask themselves what they're really getting for the higher CPM. Is it really worth paying double or triple what you might pay for standard ad units on the same site?

Clearly, the online video ad market is still in its infancy and both advertisers and publishers will need to work together to refine the models.

I have no doubt that results can and will be improved in ways that benefit advertisers, publishers and consumers. But it's also clear to me that online video ads are not likely to become a panacea for advertisers looking for the miracle replacement to other advertising mediums, such as television.

There's still quite a bit of work to be done before the substance matches the hype.

Related research:
Online Ad Networks Buyer's Guide

Related posts:
One in 10 will pay to remove YouTube ads

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