Online Video Advertising = The Next Big Thing
Right after I posted about the growing audience for online video, I came across this article about how much advertisers are spending on online video ads.
This year saw 82% growth in spending for a total of roughly $410 million.
Next year is projected to be even higher, with 89% growth totaling $775 million.
By 2008, online video ad sales are projected to break the BILLION dollar mark. That’s BILLION, people. With a ‘B’!
Why? According to the article, ad buyers are starting to accept the promise of online video, and they’re seeing great ROI. Video ads convert a LOT better than the previous generation of banner ads.
But as always, we’re talking about walking a fine line here.
We’re in the incubation stage of this new advertising medium. The early adopters are doing the experiments that will tell the rest of the marketplace what works and what doesn’t: size, placement, running time, etc.
Most places are pairing the commercial video with the free video content in the form of “pre-roll” ads. I’m sure all you have watched a clip on a site somewhere and had to sit through a commercial first, right? That’s a “pre-roll”, but studies are showing that a significant segment of the internet audience immensely dislikes that kind of separation from content.
However, audiences are becoming more accepting of these kinds of practices, and the article implies that it’s because audiences understand the tradeoff between free, ad-supported content.
Some content providers are even trying both sides. ABC offers their shows free online with ads, OR you can buy the content outright via iTunes and not have to sit through the ads.
Personally, I think this is the best solution. I’m a huge fan of the democratizing nature of the internet.
The internet puts control of the media back into the hands of the public, and allows them to better inform marketers about what the marketplace wants. But for the provider, there are still costs involved in production. It’s not much different than the difference between shows on your major networks which are broadcast for free with ads, compared to premium pay shows, like the Sopranos on HBO.
No matter what medium you’re working in, you should always try to utilize that medium’s unique strength. Giving the customer the CHOICE to either pay for the content, or see supporting ads for free content, works to the unique strength of the internet as a whole, which is CHOICE.
In the past, that choice has been a problem for e-commerce, in that if you didn’t give the customer what they wanted, they would choose to bail out on you and visit your competitor. For these content providers, rather than lose potential customers to piracy and illegal file-trading of their content, they let the customer choose how to “buy” that product — with their money or their time. The content producer makes their money BOTH ways, either directly from the consumer, or from the advertiser who will pay for their time and attention.
The producers win, the advertisers win, and the customers win. And it’s because of this “all-win” scenario that by 2010, online video ads will be a $2.9 BILLION industry.
That’s with a B.
The article comes from e-commerce times and you can read it yourself here:
http://www.ecommercetimes.com/story/54455.html?u=colintheriot&p=ENNSS_52f2f8da3bea7cda6d2ad15acdde1d35
Posted by Brad Fallon on Tuesday, December 5th, 2006 at 9:23 am 
I totally think that online video content is only going to continue to grow. I recently read an article in Wired magazine (the cover story) about LonelyGrl15 and YouTube.
Those episodes were getting as much traffic as many cable-based TV shows. I think we’re really going to see a shift to online & digital content soon. The public has spoken!
The fine line that you mention is real… but it doesn’t seem to be hindering companies from taking the plunge… take for example the recent merger between google and you tube… Mark cuban said that anyone who purchased you tube would be foolish… google went ahead and shelled out quite a pretty penny for it…
They appear to be the first test case of the marriage between ads and “voted user content”… so far it looks like google is wading in very cautiously… but I give them an A+ for their first attempt… if you go to you tube’s home page now you will see movie ads running… but they run them to look like they were voted there by the user… they don’t come across as ads and they are in sync with the general aesthetic theme of the site…
Now they just have to figure out how to advertise other things like beverages (i.e. coke) and baby gift ideas…
If they can figure out how marry the advertising needs of the every day consumer with a voter driven site consistently… then they will be onto something…
I saw a study that the Hispanic Business community increased their web marketing spending by 400% from 2005 to 2006.
Another community that will inject increased revenue into this business will be the opening of the Chinese market.
It is awesome to look back and ponder the evolution of the internet and how it is changing society.
Brad, do you think it wise to hold off on paying for video marketing while these forerunners are testing the waters or would it be good now?
Thanks for all your advice!
Hi Brad,
I definitely agree with you. Video will be the next big thing. Just look at sites like YouTube.
Thanks.
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Wow, hard to believe video online sales will break the billion mark. Unreal!
Thanks for sharing.
Air Cleaner
Well, this was all just a matter of time. I mean with broadband taking over pretty much everywhere, the video advertisements were going to explode. If some of you are looking to make good money in the future, I would start thinking HD online video… It’s what’s next..
Heath
http://www.mymedicenter.com/naked-minerals/naked-minerals.html
I’m starting to get a lot of requests for various video work. I’m glas I kept up on all the latest internet video technology. It’s pretty crazy what you can do.
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Nice post Brad! This is something I’ve pondered on quite a bit lately. Being a SEO professional myself, and attending many of the SES conferences, this subject is discussed often but no one really seems to know its future. Same with podcasting and mobile search. It’s available, but just how will it be used and accepted.
I personally find it hard to believe that anyone would choose to sit and watch an advertisement. Isn’t that why we love the Tivo? Zoom through the commercials. Secondly, for a new retailer like ourselves, our new site for Bean Bags will go live here in the next few weeks. I’m wondering how the smaller retailer will be able to compete in this space. Can they afford to make video ads. If they don’t have a substantial budget, will the content distract more than it will convert?
Just some food for thought! Hope you’re doing well Mr. Fallon
I’m in the streaming video business myself with HelloWorld and here are some stats I got from them:
Streaming video messages have been proven to generate increased response rates and create greater retention. Consider these facts:
55% of a message meaning is derived from facial expression;
38% of a message meaning is derived from gestures, body language, etc.
It’s also important to note when conveying an important message people only remember:
10% of what they read;
20% of what they hear;
30% of what they see;
50% of what they see and hear together;
And 80% of what they see, hear, and do.
Impressing? I think so.
HelloWorld Video Email
A friend of mine is in the Television Commercials business where he manages the creation, direction and the production of television commercials. I am wondering whether, How to make your own Video Commercial,” would be a good idea for an online information product. What could I charge for this?
I would really appreciate your comments..
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Brad
great info
Im coming back here more often..
Good to see that this technology is beginning to be utilized. There has been snippets here and there with many web gurus forecasting how prominent this will be but up until now it has yet to come to fruition. Definitely coming back to check out more about this.
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Brad, I like your thoughts on democratizing the net. At some point, perhaps, as television and the internet unite into one medium, perhaps, having ads or paying to not have them will become a choice that we are constantly granted. In the long run, though, I think that people are annoyed by having to sit through a commercial before watching a video … thus, the success of You Tube. With videos leading into the video, You Tube certainly would never have gotten bought up by Google.
Phil Ayres
Seo Elite
Hey Brad, I really like your Stomping The Search Engines CD Set. Driving around listening to you and Andy sure beats those crappy ass radio Dj’s.
Dennys Passeto – Maryland, DC,
Personal Trainer Virginia
ooops, screwed up the link
Personal Trainer Virginia
Ok, so video is getting some ROI results for advertisers. How about ideas for leveraging it for SEO purposes through social networking links or other methods?
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Yea, video is here to stay. Interesting to see how the little guys can stack up.
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I like your thoughts on democratizing the net. personally find it hard to believe that anyone would choose to sit and watch an advertisement. Isn’t that why we love the Tivo? Zoom through the commercials. At some point, perhaps, as television and the internet unite into one medium, perhaps, having ads or paying to not have them will become a choice that we are constantly granted.
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In the long run, though, I think that people are annoyed by having to sit through a commercial before watching a video … thus, the success of You Tube. With videos leading into the video, You Tube certainly would never have gotten bought up by Google. We’re in the incubation stage of this new advertising medium. The early adopters are doing the experiments that will tell the rest of the marketplace what works and what doesn’t: size, placement, running time, etc.
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Great stuff as usual Brad. Thanks for everything.
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Hi Brad. Yea, video is here to stay. I’ve been experimenting with various methods. thanks!
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I don’t know much about video yet, but i m very willing to learn. Thanks for everything Brad!
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I agree with Chris, I also think that online video content is only going to continue to grow. I did not read the wired Wired magazine (the cover story) about LonelyGrl15 and YouTube but when I heard that Google purchased Youtube I knew it would be huge. I thinking of doing videos in my kitchen for my chicken recipes. I think anyone can boost website visitors using video.
I’m not sure if I buy watching ads on the internet. I don’t even like watching them on my television and I have DLP TV. Besides that once it takes off millions of people will jump on the bandwagon and soon it will be like those annoying banner ads that we no longer pay attention too. I would like more information on ROI.
Videos might replace even text ads
take care
http://www.sumitkar.org
i am planning to do a video for work at home
The 16th post was too funny. My take is that if Ken McCarthy pays attention to something, I pay attention to something. : )
Brian
medifast.com
I agree with the post about YouTube getting as much traction as it did only because it was free and there were no ads to sit through before watching your vid.
Although if I had to sit through a Jennifer Aniston Sedu Hairstyles ad I’d be just fine with that!
I agree somewhat with Ravi however I think the success of youtube and ebay and the others is that they give the consumer control of the content. It’s real people doing real stuff without the fake junk we are fed by the Madison Avenue Ad people.
Reality TV is big for a reason.
Brian
http://www.StephensonandCompany.com
Video will be the next big thing. But what will be the next thing after video? You need to be thinking two or three steps ahead of the game in order to be on the cutting edge of the internet.
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Hi Brad,
Wow! Lots of interest on this subject.
I’ve run a very active blog on Internet Video Advertising for a year now (our first anniversary was December 15.)
Many of the posters are extremely well informed and we’ve already got over fifty articles up on various aspects of Internet video.
If Internet video interest you, come on by and see if you like it:
http://www.systemvideoblog.com
You are annoyed at first but after a while you get used to it.
And when you really want to see the content of the site you really don’t care about the pre-roll.
as long as the pre-roll are interesting i don’t think people will be annoyed by it.
What is your recommendation to pursuing this advertising medium? With my current marketing budget, I don’t think I could afford to use this medium until it proves a high ROI compared to targeting AdWords and such. I know YouTube is free, but to produce quality videos that could be targeted to the right market, this could take some time.
Tan
Unique Wedding Favors
future will be big.
bye
http://www.sumitkar.org
Thanks for the great article Brad!
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Video advertising may become more prevalent, and even become seen increasingly in the community websites, but I anticipate a bit of resistance on the part of the consumer to accept this as a norm, in the near future. For example, I would imagine that community sites such as MySpace may want to try to run an advertisement before a posted video is displayed. This will probably alienate alot of community members who will eventually go to the next big community site that doesn’t have such a program.
The internet is great, but too much commercialization is going to be to its downfall – there has to be a balance.
I think there is a long way to go for online video _Advertising_ to go to catch on as well as something like Adwords and Adsense. The power of those programs is the ability to deliver very relevant advertising, something that would be much more difficult with video. Video doesn’t have the granualarity and the ability to tailor to keywords/ content the way that text advertising gotten to. But never say never.
Still time to invest in some of these stocks! =)
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I can tell you from a personal standpoint that the “pre-rolls” are annoying as hell. I have the mlb baseball package and everytime I want to switch from the radio to the tv broadcast, I have to sit through a commercial. It effect my choice(which I paid to have) and therefore, hurts the product. I beleive that eventually the “pre-rolls” will be a thing of the past
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