How to shift more TV budget online

It's not a secret -- video is gaining significant market share. Morgan Stanley recently predicted that there would be a $50-billion online advertising boom. After all, people spend 28 percent of their media consumption time online. And with the medium capturing only 13 percent of advertising spend, it's safe to assume we haven't reached full potential.

With the shift of video content consumption from TV to online video, advertisers are slowly shifting budgets. While TV networks choose and schedule content, online video allows more consumer control and flexibility. Consumers want high quality content combined with on-demand access. Content owners want to reach the largest and most lucrative audiences to maximize their long-term content value; they realize that content without control doesn't achieve that objective.

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Giving consumers control over the levers of consumption of video content is driving success. Over the last two years, we've seen the introduction of Netflix (now streaming on the iPhone), the explosion of Hulu, and Comcast's unveiling of Webvisible. As consumers move their video consumption online, smart and aggressive advertisers will follow.

The initial shift from TV to video advertising has been in the works since the mid 2000s, but was accelerated by two factors:

1. The drive to reach consumers in a more cost-effective and hyper-targeted way.
2. Standardization through the introduction of the digital video ad serving template (VAST).

There are still challenges for advertisers to overcome in order to move a greater share of their TV budgets online:

Lack of measurable standards
Online banner advertising has grown as standardization brings measurability and insights into effectiveness beyond the click. For online video, better metrics, visibility, and accountability into the target audience will answer the crucial questions of "who did I reach and did I convince the consumer to buy?" Click reporting is not sufficient. Post-campaign surveys such as Vizu, Dime Store, and Dynamic Logic aim to bridge the gap, but the challenge is that those results can only be applied to the next campaign. The crux is real-time audience reporting with insights allowing dynamic optimization.

Ad and content length
Video technology has improved enormously with standardization through VAST and increased scale. However challenges remain as there is no set standard for the length of an ad based on the length of the content. The industry has 10-, 15-, and 30-second slots for both long- and short-form content, which creates a poor user experience. In many cases, ads are delivered in smaller ad formats than the size of the content itself (e.g., pre-roll served in-page). This trend is becoming pervasive as the pressure mounts to reduce CPMs to stay competitive.

Refined targeting
Targeting in online video is still in its infancy, and the industry has more work to do. If ads cannot be delivered based upon geography, interests, or even gender, then the relevant target audience is not being reached and the ads are wasted.

The market opportunity of online video is truly enormous. Given the adoption of online video ads for pre-roll, post-roll, and in-page, the potential exists for truly explosive growth.

Iggy Fanlo is president and CEO of adBrite.

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Comments

Andrius Zacharovas
Andrius Zacharovas February 7, 2011 at 7:05 AM

Whu hahhaha

Andrius Zacharovas
Andrius Zacharovas February 7, 2011 at 7:05 AM

Whu hahhaha

Susan Chaika
Susan Chaika January 26, 2011 at 7:07 PM

"The crux is real-time audience reporting with insights allowing dynamic optimization."

Agreed - that's why Vizu provides actionable brand performance data in REAL-TIME during the campaign, not, as this article states, post campaign.

Video, and all brand advertising, should be optimized dynamically and-in campaign to fully take advantage of the benefits online advertising. Our most recent video case studies, which can be found on our website www.brandlift.com, show that mid-campaign optimization can increase effective media spend by literally hundreds of thousands of dollars. This is possible through our real-time technology platform that provides actionable brand metric data throughout the life of the campaign, as opposed to post campaign research.