The two video advertising models that have emerged are pre-roll and overlay, but if you're taking a hard look at your budget, which one is worth your money?
The online video industry has skyrocketed over the last few years. According to comScore, Americans watched 11.4 billion videos in July of 2008 alone, up from 10 billion videos the previous December.
With consumer adoption came advertising potential, but potential does not equal advertising value or a measurable ROI. Google's high-profile acquisition of user-generated giant YouTube -- and its subsequent inability to monetize the video portal -- famously reflects this conundrum. Numerous advertising models and mechanisms have sprouted in the online video world, but the two that remain at the fore of conversation and debate are pre-rolls and overlays. So if you're taking a hard look at your adverting budget, which one should you spend your money on? In the following paragraphs, we'll make a case for each, following which, you can be the judge.
Pre-roll
Pre-roll ads are the most common advertising vehicle for web videos, but there has been continuous debate and research on pre-rolls, specifically on the effectiveness of pre-rolls of varying lengths.
Generally speaking, pre-rolls can perform very well for longer-form content, especially when the viewer is familiar with what is forthcoming, such as with music or entertainment videos. According to the Online Publishers Association (OPA), 30-second pre-rolls leave more of a positive impact than 15-second ones, especially in terms of brand consideration. Additionally, the OPA says that out of 80 percent of viewers who have watched online video ads, 52 percent have taken some form of action. A separate study by DoubleClick indicated that 8 percent of video ads generate user interaction and that clickthrough on video ads is five times greater than that of image ads. YuMe has also found that pre-rolls prior to longer-form content generate strong CTR, despite the fact that these ads tend to get a bad rap.
Even though there are some encouraging studies for video ads, pre-rolls in particular, one must also factor in abandonment. For example, 30-second pre-rolls might resonate more with a viewer, but they can also produce a higher abandonment rate. Pre-roll ads that are 15-seconds or shorter might help combat viewer attrition, depending on the length and content of any given video. Brightcove, for example, uses 15-second pre-rolls in conjunction with banner ads and has reported no negative attrition.
A general rule of thumb an advertiser can follow when determining the length of a pre-roll is the ad-to-content ratio, which should remain below 25 percent. In other words, a 30-second pre-roll is just not going to be effective with one-minute of content without a gap in advertising following additional viewing.
Another thing to consider with pre-rolls is the creative that is being generated. The same way that TV shows, repurposed for the internet, are limited in their engagement of web-goers, repurposed TV commercials are limited.
The internet audience is younger and more savvy, and there is a different dynamic altogether online which, along with ad-to-content relevance, is an important consideration. The OPA has found that 56 percent of respondents prefer video ads to be related to the content they're watching. One more aspect of online creative is that it's often shown too frequently. With the growth of technology tracking who has seen what, it's in advertisers' best interests to grow their advertising inventory so as not to bombard viewers with the same ad over and over again. In sum, creative inventory needs to be expanded, relevant and adjusted by length to the content, as well as produced with an internet audience in mind in order to maximize engagement.
Overlay
While pre-rolls tend to perform better with longer-form content, overlays are effective alternatives for shorter-form content. According to YouTube research, only 10 percent closed overlay ads, whereas up to 70 percent of viewers abandoned pre-rolls. VideoEgg's findings among its clients also support research that viewers generally prefer overlays to pre-rolls.
Although overlays can be more effective in protecting against viewer abandonment, other research suggests that users find overlays intrusive. According to Dynamic Logic's recent research, 21 percent of viewers do not support any overlay ads, even in exchange for free content. However, this percentage has decreased from 33 percent in 2003, suggesting that the overwhelming majority of people find over-content ads appropriate so long as there is a frequency cap. Dynamic Logic suggests this cap should hover around two overlays per hour lest they run the risk of disrupting viewership and, in effect, annoying the user.
In addition to frequency, advertisers must also consider overlay creative, which is akin to banner ads. Overlays are meant to incite some sort of action (as opposed to the passive viewing that pre-rolls promote). This gives advertisers the opportunity to be somewhat edgier when creating overlays, an opportunity that could be a risk in pre-roll creation. Finally, the most effective ads are those that are targeted, be it demographically, behaviorally or contextually. Ad networks serving overlays have made major headway in targeting users based on what they're watching, which is definitely a boon to any advertiser.
Where is the video ad headed?
While overlay ads are gaining traction, pre-rolls still account for 80 percent of the web video inventory. Though experts see a lot of potential in contextual overlays, it seems that pre-roll ads will continue to dominate the industry for now. But this still does not answer the question, "What's more effective: pre-roll or overlay?"
The lesson that can be gleaned from the aforementioned statistics and research is that there isn't a definitive answer to that question. As online video continues to evolve, so does the creative being produced and the advertising vehicles through which it is delivered. But in spite of the continuous flux, one thing will remain constant: It's a matter of context, content and the expectations of any given viewer.
Rob Campanell is co-founder of Blastro Networks.