iMedia Connection

Three Reasons to Invest in Online Video

Michael Jones
  • Michael Jones
  • VideoPosted on February 08, 2006

Thanks to online video ads, guys with bad hygiene and pathetic social skills can try wooing VH1 VJ Rachel Perry-- and they even get a well-mannered response. Ah, the wonders of the internet.

The ad campaign was an innovative partnership between laddie-mag Maxim and Pontiac to hype the carmaker's Solstice Roadster. Users logged onto the magazine's website and submitted pick-up lines to an image of Perry, actually an incarnation of the beautiful celebrity compiled from hundreds of pre-recorded videos. People with the best lines registered to win a car. Depending on the attempt, the program culled Perry's retort in real time from hundreds of pre-recorded responses. The site was flooded with users. According to Advertising Age, 16,000 people registered in its first three weeks.

The titillating Pontiac campaign was the successor to Burger King's Subservient Chicken, an online craze of its own. The two demonstrate the unique potential for online video ads. They lock millions of users to the sites, create a viral response by allowing fans to email the links to friends, and generate pop culture buzz. And of course, the online video ads paid off in higher chicken sandwich sales and registrations.

We shouldn't be surprised online video ads are becoming so popular. The streaming ads are a natural outgrowth of technological advances, evolving consumer habits and the perennial desire to gain traction with users. They are a much-needed advance in the maturation of the internet and will help ensure its future profitability. Fortunately, companies are realizing this. The online research aggregator eMarketer projects streaming video spending will nearly triple to $640 million in the next two years, and grow to $1.5 billion by 2010.

Three key factors have caused the rise of online video ads, and will guarantee the medium soars in 2006. 

1.) A tech-savvy culture
If the internet were a child, we could say it's leaving the awkward ugly stage and beginning to blossom. Let's face it, only a small number of consumers jumped on board with the latest technologies when they over-promised on the results or didn't work out the bugs. At first, technology was holding back advances, which held back the profits. I was like a parent, cringing and wincing at those banners and pop-ups. It was like seeing my youngster lurching through puberty. Hang in there little buddy, you're gonna make it! Now, technology is catching up with expectations, which entices a broader range of consumers and gives marketers a piece of the action. I'm beaming.

The rapid adoption of broadband internet access is the primary driver of online video ads. And it's only going to get better. The U.S. market hurdled a barrier to internet advertising this year when more than half of online households were using high-speed connections. A study by eMarketer estimates the number will continue to grow, from 42.3 million households in 2005 to 69.4 million in 2008. 

With all those high-speed connections out there, comScore Networks found consumers putting them to good use. More than 94 million people in the United States viewed a streaming video online in June of last year, according to comScore. The company recently released the first comprehensive assessment of the online streaming marketplace and, surprisingly, discovered that technology isn't just for youngsters anymore. Consumers between ages 35 and 54 accounted for more than 45 percent of online video ads watched in August 2005. It is 20 percent more likely that these mature adults will watch an online video than the typical internet user, the study found, and people between the ages of 25 and 34 are 12 percent more likely to watch a streaming video. These are hot marketing targets, and they love their streaming media.

"Contrary to public perception, it's not just 'college kids' or 'bleeding edge' internet users who are streaming videos," said Erin Hunter, senior vice president of comScore Networks media and entertainment solutions. Publishers are using innovations like high-quality video product clips, music videos, movie trailers -- even news broadcasts -- to engage consumers, Hunter said. "This creates a fantastic opportunity for advertisers to capitalize on what is now a mainstream audience," she added. 

2.) An evolving business mindset
The video ad pioneers have mainstream companies hot on their heels, jumping on the online video bandwagon. Todd Herman of MSN told Clickz.com that 23 of the top 50 brands have advertised on the site since its launch in August 2004. They include Pfizer, Procter & Gamble, General Motors and Johnson & Johnson.

Hunter, of comScore, says advertisers are "waking up" to the potential of online video ads. "People want more than a two-dimensional experience online, and this powerful medium now reaches everyone with engaging and interesting content," Hunter said.

The internet makes users part of the media experience. They aren't just viewers, as they are on television. They're participants. They're members of the online community. Advertisers are taking advantage of this increased engagement and loyalty. On New Year's Eve, MSN aired 30-second video ads from the entertainment and automotive industry throughout its live web cast from Times Square. The coverage allowed internet viewers to become part of the show-- sending emails that were included in the web cast.

Companies are also mainstreaming online video ads because they use quantitative data to connect consumers to products and services. This is the new "golden metric" to determine ROI, according to Diane Mermigas, contributing editor to The Hollywood Reporter. "It is impossible to counter the logic that paying 28 cents for a click on Google by a targeted consumer who might engage in an electronic transaction is not preferred to paying 10 cents per reader for a national magazine print ad that might not be seen," Mermigas writes.

Mermigas says traditional media outlets can cash in on the online action by moving consumers and advertisers to websites. In the future, look for more joint marketing sales between internet video advertising and traditional media outlets. Companies will integrate campaigns, combining online videos with TV spots run on cable networks. This naturally extends the campaign because video production costs were paid when the content was prepared for traditional media.

3.) Interactive, engaging and informative
Finding your ads' target audience is only a start, you have to lock them in to be effective, get them to engage. TV, radio and print have skinned this cat every which way for decades, but they're still handicapped. They're dealing with passive mediums and can't snoop while the consumer interacts with the pitch. The truth is, they don't know who's paying attention or for how long! Meanwhile, customers who check out the new online video ads by Ross-Simons not only get a behind-the-scenes peek at the styles of jewelry merchant, their interaction with the ad teaches marketers what works.

Ross-Simons just launched its streaming ads on its website. They star soap opera actress Lauren Koslow of NBC's "Days of Our Lives," and allow consumers to click on highlighted items to learn more or order the product. The videos engage customers and allow them to take action at the moment of interaction. It's more than an advertisement-- it's a prelude to a transaction.

Shot on digital video, there is little comparison between online advertisements and their passive cousins. Programmers can blend interactive concepts with the campaigns, like hidden "Easter eggs," flash, 3-D and high-resolution images. Many online ads include viral elements like emailing the ad to friends or allowing users to become part of the online community by posting comments on the site.

David Hallerman, senior analyst at eMarketer, said, "More than any other advertising format, internet video has the potential to blend hot marketing elements together-- branded entertainment, paid search, viral marketing, consumer generated media, behavioral targeting, website brand marketing and online gaming."

And every time a user emails an ad, clicks on an Easter egg or conducts a search, we're learning more about our target audience. We'll take that information and improve, giving consumers what they really want next time, and the time after that, and the time after that. The best part is that this is only the beginning.

Michael Jones, founder and president of Userplane, oversees the company’s application and business strategy, focusing on the future of live communications through the development of web applications. During the past two years, Userplane has gained recognition as a leading web-based application developer, in large part due to the success of its Flash-based Audio/Video Instant Communicator. Jones, one of the primary team members in the design and development of Instant Communicator, remains the primary manager of the application and its deployments.

Prior to founding Userplane, Jones was CEO of PBJ Digital, a national web development agency with clients ranging from Disney to Boeing. Among other activities, Jones has been a keynote speaker at the 2003 OFFF conference in Barcelona Spain, a featured presenter at Flash Forward 2003, and an advisor to a number of growing web communities. He earned his Bachelor of Arts in Marketing from the University of Oregon.