How Video Can Dominate Advertising

Brought to you by Ariel Geifman

Despite its fast growth, online video advertising is in limbo, waiting for TV to abdicate its throne as king of advertising. With decades of experience in producing 30-second spots, TV is a comfortable medium for advertisers. Online video, on the other hand, bundles an array of distinct formats, placed in a variety of different online environments, each delivering the marketing message differently.

Today, three parallel processes are facilitating the growth of online video advertising. First, people are spending more time online at the expense of TV viewing time. Second, TV viewing is being displaced by video viewing across different devices, from computers to cellphones. Third, use of DVR systems like TiVo is stripping TV advertising viewership.

A Millward Brown and Dynamic Logic survey found that only 21 percent of people watching DVR playback, and 30 percent of people watching TV airtime, pay attention to commercials, compared to 46 percent of people watching in-stream video ads online. So, in short, consumers are indeed watching a considerable amount of video online, and while online video advertising adds up to only a fraction of total advertising spending, it is projected to grow rapidly, according to a report from eMarketer.

However, unlike TV, which is basically a single environment with changing programs, online video is placed in multiple distinct environments and used with several formats, in which users' viewing habits significantly differ. To push online video performance to its full potential and, ultimately, assume the advertising throne, advertisers need to take online environments into consideration.

Aligning the creative and the environment
Users' engagement with online video ads varies by the environment in which they are watched. In-banner and floating ads typically appear next to textual content, which is often a sound-off environment. These formats need to attract and maintain users' attention -- as users can easily drift back to the content -- which introduces greater complexity for advertisers. In these environments, video ads compete for attention with publishers' textual content. Since the ad is not the center of attention, users do not have to watch the video and can stop it or browse on to another webpage before it is fully played. As advertisers rely on users to voluntary devote their attention, there should be a symbolic relationship between the video creative and the environment in which it is played.

New research on online video environments indicates that in-banner and floating video ads tend to outperform in environments where users spend ample time and attention on a single webpage. Top performing environments include editorial content -- such as news, sports, music, and finance -- as well as email.

In editorial and email environments, users linger on the same webpage for a long duration of time, reading (or writing) content in detail, and thoroughly moving their eyes across the page over and over again. The more users engage with content, the more they dwell on ads, and particularly on video ads. As a result, there is a higher likelihood that the video is going to play in full.

Users also spend significant time on social networks, but their browsing there tends to be more erratic -- logging in and out, updating their status, poking a friend, or checking for updates. Thus, consumers tend to engage with ads less frequently. Similarly, in gaming environments, users focus on the game and are less prone to engage with ads.

Experience is power
Although overall data shows that video ads perform better than ads without video across all environments, today's analysis suggests that existing video ads work best in editorial content and mail environments (as compared to social networks and similar 'casual' content). Nevertheless, advertisers need to use different kinds of video ads, that cater to the unique attributes of user behavior on various sites specific for news, finance, social, games, etc.

Some new or unique video formats include live web cams, as seen in Pepsi's Dear Mr. President campaign along with polite banners that feature interactive video from brands like Virgin Bets and Dove.

For example, Eyeblaster TV -- an implementation that floats over the publisher's content and starts with the sound turned on by default in low volume -- provides high visibility. Past examples from VISA, Coca-Cola, and LG show how this format not only engages audiences, but lures their attention away from the content.

While online video advertising requires advertisers to be cognizant of many variables -- from the creative through ad formats to the environment -- savvy advertisers can turn this complexity into a competitive advantage. Advertisers who learn to adjust the video to the format and environment are bound to outperform their peers.

With such an array of creative possibilities, online video has a steep learning curve. Marketers and advertisers should master it now, as sufficient experience and awareness will help to deliver video at peak performance in any environment.

In 2010, when using online video:

- Consider user browsing habits over consumers' mindsets.
- Use metrics that show engagement compared to clicks.
- Identify online environments that work best for video.
- Leverage the time of day when users are most likely to engage with online advertising.
- Develop creative that corresponds with certain environments.

Ariel Geifman is a research analyst at Eyeblaster.