Editorial Articles

More people are watching video online than ever before and TV advertisers are now acknowledging the importance of targeting these audiences. While online video delivers incremental reach to TV, there is still ambiguity over its effectiveness with a lack of research and measurement. Video on-demand (VOD) needs a standard metric for ad buyers before its full potential is realised.

Following our latest bi-annual media buyers’ report, we are confidently predicting that investment in the online video advertising market is set to break records this Christmas quarter. Great news, but our research also uncovered an interesting and very important inconsistency which lies at the heart of the development of VOD.

Our study focused on video advertising placements around professionally-produced content on the web. These are dominated by pre-roll adverts, usually a 10 to 30 second audio-enabled video advert, that is played when a user clicks to view a video online. Focused on the people investing in this evolving new advertising , the study was based on feedback from 150 people responsible for buying online video advertising on behalf of brands. In short they told us they were planning more campaigns with VOD, and that they would be spending more money on it. Our market intelligence mirrors this and the two combining factors led us to the conclusion of a record upcoming quarter.

Predicting growth in the popularity of VOD is relatively easy when consumers continue to spend more time watching short and long form video content on the web, but growth cannot be achieved without good content and good content costs money to produce. That comes from advertising and it is advertising money that is the current driver of this market.

So why are advertisers interested in VOD? It is clear from our survey that VOD is increasingly being used to deliver incremental reach to linear TV ad campaigns, which means TV ad budgets are fuelling this growth. For 56% of media buyers, the primary use of VOD is to deliver incremental reach to TV – up from 41% in March 2010. More than a fifth (22%) said they used it for brand awareness. There is also an increasing confidence in VOD. Advertisers and media agencies have been testing pre-roll advertising over the past 18 months and are investing a larger share of their ad spend to feature VOD channels on their media plans.

This is where we found a major inconsistency and one that needs to be addressed. The biggest concern taken from our survey was that 29% of media buyers said click through rates were their primary measurement for judging the success of campaigns. When you consider that 78% of the same buyers told us their primary use for VOD was to deliver incremental reach or brand awareness, how can buyers be using click through rates to measure success?

The answer is simply that they don’t have much choice when there is still no clear metric for buying audiences on the web and measuring brand uplift. 30% of media buyers said a lack of research proving the effectiveness of VOD was the barrier for them not to invest more in VOD. It is a clear area for companies like us to address if we want to continue growing the market. The demand is there from audiences consuming premium content but for the market to truly flourish, the advertising money needs to follow.

For that to happen a lot of work needs to be done but the good news is that we’re by no means starting from scratch. We are running numerous online panel-based studies around our campaigns to further understand the brand uplift delivered to our advertisers. We’ve done research with some leading brands which proves VOD delivers incremental reach and raises brand awareness, and we’ll soon be in a position to publish some of that.

The industry as a whole is investing more resources in technologies and studies while research companies, such as Comscore, BARB and UKOM are making great progress in implementing a standard metric for buying audiences on the web. To have comparable confidence in VOD as they do in TV, advertisers and media buyers need a comparable system to the one operated by BARB.

I wonder how much more of a share VOD could take of TV budgets if research of VOD as a branding tool was more advanced and a set of industry-standard metrics was established. It may take some time but it will happen.

Jamie Estrin
Managing Director, Web TV Enterprise
Twitter: WebTVEnterprise