Web-based Video Advertising Is Red Hot

Eager to learn the keys to success for converting TV viewers into Web-based video viewers, marketing executives packed like sardines into the AD:TECH San Francisco Conference session focused on leveraging interactive broadcast and broadband in today’s complicated media environment.

TV advertising has indeed provided reach and emotion, but interactive video advertising promises those two benefits plus another: metrics. All forms of Web-based video advertising, such as streaming, embedded, viral video distribution, desktop push and long-form video, are murdering the traditional 30-second spot and demanding that “time-spent” become the new ad measurement.

The state of the industry shows a positive trend in acceptance of broadband advertising -- to be exact, 39 percent of all Internet-connected households claim to use broadband. But challenges still loom for the industry’s growth. Clients seek “interactivity beyond the click-through” -- using the Internet for interactivity other than simply allowing consumers to click straight through to a particular site. Agencies, who feel an enormous amount of pressure on creatives to make advertising work harder and to be more effective, complain that they still have to bring clients up to speed on broadband’s advantages.

“When we educate clients about broadband video, we convince them first that it is similar to TV and then second that it offers more benefits than TV, such as powerful interactivity,” says Karim Sanajabi, Carat Interactive’s EVP Creative Technology.

Several panelists described their broadband solutions, how their products are being embraced in the marketplace and the attractiveness of their customers.

Personalization and positioning build TV audiences online

ESPN didn’t want people to miss out on its favorite sports highlights, so it introduced ESPN Motion, which provides free online video with no streaming or buffering built into the pages of ESPN.com. It offers four content packages a day and has a wealth of programming assets in its arsenal. Approximately 85 percent of its user base has a broadband connection, with at-work users comprising the largest segment. This group is especially hard to reach other than through the Internet.

The division is introducing personalization through two ways: user-initiated personalization (a user wants mainly football and baseball content) and implicit personalization (ESPN Motion tracks where a user spends the majority of his time). Convenience and customization is provided by allowing customers to manage their own playlists and on their own time. By monitoring how customers use the site, the company’s executives have realized that motion content could exist in tandem with static content, such as headlines, as long as it would not compete. The far right of the screen was determined to be the most ideal location for movable content.

“Users may not realize that we’re personalizing the content, but it’s financially rewarding for the company’s revenue stream,” says Ed Davis, ESPN Motion’s director and general manager. “Our site’s impressions will increase because we’re sending inventory to customers that they are far more likely to interact with and appreciate.”

ESPN Motion has positioned itself as a service that tells stories of major events. For example, this past season it offered customers :30 vignettes of a certain football player just seconds after he was drafted. Mixing original programming, such as a Fantasy show, into the site informs consumers that Motion is not just “Sportscenter” placed online.

Since ESPN Motion’s target market is made up of Web-savvy sports fanatics, its marketing team can feel confident in offering downloads and advanced products to its users without intimidating them. On Davis' agenda is continuing to enhance the user experience in order to improve the retention rate. In two weeks this will include, among other things, offering Fantasy game subscribers a “send to a friend” function attached to certain video clips. This is an attempt to leverage viral marketing’s strength in driving usage of the site.

The division not only uses development resources from both the Disney Internet Group and ESPN.com, but also collectively brainstorms with other Walt Disney unit marketing departments about which mediums to use to achieve its goals.

Davis says his team has no plan to license Motion in the near future because 100 percent of its time is allocated to improving the product versus building the customer service needed to manage the licensing process. The company is, however, spending a bit of time chopping down 30-second ads into 15-second ads and reviewing new advertising opportunities like sponsored content. He described interest in one potential application that would involve pausing a video for a brief ad or sports trivia quiz since these offerings lend themselves well to the online medium.

Broadband video is viral and “sticky”

CEO Mika Salmi was right on when he predicted his company would be “the pioneer in video advertising.” Drawing both viewers and marketers to its full-screen Internet video service, AtomFilms in 2003 served 33 million video ads that had a 9 percent average click-through rate. At the Sundance Film Festival this year, AtomFilms and Maven Networks, a broadband media software company, debuted a Hi-Def, free and advertising-supported service that enables enhanced online viewing of independent films. The Hi-Def service, which delivers three films a week to a user’s desktop, also boasts an extremely high click-through rate.

For 20th Century Fox’s request to build an interactive video Web site for “Master and Commander,” Maven Networks developed a handful of videos that included a trailer, behind-the-scenes footage and interviews with the director and crew. The wide selection was effective in driving “stickiness”: Browsers spent on average 15 to 20 minutes viewing video content on the site.

To satisfy another client request, this time from Virgin, Maven Networks built a viral video campaign for Ben Harper’s CD release. When the video is opened, users are prompted for the names of five friends and promised an MP3 video in return for supplying them. The campaign increased Virgin’s email database by three times and supported on-going relationship-building with customers.

So there’s proof that video ads are being embraced, but what about ads embedded in video content? As one example, MSN Video has developed an advertising marketplace around the emerging rich media platform.

Let consumers control, condense and combine

Microsoft developed MSN Video as a “bridge product” to solve clients’ need for video that acts like TV but takes advantage of IP. With goals to provide actualization, fresh reach, targeting and a solution to clutter, brands like P&G, McDonald’s, Pfizer, Revlon and Disney have been lining up at the door. MSN Video touts the demographic desirability of the broadband audience: The tech-savvy young and middle-aged adults that make up the heaviest users of streaming media are the higher-income earners that advertisers seek. But this demo also makes more demands.

“Consumers want to control, condense and combine their viewings, so we allow them to do that” says Todd Herman, MSN’s streaming media evangelist. “Already MSN Video has seen a 40 percent consumer adoption rate.”

Herman believes concurrency is advertising’s biggest change to date. MSN Video relies on an advertising model that includes 15-second video spots and stationary ads that provide links to an advertiser's Web site and other information. However, only one minute of spots is allowed for every 30 minutes of content.

Its team hasn’t had time yet to explore creative possibilities since the product was just recently launched in January. As an end-to-end communication, MSN Video will be used on Microsoft’s Portable Media Center PC.

Look for more AD:TECH coverage next week.

Rebecca Weeks, a strategic marketing executive, offers consumer businesses innovative solutions for both developing customer acquisition campaigns and strengthening existing relationships. She is known for her exceptional research, analytical and trend-spotting skills.



Vinod Tonangi
Vinod Tonangi October 8, 2009 at 4:11 PM

Video is definitely changing the way people think about advertising on the internet. Radio, & Newspaper are quickly falling by the wayside. The combination of local television and online video advertising is quickly becoming the winning combination for small businesses.

Check out a blog post directly related to this topic: http://blog.tonangi.com/journal/2009/9/24/radio-newspaper-tv-internet-oh-my.html

Brett Hill
Brett Hill April 10, 2008 at 8:34 PM

Rebecca, I think you article is spot on! Being the owner of a new Video Advertising Directory, I have done my research and know there is going to be a big push of advertising to the Internet.I just got done commenting on a well known bloggers site who was very persimistic about content producers making any money. I thnk the market is wide open and their are many opporttunites for small businesses around the world to finally get their message out there in motion. It's far less expensive for them to create video ads--put them on their websites, launch PPC campaigns and/or post them with their business profiles to Video Ad Directories.TV Ad's are often cost prohibitive for most of the 25 million small businesses across Amercia. Put together a funny, viral or emotional video ad that showcases your products and services and the Internet world's your oyster.Let's face it, with the advancements of broadband video, the opportunities are endless. Like anything else, it is still work for a business owner to go out and create their video ad. That's why there are now companies out there like www.animoto.com giving people low cost--quick to Advertise options.Of course the ohter half is where will the content be placed? Obviously I believe the less intrusive opportunity is a video ad directory. People won't be using these to see commercials--they will transform their shopping habits with the new ability to make more informed shopping decisions.Banner Ads worked all these years--Video Ad's will soon become the business owners best means of getting their message and branding out to the world.