Why Online Video Matters For Advertising

by Enrique Allen

This is the first of a series of posts on why online video matters to different use cases of persuasion.

Online video is becoming a central experience on the web, validated by increasing levels of consumption and investment. In just one month alone this year, there were more that 11.2 billion total video streams, that’s nearly double the population of the entire world. This trend is naturally converging with the explosion of social networking sites, making Facebook and Myspace.com increasingly important distribution points for both consumer and professionally generated video. As broadband access becomes commonplace, people are expecting engaging video, often with acceptance of pre-roll and interactive advertisements.

While some categories of advertising dollars are shrinking, video ads are booming to account for $477 million of 2009 revenue, up 38 percent from the same time period in 2008. Even news sites in dire need of diversified revenue like WJS.com are using video players on prime real estate to benefit from higher cost-per-thousands (CPMs). Early adopters of online video publishing have something to gain as eMarketer projects online video advertising to grow by 45 percent yearly, reaching upwards of $5.2 billion in 2014. However, this is only the beginning as online video mixes with traditional TV, illustrated by successful sites like hulu.com, in conjunction with measurement initiatives such as Google TV Ads. Nikesh Arora, President of Global Sales Operations and Business Development at Google, remarks that advertisers are still figuring out how to take advantage of the online video phenomenon, with many companies simply shifting ads made for TV to the Web.

“These spots do not exploit or leverage any of the values of the Internet. It’s not interactive, it’s just a video. I can’t click on it, I can’t interact with it,” Arora points out. He projects that ad formats for online video will inevitably evolve and improve, making video a more attractive way for brands to pitch their products. Arora sums up my point that, “If you believe it can be targeted and it can be interactive — just those two features are going to change the way video advertising will be done on the Web.”

Google sees growth in online video ads (December 2009)
Online Ads Are Booming, if They’re Attached to a Video (November 2009)
TiVo and Google Team up on Audience Research Data (November 2009)
Viewing of Online Video Streams Up 26% (October 2009)
Internet Ad Revenues at $10.9 Billion for First Half of ’09 (October 2009)
Total Online Video Streams up 41% from Last Year (September 2009)
Nielsen: Overall Stats Up, Bing Gets Dinged on Streams (August 2009)
Online Video Growth Continues (January 2009)

Enrique Allen


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