How Much Should Advertisers Pay Per Video View?

confused.jpgOne of the things that hasn’t sorted itself out in the online video space is the value to an advertiser of the online video view. This depends on many things:

  • What audience is watching the video? It’s hard to slice demographics yet since most sites don’t require that information when you register. A lot of marketers are treading lightly because they assume the viewing is done by wacky teens, but I think that’s a dangerous assumption.
  • What is the typical “action rate” or “cost per click”? Ultimately did the person do anything after watching the video?
  • Most consumer product good (CPG) companies like P&G are trying to brand. So they’ll be more interested in awareness/recall/perceptions of their brand after it’s appeared. I’ve used companies like Dynamic Logic to help determine this. For instance, Mentos probably doesn’t judge its campaigns on how many people bought Mentos online after seeing an ad. Rather they’re looking at “proxy” measures and ultimately whether sales go up in the period during and after a major campaign.
  • One of the major drivers will be how many ad units can be sold against video views. If you’re iFilm you’re smashing viewers with pre-rolls, you can make a lot of money but you will probably scare away visitors in the long term. If you’re selling subtle text ads via Adsense you’re being very unobtrusive but probably making dirt.

pile-o-money.jpgTypical CPM (cost per thousand) for banner campaigns can range from the low of $5 (via such companies as Advertising.com that buys up random inventory) to $25 and even $50 for very niche upscale sites. It depends on the target audience (teens will be less expensive than physicians, for instance). Performance varies greatly- the cheapest CPM usually is not a very qualified target, so response rates drop.

Since between 800-2500 are reading this blog a day, we can safely guess that some of you have more experience with online advertising than I. What’s your sense of the “value of a view” for ads around popular online video sites?

Recognize that the advertising income sources for an online video view can include:

  1. Ad frames at beginning or end
  2. Pre-roll ads
  3. Wrap-around banners
  4. Contextual ads
  5. Special sponsorships
  6. Eventually the videos might contain sponsored placement- just like Wayne’s World charges Dominos for the pizza box that appears in the flick, maybe Brookers will charge some cash to DietPepsi for having a bottle on her desk.

We can “back into” the current numbers with some rough data from Revver, recognizing that they sell no pre-rolls or banners around videos. It’s all about a single ad frame at the end of the video, and the money is driven on a “cost per click” basis (so the advertiser pays nothing for impressions). So all of those Mentos ads are getting the Mentos brand a nice deal if you look at it from a CPM perspective. It’s like my Google text ads. I pay nothing unless you click. So every ad your brain absorbs and you DON’T click is essentially free..

So Revver is being ultra conservative about advertising, and without having launched officially, it would appear that they’re making about 2 cents per view (1 for the content provider and 1 for themselves). Note- this is an estimate based on my experience, friends’ experiences, and the Eepy Bird success. I think the advertising market will drive that price up, but currently Revver is charging on a CPC (cost per click) basis… not by impressions. Other sites are pursuing content at a “guaranteed .05 cents per impression.” That’s less cash-per-view than Revver but not bad if they get your content more views than Revver can.

Most sites will get more aggressive than Revver by selling slightly more obtrusive ads, but they may not share as much. So maybe the content creator, over time, will eventually make between 1 and 5 cents per view? Sound right?

Author: Nalts

Hi. I'm Nalts.

7 thoughts on “How Much Should Advertisers Pay Per Video View?”

  1. I have had the pleasure of watching three other ad agencies in the last month destroy any idea of rolling online video’s into their marketing budgets for moderate sized brands at Fortune 500 companies. Most of them saying “Its to soon to truly understand the metrics, and understand its possible impact”. One of them was so daring as to say well “we experiment with it”. And no Nalts they were not all pharma companies.

    Welcome to the bleeding edge of advertisement, video producers.

    In my personal view Pre Roll ads are really interruption marketing (like TV commercials but now without TIVO) and I have yet to see any numbers that really work from the advertiser perspective.

    What I am waiting for is to see better contextual placement around videos and a slightly tweaked ad format that what we have today. Again in my personal view, I would want ad frames at the start and finish of a clip (like Revver but in the start as well). Also if its contextual you would see better results…example NALTS videos would get new Will Farrell movie ads; while MARQUISDEJOLIE videos would end up getting art film and horror film ads. Some of the problem is the online ad servicing technology is a bit behind when it comes to video; and we take for granted (or may not realize) the insane complexity that is baked into some online ad campaigns today.

    Some other legitimate issues are shelf life; The Mentos Diet Coke thing has been really hot; will it be in 6 months or a year? Finally problems both with inventory both in regards to the number of videos themselves and advertisers ready to spend a buck.

    It took years for the IAB (Internet Advertising Bureau) to standardize on the sizes of ads we see today; on last check I am not sure if online video has really hit their radar screen.

  2. Jack- thanks for pointing out the BusinessWeek article. And for another informative post.

    Man- you’re dead on about the contextual stuff. Tricky one, though. You either have to trust the creator’s tags or vett the stuff.

    Then again- eventually the really good stuff will rise to the top, and make the ad placements easier (since you’ll be able to reach 80% of online viewers by focusing your ad efforts on the top 20%…

  3. first of all 90% of the people who are in control of advertising budgets are freaking useless executives in suits who can not think or make a decision for themselves so they use their budget unwisely on focus groups and on consultants who are just out to fleece the deep pockets of a big company.

    at this point i’d like to call out a reuters exec who hasn’t accomplished crap but is sooooo busy that he constantly has one of the executive assistants (she’s new so he is abusing her) to get him breakfast and lunch from the cafeteria downstairs. today he had her get a coke from the machine that was less then 50ft away.
    dude, don’t be such a jackass and get your own soda. it takes 1 minute. prima donna jackass.

    ——

    back to the topic – revver needed to open doors and the pay per click helped them. i suspect when the move to a flash form they will experiment more with 5-15 second post roll ads and be able to charge a cpm. right now, i suspect they can’t insert video post rolls into quicktime.

    if “soon after post launch” revver can’t increase the cpm or the cpc then i would begin to get concerned about the viability of the high rates that some of the bigger sites are charging.

    different train of thought… if behavorial targeting, and time of day placements are the reason then smaller operations like ours will be hindered by the inability to afford such tools.

    night

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