Video Ad Study Shows High Engagement Rates

by Mark Walsh, Aug 18, 2008, 7:00 AM

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Completion rates for pre-roll video ads approached 90% and click-through rates averaged 10% in a new study of video ad units by Break Media and video ad technology provider Panache.

The companies said those figures and strong results on overlay ads demonstrate high levels of user engagement for video ads, and help to validate spending in the emerging ad category.

In particular, the research was intended to provide fresh data backing up new video ad standards adopted by the Interactive Advertising Bureau in May.

"Our research was a result of our desire to provide data about the effectiveness of those new standards to our clients and partners, and to lay a foundation for future research initiatives to build and expand upon," said Break CEO Keith Richman, in a statement.

Despite the widely touted promise of online video, a dearth of professional content, lack of standard formats, and concerns about alienating viewers with overly intrusive ads have proven to be hurdles to monetization. The new IAB standards were aimed at streamlining and expanding media-buying for Web video.

The Break-Panache study, conducted between May 20 and Aug. 2, involved four types of IAB-standard video units: pre-rolls, interactive pre-rolls (including a call-to-action), non-overlay ads (running at the top of screens), and overlays (running in the lower third of screens).

The test featured campaigns for the Honda Element, T-Mobile's Side Kick Lx, and cable network truTV's "Most Daring" reality show. The spots were placed "run of site" across Break.com, a video site geared to a young male audience and offering user-generated, "prosumer," and professional video.

The study included a total of 5.85 million impressions.

Both types of 15-second pre-rolls had an 87% completion rate. The click-through rate for interactive pre-rolls was 11% to 35% higher than the average 10% rate for standard pre-rolls.

For overlay ads and non-overlay banners, about 78% viewed the ads for at least 15 seconds. Non-overlays had click-throughs of 0.08%, while overlays were higher at 0.65%--five times the industry average for standard display ads.

The study also found that making an entire interactive pre-roll clickable led to click-through rates four times higher than when just the call-to-action was clickable. The use of rich media and bold colors also led to higher click-throughs, including triple the rate for non-overlays.

At least one media buyer thought the 10% click-through rate the study had for pre-rolls was unusually high. Adam Kasper, senior vice president of digital media at Media Contacts, said 1% to 2% was more typical on pre-rolls, with 6% to 8% at the high end. "I wouldn't tell a client to expect 8% [click-throughs]," said Kasper.

But he added that the completion rates for pre-rolls and click-through rates on overlays cited in the Break-Panache research seemed to be on target.

As a separate comparison, online video ad network BrightRoll in July showed a 77.8% completion rate on 15-second pre-rolls and a 0.54% click-through rate. BrightRoll CEO Tod Sacerdoti said the network has never run a video campaign with a click-through higher than 6.1%.

A Break Media spokesperson acknowledged that 10% was a high rate, but noted that Break.com has a highly targeted audience and that the advertisers were very relevant and their campaigns had strong creative.

The report emphasized the importance of tailoring creative development to marketing objectives. "It's about picking the right ad units and the right mix of units," said Steve Robinson, CEO of Panache.

EMarketer last week dramatically lowered its forecast for online video ad spending in 2008 to $550 million from $1.4 billion, based on changes in methodology. The revised estimate is much closer to Interpublic unit Magna Global's projection of $555 million in Web video ad dollars this year, a 54% gain from 2007.

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