Attic Rats, Preroll Ads & Show Your CPM

I was invited to join a web studio yesterday that provides a fixed CPM or cost per 1,000 views. That means the network promises you’ll earn no more and no less per video view… many of my friends have made that choice. It forced me to examine my current CPM and consider how that might change. Is it in my interest to accept a “floor/ceiling” amount? Or am I optimistic it will grow, and eager to benefit from that?

So today let’s look at attic rats, income for online-video ads, and contrast the sorry current state with what industry analysts predict.

Jim Louderback, CEO of Revision3, recently posted an intriguing article/rant about CPM prices… it’s titled “How Rats in the Attic Made Me Realize What’s Wrong With Prerolls.” Let’s examine the highlights to get a sense about why brands and online agencies have artificially depressed online-video advertising (despite shifts from print/TV to this medium).

Attic Rat

Problem (according to Louderback):

Unfortunately, even though those two video ad experiences are as different as rats and wine (KN note: Louderback was inspired having received junk mail for rat extermination and wine), they were probably priced at similar CPMs. That’s because the online video ad market – particularly the pre-roll market — hasn’t progressed nearly as far as print. Those were two markedly different experiences, with wildly different levels of engagement. However, for many buyers, agencies and brands an on-line video pre-roll is valued the same wherever it runs, regardless of viewer intent, ad placement and playback environment. It’s as if Trump and “Take Air USA” paid exactly the same for those two print placements – even though their impact is worlds apart.

Solution (according to Louderback):

If you’re a video ad buyer, understand the value differences between in-banner impressions and engaged in-stream video ads. Focus your energy on the latter, and you’ll get far better results than if you lump the two together. Even though engaged, in-stream video ads will be more expensive, they are still a great bargain – especially if when you target demographic or content affinity along with the in-stream purchase.

Now let’s pull a “you show me yours I’ll show you mine” to see what poor targeting has done to the online-video economy. 

Here’s a question for those brave enough to admit in comments below (feel free to use an anonymous name). What’s your YouTube CPM (income per 1000 impressions)? In other words, how much do you make per 1,000 views? It’s easy to compute: simply take your earnings in a given month, divided by the total number of views you get per month (divided by 1,000).

  • Example: you earned $200 last month. Your videos were viewed 100,000 times. So you divide $200 by (100,000/1,000). You get $200 divided by 100 equals $2.00 CPM.
  • Since YouTube keeps about a half, that would mean the company is fetching about $4 CPM… which is horrendously low if prerolls were used.
  • Show us your CPM?
Good news: eMarketer puts online-video advertising growth at more than 43% in the next year and 35% the next year. As marketers become more targeted and sophisticated, we should easily see a CPM lift of 20-30%.

Are Video Preroll Ads on Rise or Decline?

Yes. Video prerolls are both growing and declining. The good news for viewers is that we saw fewer prerolls. But we saw more “polite prerolls” (option to escape) in Q1 2011 as reported by AdoTube/eMarketer. Since this doesn’t include YouTube data and presumably a small sample of total online-video ad streams it does need to be taken with a grain of (Morton’s: when it rains it pours!) salt.

Viewers will appreciate fewer prerolls (as reported by AdoTube), and advertisers will enjoy more "engagement" models
This "Right Guard" ad begs for engagement. Did you notice the "close" button?

Forget prerolls, friends. The increasingly competitive ad networks have a whole sleuth of weapons in their online-video ad formats that range from the innocuous “polite pre-roll,” to a bit more ominous names like in-stream takeover, ad selector, in-stream skin, inside-out roll, interactive overlay, video-in-video, interactive gaming overlay, data entry and capture, branded player, over the top, and beyond stream. I believe that Seroquel example, placing a “reminder” ad without “fair balance” adjacent to depression content is (shhh) a violation of FDA guidelines, but I digress. ANY of these ad-format names beats the “fat boy” branded by Point Roll.

Take a look at some of the bold “engagement” formats presented in AdoTube’s ad-format gallery and you’ll see why viewers are, according to eMarketer, about 30% likely to engage in an ad… even when not forced (hence the term “polite”). You’ll also see that it’s often not clear there’s an opt-out available.

The eMarketer report, titled “Options for Online Video Ad Viewers Leads to Higher Engagement” is encouraging. With online video being one of the leading (if not #1) fastest-growing portion of a marketer’s “media mix,” advertisers will want and expect formats that achieve their goals: from branding to engagement. This chart is important to viewers because it shows that “cost per impression” remains the dominant percent of spending. In “cost per impression” (often called CPM, or cost-per-thousand), the advertiser simply pays a few bucks to reach 1,000 eyeballs without much accountability.

"Cost per impression" still leads, but more interactive "engagement" ad formats are increasing (Brightroll Data)

While few of us welcome more aggressive online-ads, this also substantiates a business model to fuel the medium’s growth. While it’s easy to complain about intrusive ads (especially as the pendulum seemed to swing dangerously to the advertiser’s benefit in the past year), it’s a vital element to online-video’s maturity. If the advertisers don’t get what they need, friends, we won’t be seeing our content for free.

There are three ways to increase “engagements” in this online-video advertising medium, and I’ll list them from best to worst in order of sustainability: novelty, creative and targeting:

  1. Novelty: A new ad format generally enjoys a period of high engagement that’s deceptively high. We’re curious about what the ad does, and may not realize we’re engaging, so it’s not necessarily suggestive of purchase intent. In early February, a debut YouTube customer of YouTube’s “skip this ad in x second” preroll told ClickZ he was seeing a 30% engagement rate. That’s far higher than we’ll see as a norm, and a tribute to the novelty effect.
  2. Creative: Great creative always wins, and this is a fairly enduring trait. While overall engagement might slip when we’re “numb” to an ad format (like monkey-shooting banner ads, or even the “InVid” format that creeps up on YouTube… the best creative wins the best attention, engagement and results.
  3. Targeting: Ultimately the most sustainable and important characteristic of a high-engagement online-video ad is its ability to reach the right target. I can engage in a tampon ad, but it’s not going to sell more maxi’s. But if I get a rich-media ad over (or adjacent) to my valued content, then we’ve got a win-win-win (advertiser, publisher, viewer). That’s where we can expect Google/YouTube to be better in the long haul, but it appears the sophisticated advertiser networks are ahead. These ad networks marry data from a variety of sources to serve ads invisibly on the videos across a variety of websites.

So what are the takeaways to advertisers, video sites and us viewers?

  • First, the options available to advertisers means that online-video ads will begin to get as aggressive as other forms of interactive ads. This has positive and negative effects, but as long as it’s targeted it’s sustainable.
  • YouTube, which reports very little about its ad performance, has not radically departed from its debut formats, with the exception of breaking its early commitment to make pre-rolls optional. Now most pre-rolls are mandatory, but we can opt-out of some after a few seconds (at which point the “opt-out” means the advertiser pays YouTube and the creator less).
  • Ads are a vital cost-offset for those of us that have been enjoying free video content for 5 years and would like that to continue without avoid pesky Hulu-like subscription models (unless a “value ad” bonus to the cable contract, assuming we haven’t “cut chord.”).
  • And finally, Morton’s salt can be trusted. Trusted I say.

 

How to Measure Online-Video Advertising: Shaping the Fog of “Engagement”

“Video advertising is still ‘in its diapers’… you gotta remember that most people don’t want to see ads” said eMarketer’s David Hallerman in a webcast last Thursday (October 21, 2010). eMarketer provided highlights from a report (“Video Advertisement Engagement: What Marketers Need to Know”) in the one-hour webinar, and slides are excerpted from that.

Engagement is worth defining considering it's what advertisers want most (after awareness)

Hallerman says online-video is the most expensive form of digital advertising, and skews toward professional content not user-generated. He explores both the definitions and forms of engagement. Per the chart on the right, awareness is still the #1 goal of marketers followed closely by engagement (according to an April 2010 study by Tremor Media of 98 advertisers/agencies).

So what is engagement? Some say it’s paying attention, others refer to interactivity, and still others refer to what happens afterwards.

I’d prefer to focus on what Hallerman calls server based data (a view, start-rate, completion time, mouse-over, sharing) and not survey data (like “brand health” metrics like awareness or intent, reported by Insight Express or Dynamic Logic). However those “brand health” metrics can be vital to determining “intent to buy,” which is often not captured by server metrics (although some cookies provide advertisers data about purchases that occur long after a video view).

Engagement metrics include:

  • Interactivity (clicking ad or mousing over): Scanscout’s cost-per-engagement. Hallermans says there’s an increasing desire among marketers for interactive pre-rolls.
  • Sharing or commenting
  • Interactions, experience (Forbes)
  • Two-way

Context is also important… an auto-roll on gaming or entertainment site is not going to be as powerful as a self-directed and completed video on a shopping site. Hallerman reminds us that consumers value HD (above many other factors) and that quality (original versus repurposed) is vital, and that’s an important insight. During the Q&A Hallerman later acknowledged that some studies are showing that repurposed television commercials are faring better than once expected.

Online-video advertising spend is growing in strong double digits through 2014 according to eMarketer

eMarketer projects continued growth of the medium as depicted above — reaching at least $5.5 billion by 2014. But when it comes to online-video ad views, all video sites aren’t created equally (comScore, Sept. 30, 2010). The report shows that “ads per viewer” on Hulu is more than seven times higher than Google/YouTube sites. See the rank of video-advertising properties, and Hulu tops followed by Brightcove and Tremor Media (both which serve ads on websites not exclusively devoted to video content). At 30 ads per viewer per month, it’s no wonder Hulu is considering cutting its monthly subscription in half.

Far more online-video ads are consumed on Hulu and networks (Brightcove and Tremor) than on Google/YouTube

Time per month per viewer on YouTube is nearly twice that of Hulu, despite Hulu’s content being generally longer (22 minute shows versus 2-3 minute videos). Hallerman refers to Hulu’s experience as “lean back” because we allow the show “to wash over” us, whereas other sites (YouTube) require a more “lean forward” experience. Marketers, says Hallerman, are looking for what they know from broadcast advertising — pre or mid-rolls played “in stream” during a video’s view.

An August 2010 study by comScore shows time per viewer leading by YouTube then Hulu

Marketers choose ad-networks to target online-video ads based on two factors: demographic or content. A beauty ad on Break.com, Hallerman explains, won’t likely get high engagement. As for viral?

“…You don’t just make something go viral,” Hallermans says. “It’s really a whole process that needs a blend of paid, owned and earned.” He provides the recent Old Spice example, which involved paid ads on television and the web, a microsite showing more content, and “earned” media where video answers responded to specific bloggers. He credits the paid ads were the “spark.”

Aside from viral or its own reason, here are what some marketers claim to have accomplished on YouTube. So one in five (20%) say their YouTube videos have driven sales via links. But recognize that the data are not saying that happens twenty percent of the time- it’s usually in the low single digits in my experience.

YouTube marketing tactics reported by marketers (MarketingProfs 2009).

Branded content (where the marketing is not “heavy handed” and is “almost a bi-product”) is the most effective forms of marketing according to an October 2010 report by the CMO Council. Branded content tops more traditional online advertising models or even database-driven behavioral marketing. Video content, for instance, about dogs with dog-food product placement… may have a greater impact than dog-food ads alone. “Creating an experience,” Hallerman says, “is hard but important.” These can be tracked by brand-equity scores. He provides another example of a hair-care product that might show entertaining or educational fashion tips (focusing on benefits) rather than advertising about the product (features).

During the eMarketer webcast, EyeWonder shared “server side” data that show higher engagement rates for ads in the financial sector, with travel or electronics on the low side of engagements. EyeWonder showed a case study involving Gatorade’s G Series, which featured a 15-second ad that allows customers to see how the beverage helps before, during and after an athletic event. The click-thru rate was a tame .13%, but the a video completion rate was an impressive 62% across all of the impressions.

Hallerman was asked to comment on how to make a video more likely to be viral, but said if he had the answer he’d be working at an agency. Perhaps he just needs a copy of “Beyond Viral.” 🙂

What Media Buyers Need to Know About Online Video

What perfect timing. I watched this “New Media Minute” by Daisy Whitney, and  was interrupted by a Product Director who’s seething over his clueless media buyers. My client, like me, is perplexed and annoyed by the inability of most media buyers to speak succinctly to brands about two simple things: whether the media spend is, simply, “on strategy” and “on budget.”

The details are noise, and we just want to be convinced the media-buying firm is not completely clueless. Like maybe they’re buying based on efficient and high-impact opportunities and not to payback for the dinner AOL bought. I mentioned that some media buyers are the people from high school that could have chosen careers selling cars or mortgages, and generally had C averages (but to be fair, they dressed well and always knew how to tap the keg). He recounted his friend who “was probably 400 in a class of 399” and is now quite wealthy in the media space.

I really shouldn’t poop on media buyers until I walk a mile in their Manolos.

On a particularly good hair day, Daisy Whitney tells us Pepsi's putting its Superbowl coinage into creating its own BudTv.

But imagine how frustrating it is — to a marketer and video creator — to read eMarketer reports that online-video is projected to grow at a bullish 30-40% annually…. but knowing that it’s all in the hands of career buyers of print and television who like driving f’ing awareness & attitudes and CPMs and anything else you can’t connect to sales.

People, video has the great potential of driving awareness, but also trial... dare I call it a “direct response” medium that “traditional media buyers” misunderstand, fear, loathe? Media buyers are to “direct response” and sales what belly dancers are to FIFO. And even the Wall Street Journal (a publication you’ve not heard of because it requires a subscription) says snail mail is still hot.

(Oh- you’re not a “traditional media buyer” if you are reading this article, unless someone sent it to you to chastise you).

I find Daisy’s characterization of marketers and advertisers hoping to “buy not rent” audiences a bit quaint, even if it may well be accurate. How many of us wake up each morning curious to know what entertainment P&G or Kraft has cooked up for us? Seriously? Pepsi is apparently bagging the Superbowl and launching some online thing that may or may not be fabulous. It’s “the next great thing” or BudTV.com all over again. We can’t be sure, but I suspect we won’t bookmark it. It reminds me of pharmaceutical brand managers in 1999 aspiring to have their website as the “home page” of every physician. Fat chance, but sometimes time is the best teacher.

I do like the theme of marketers shifting from interruption ads to the creation of engaging content and entertainment. Yey for that! But we impatient and ADHD-driven online-video carnivores are not likely to find it without some help from PR and ad spending.

Fortunately we’re seeing some new “video” ad networks (Daisy names Yume and Scanscount) that might help media buyers go beyond prerolls. I wonder if these companies are sophisticated enough to monitor their names in social media. First company to comment below wins a free pixel.

Read this TechCrunch piece by WatchMojo’s CEO for some tips for content creators looking to snatch some of the massive online-video spending (the writer leads a company that does branded entertainment, which is about as pervasive these days as ad networks). According to WatchMojo: “Unlike articles, you can’t fool audiences as easily with videos. It’s easier to get away with a slapdash article than with a slapdash video.”

Well that’s news to me. I’ve been fooling audiences a few hundred million times.

So here are some tips for the ambitious media buyer who, at least, wants to sound smart when speaking with a brand:

  1. Acknowledge that online-video is growing, and that budget should follow the audience.
  2. Don’t spend it all on pre-rolls. We hate them as much as you.
  3. Find people who have already assembled an organic audience, and sponsor them or buy product placement. Go direct to the big ones (NextNewNetwork, Revision3) or use Hitviews, PlaceVinePoptent or Zadby to broker deals with smaller guys. Did I miss any intermediary between popular web content and marketers? Don’t be afraid to raise your hand.
  4. Partner with content providers and online media players to create webisodes that are entertaining AND engaging (with an emphasis on the former, since the latter depends on it). You’ll need a “branded entertainment company,” but be sure they have an idea of how to get the crap seen not just make it fabulous.
  5. Buy the crap out of ad inventory that are driven by search (if they’re searching for your brand, you want to be there first).
  6. Customize your content because if I see another 30-second spot as a preroll I’m going to power puke.
  7. Use rich-media ads with compelling video content and an irresistible “call to play.”
  8. Buy every Nalts InVideo ad you can from YouTube regardless of the CPM. I heard his content attracts your target buyers, and that they’re 45% more likely to engage in your ad because his videos are so bad.

Online Video and Paid Search Run Counter to Shrinking Online-Advertising Spends

Laurie Sullivan of MediaPost reports that paid-search and video are the “bright spots” of online ad spending according to a recent eMarketer report. “Search and video were the only two media that experienced growth this year, although much less than the prior year,” according to the article.

Two trends to watch according to David Hallerman, eMarketer senior analyst.

  1. The first is the move toward non-advertising marketing. That is particularly true in the online space, where marketers focus more on social media (so estimates on spending can be misleading because the numbers fail to capture the full extent of the growth in online marketing).
  2. Second, the way we’re using various media impacts ad spending by traditional media losing audience and associated ad dollars, and the social Internet has begun to alter how marketers need to communicate with customers and prospective clients.

Go check out the article in MediaPost for some fun-filled stats that reaffirm that video has power… because it’s a hot portion of the online mix, and has direct impact on a company’s ability to show up on search results (more YouTube videos means a greater chance of placing high on organic results on Google). And if you’re rich enough to buy the $700 eMarketer report, please send me a copy. 🙂

Media Buyers Remain Afraid of UGC & Chupacabra

Advertisers continue to fear user-generated content (aka consumer-generated media) and Chupacrabas, according to an eMarketer report. Instead of contextual ads or sponsorships, buyers are sticking with 30-second pre-roll ads that reduce purchase intent compared to control.

Media buyers prefer online video advertisements (versus sponsorships or branded entertainment) because “viewers dislike or distrust video advertising—even though they freely accept television commercials.” David Hallerman, who wrote the report, says that distrust is what wins over digital buyers who overlook the reduced intent test/control data because the CPMs (cost per 1,000) are irresistibly cheap, and media buyers can’t resist a deal.

“Even on their personal time, a good media buyer can’t overlook a sale,” eMarketer’s Hallerman said. “I have a neighbor who is a senior digital media buyer, and he purchases randomly sized dresses and skirts at Loehmans each weekend.” Hallerman added that despite his neighbor’s peanut allergy, he can’t resist the Jiffy “buy one, get the other 50% off“sales. But, Hallerman added, “He’s certainly financially disciplined enough to resist the paltry 25%-off sales.”

Chupacabra Sightings at Major Digital-Buying Agencies Have Created Near Hysteria.
Chupacabra Sightings at Major Digital-Buying Agencies Have Created Near Hysteria.

“Like last year’s study, media buyers remain afraid of the dreaded Chupacabra,” says to Hallerman. “Many of the top digital-media buyers we interviewed at such leading agencies as Digitas, Avenue-A Razorfish, OMD, UMI and even Scient and Viant are terrified of the goat-sucking beast. This is especially true of those Puerto Rican people, whose fear rose from 18% to 37% from 2008 to 2009.” Hallerman believes the Cupacabra threat may have originated via sales representatives of advertising networks and large media properties, who wished to keep their buyers safe.

“More than 78% of media buyers are taking protective measures against consumer-generated content and Chupacabra attacks,” says Hallerman. “It’s not very different from the swine flu, except that the swine flu actually exists.”

“In my country, many beautiful media buyers would having look at consumer-media,” said Marcos Sanchez of Cerebro Muerto Digital (CMD). “And they no coming back from night after Chupacabra eating their blood.” Sanchez said, under promise of anonymity, that CMD invests no less than 30% of its client’s digital media budget on low-cost inventory on websites that have not been operational in five years or more. “We finding on professional sites like “The Daily Reel” that they video prerolls get 500,000 impressions daily and viewers very, very engaged in banners with 94% recall.”

So… umm…. I’m kidding about only some of that. The preroll is all the rage,  while WVFF has showed how sponsored videos have measurable ROI. Did I ever mention on this blog that you can’t get reach without advertising near UGC (user generated content) because the VAST majority of views are of vloggers, YouTube stars, viral hits… not Hulu shows. Did I ever mention on this blog that you can actually pay a YouTube star a small amount of money to make a funny video about your product that you approve?

Anyway, some other key points for those that see online-video marketing as digital ads only:

  1. A 30-second preroll is not as effective as a 5-second preroll and lower 1/3 ad. In fact, purchase intent goes DOWN due to 30-second prerolls as compared to a control!
  2. People under 30 are far more likely to find an ad funny, emotionally touching or informative (3 proxies of purchase). Is that a function of their familiarity with the medium or the fact that many campaigns are targeting them?
  3. Below are other topics the full report hits. Feel free to send me a copy if you buy one. I can’t find a spare $700 of change in my couch. Plus they never interview me for these, so they can’t be that informative. Moo haa.

  • Why do many people distrust online video advertising?
  • What can advertisers do to overcome that obstacle?
  • Can social media and video advertising be an effective mix?
  • What ad methods are needed with short video content?
  • Is the online video audience as large as it appears?