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.

 

YouTube Answers FAQ About Video Ads

Curious about the different ad formats available on YouTube? Here’s a video by Product Marketing Manager Rick Silvestrini, in which he answers common questions (frequently asked questions or “FAQ”) about how ads work — it’s posted today on YouTube’s YouTube channel.

The Fourth Generation of Online-Video Advertising

Stop. Do not read another word before pausing for 15 seconds. Really.

Okay. How’d that feel? Chances are you ignored the advice, and perhaps it compelled you to defiantly plunge ahead with more interest. After all, the headline promised 4 generations, and that usually begs the question “what were the first three?”

But I made       you        wait. What if I forced you to wait?

Would you click the headline next time? I suppose it depends on how saucy it was. Maybe “New Video Compression Technology” would have instantly given your brain a pro/con dance. But “Fat lady falls down stairs and onto YouTube” might be the “spoon full of sugar” that made the interruption “medicine go down.”

According the book I read last night (Neuromarketing) your "old brain" (the prehistoric one that actually makes decisions) will love and remember this image. But your less important "new brain" (intellect, feelings) may find the text interesting.

My point is this: the third generation of online-video is preroll ads. Let’s get past this, shall we? They’re usually void of entertainment, unavoidable and will continue to proliferate and erode the medium — if unchecked. And according to my media friends, they’re hot. They’ve made me far more selective about what content I view on YouTube… it better be worth it. And this morning, in a move that might surprise you, I asked YouTube to turn them on my Nalts channel.

Think About.com in the mid-1990s, when it fell from a coveted curator of credible content to a cesspool of ads masquerading as content, and ads masquerading as more obnoxious ads.

So many ads you'll get an epileptic seizure (ask your doctor about ZIMPAT)

But let’s back up and look at the first three generations of online-video advertising in simple terms:

Lurker hangs around playgrounds and sometimes finds a victim.

First Generation: Lurker. Nickel CPM ads surrounded videos, and didn’t even subsidize the bandwidth. YouTube was a voluntary non-profit, and companies like Revver and Metacafe compelled creators with ad-sharing. Unfortunately the advertising industry saw online video with the same disdain it viewed the web in 2000. Oh- that’s the Wild, Wild West. We can’t put our brand next to that nonsense. In fact people aren’t even using the medium. You want reach? Look no further than the original tube.

Second Generation: Overlay ads. The healthy compromise of ads like YouTube’s “InVideo” model was what saved the medium. The ads had critics, but as an advertiser I felt like my brand got enough attention. As a viewer I felt like I could tolerate it. Ad a creator I felt like I enjoyed the higher revenue. But then the illness started with our children. They began reflexively closing the boxes, almost like you hit “skip” on the flash/splash screen on the publisher’s website. So click-through and presumably all the other polite terms for “no immediate action” (awareness, recall, attitude, purchase intent, favorability) dropped too.

You peeked the first few times, didn't you?

You want access to the party? You'll deal with him first.

Third Generation: Pre-Roll Bouncers. You won’t have to look hard to know my POV on these little bastards we call pre-roll ads.They’re annoying, intrusive and deceptive (you often mistake them for the video you thought you’d be watching). And I just asked YouTube to turn them on my content. Why? They’re profitable. Why? They work… for now.

Fourth Generation: In the Show. Before I explain what I hope will be the fourth generation, let me guess what you’re thinking… that these surround, overlay and pre-roll ads are here to stay. You’re right. The lurker, flasher and bouncer will be around as long as media buyers are held accountable to buying space like purchasing agents buying #2 pencils and copier paper. As long as reach, “frequency and single-minded impression” is chanted like monks by students of advertising 101.

Hmmm. I'm thirsty.

Now think like a receiver of advertisements. The Coke room on American Idol. The weather brought to you by Smuckers. They’re gentler on the stomach and more effective than the leading medication. Advertisers need to get within the show. It’s not easy to scale, it’s hard to do an “insertion order,” and it may not be the “path of least resistance” to getting your brand’s aided recall up by 50%. But it’s polite, there’s an implied endorsement, and it’s impossible to ignore. The brand is hero not the Soup Nazi. Most of Beyond Viral addresses this model of advertising, however my “lurker, flasher, bouncer” model is conspicuously absent in the book. It came to me in a dream last night. Shut up. Most of my dreams are better than your acid trips. This one just happened to be about advertising.

The burden of proof, I’d contend, is not on “in the show” to prove it’s scalable and drives purchase intent (although it certainly can’t be without accountability). Rather the burden of proof is on the less Darwinian evolved models to prove they’re a better bang for the buck.

What Is the Purpose of a Video Ad?

There are really four distinct ad formats on YouTube, the online-video site with the lion’s share: display, text ads, InVideo ads, and video ads (10-30 seconds). Unlike most sites, YouTube forbids preroll, but does offer full-motion video ads if the user fires the player (in the home-page ads or in display areas).

So let’s talk about your advertiser’s goal for each, and then let’s give a good case study.

  1. Display: Your display ad (a flat graphic) should primarily brand since 95 percent of people will not experience anymore than that. However if you want click-thrus of greater than a fraction of a percent, then have a good call-to-action. Nothing sells like more video content — especially if it’s non promotional.
  2. Text: Text ads are dirt cheap, but largely ignored. However you can brand on these and run them CPM (cost per thousand), but the ad will eventually fall aside to CPC (cost-per-click) ads that are more profitable and maybe more relevant. So the smart thing to do is be extremely targeted and buy specific keywords, then have a specific call-to-action.
  3. InVideo: InVideo ads remain novel, and give the advertiser the “hard to ignore” exposure of a banner that bursts into the video’s bottom 20%. Usually these are sold with accompanying display ads adjacent to the video. Here’s a good chance to brand (again- even a high click through will be in the low single digits). So focus on branding, but invite people to see more content.
  4. Full-motion video ad: Here’s an opportunity to entertain, brand, and invite people (if necessary) to the next step of the sales cycle (for more content and commerce).

The bottom-line is that advertising against online-video means you have to engage the viewer in an entertaining format. Don’t expect many people to leave my CharlieCam video to buy a helmet cam (even though I am rather impressed with instant targeting last night by a commerce site). Instead, promote more content. ZipIt Wireless (which sells a device and service for instant messaging) used YouTube’s Fred in ads, and invited people back to a campaign site (FredOnZipIt) to see more videos. My guess is that about 2-4 percent of viewers (in the early part of the campaign) visited the campaign site, and of those maybe 5 percent purchased ZipIt devices (wild guess).

Did that math work for ZipIt? I notice ZipIt’s ads aren’t popping up on Fred’s videos or elsewhere, so maybe not… or perhaps the company is assessing results. Either way, this campaign was in the right direction — use content to lure the potential customer, and then expose them further to the product or service (in a web experience that can do that in ways television can’t).

Now look at the Burger King campaign for an even better case study. It’s an integrated campaign between a comedy show and a fast-food restaurant which might otherwise have a tough time getting people to engage in a branded experience.

Burger King is sponsoring Seth Macfarlane’s “Cavalcade of Cartoon Comedy.” Although the creator of Family Guy produces edgy stuff far more risque than much of the YouTube amateur Partner content, it’s instantly recognized.

Macfarlane also probably made a good choice to align with Burger King, because he sure wasn’t going to cover production costs of his short web series via ad-sharing through online video. And he’s also enjoying the publicity that Burger King is making for him.

It’s another page out of the Star Wars Happy Meal promotion playbook, but a good reminder that online-video is growing up.