• by P.J. Bednarski , Staff Writer @pjbtweet, February 12, 2013

First the good news: In 2012, viewership of video content online increased 23% over the year.

Now, what would seem to be the really good news: viewership of online video ads grew 49% during the same period.  Demand for ad placement seems to be at an all-time high, a new report says.

But, cautions the tech firm FreeWheel in its quarterly Video Monetization Report, hiding in the grass is the possibilility there won’t be enough places to put ads.

“If new opportunities for distribution and syndication aren’t created and more content isn’t made available online, advertising revenue potential will stall as there is a limit to the number of video ads that can be placed in a single piece of content,” the report says.  

Taking the contrary view, it seems to me that fewer videos would seem to drive up the price for all those advertisers that want to be advertising in the videos that are there. Depending on where you’re coming from that’s really good or bad news. The problem for content sites these days is getting full value for their goods. Cable TV had/has the same problem. It is hard to sell out in the upfront (like the broadcast networks often say they do) because cable has so much inventory out there.

Taking the double-contrarian view, providing too much has never been a problem for the Internet, whether it makes sense or not.

The quarterly report to be released today is compiled by FreeWheel’s Monetization Rights Management (MRM) unit, an advertising system designed to manager ad sales and serve ads into wired and wireless Internet devices. Its data for the quarterly report comprises 15 billion video views and over 13.5 billion video ad views in Q4.

In one side portion, it notes that viewing by mobile phone has moved from just a sliver (2%) in the fourth quarter of 2011 to 12% in 2012’s Q4.

There’s pretty interesting date here.  FreeWheel has posted a version of it this morning for all to see.

Continuing on the content/ad disparity beat, the report says that video content viewing increased just 7% in the fourth quarter, while video ad views were up 26%.  That inconsistency has been evident for several quarters in a row.

Again, not to be nay-saying just for the sport of it, but in a content form that has been growing extraordinarily and is relatively inexpensive, it would seem likely content would have perked before advertising to support it fully developed. Now might be something like the period of adjustment.

Advertisers are loading up in long-form videos (20 minutes +), where there are now an average of 9.4 ads per view, up a significant 36% from the fourth quarter of 2011. Consumers are watching them more too. FreeWheel reports the completion rate rose from 88% to 93% year-to-year.  (That matches completion rate in the third quarter alone, when the percentage reached that high-water mark for the first time. In 2011, the level was in the mid-80s. )

Indeed, completion rates rose for whatever length of video was studied, a sign that consumers are easing into the idea that they have to watch commercials to get content, and that advertisers and content providers have figured out the type, length and placement that viewers will tolerate.

FreeWheel says there’s even a little more give in consumer attitudes. “Overall, the very high completion rates indicate there is still some room for higher ad loads in managed content, no matter what the length,” the report says.

The go-to length: Thirty seconds. “The ability to use one piece of creative on any video delivery platform is a significant cost savings for advertisers and will encourage the flow of ad dollars to digital video,” FreeWheel says, which is a probably an unwelcomed piece of advice for marketers who think the most effective way to advertise on line is with a specific online-video message that helps reinforce the standard pitch.  They can fight it out among themselves in the next few months when upfront budgets are set.  

pjbednarski@comcast.net