• by Jack Loechner , Staff Writer, May 6, 2010

According to the BrightRoll survey of executives and media buyers at advertising agencies, online video advertising is poised for continued growth, as 94% of respondents plan to spend more in the category in 2010 than they did in 2009. In a positive sign for the industry, targeting capabilities, a point of concern for 28% of last year's respondents, were cited by agencies as the most valuable attribute of online video.

BrightRoll's CEO and Founder, Tod Sacerdoti, remarked, "... online video advertising has continued to mature as a trusted and proven medium for reaching highly engaged audiences... across premium content sites online... "

56% of respondents said that they view online video advertising as either more effective or much more effective than other forms of advertising, while 83% of respondents feel they're getting more value for their online video spend now as compared to this point last year.

In addition to ad unit format (21%), reach (19%), price relative to TV (10%) and ability to reuse creative (10%), numerous respondents listed engagement and interactivity among online video's advantages.

Those individuals who felt that they were getting more value cited factors such as:

• Lower rates
• Better targeting
• More access to quality inventory  
• Emergence of performance-based metrics like cost per engagement and cost per video view.

They felt that increase in value from online video buys will continue to drive growth in this category, as evidenced by the fact that, in 2009, 87% of respondents planned to devote more of their budget to online video, whereas in 2010, 94% of respondents plan to increase their spending in this area.

Advertisers are most concerned, though consistent with last year, with running their campaigns across high-quality sites that are consistent with the brand standards of their clients.

Relative to current CPM pricing structures:

• Quality of inventory was the most important factor to buyers (61%)
• Specialized targeting (14%)
• Click-through rate (11%)
• Quality of surrounding content (8%)
• In-stream vs. In-banner (4%) 
• Length of ad (2%)

While executives and media buyers polled in last year's survey cited targeting capabilities (28%) as the aspect of online video their clients were most concerned about, this year targeting was identified as online video's most valuable asset (32%),

61% percent of survey respondents indicated that they've already seen an improvement in performance on ads that are behaviorally targeted, while over half expect that at least 25% of their ads will be behaviorally targeted in 2010.

In addition to lower CPMs, agency executives revealed that they want new and better metrics on which to base their online ad spend, including CPVs and CPEs.

This finding is strong evidence that publishers and networks need to move towards offering more flexible pricing models based on engagement and performance, as agencies are seeking to pay for video ads on the method that is best suited to their individual campaigns, while avoiding overpayment or payment for engagement with the wrong consumers.

On Which Metrics Would You Most Like To Base Online Ad Spend? 

• Cost per video view ...45% 
• Cost per engagement ...34% 
• Cost per impression ...16% 
• Other ...5%

Research into the efficacy of online video continues to be an unmet need for many advertisers, as demonstrated by the 52% of respondents who stated that their clients were most interested in more information around campaign performance.

61% percent of survey respondents indicated that they've already seen an improvement in performance on ads that are behaviorally targeted, while over half expect that at least 25% of their ads will be behaviorally targeted in 2010. In addition to ad unit format (21%), reach (19%), price relative to TV (10%) and ability to reuse creative (10%), numerous respondents listed engagement and interactivity among online video's advantages.

As online video's targeting capabilities continue to improve, advertisers are gravitating to ad networks, which use highly refined targeting methods to widely distribute ads, or to publishers, whose content they seek directly. In 2009 advertisers, on average, bought most of their online video through either ad networks (42%) or directly through publishers (43%) and purchased only minimally through portals (15%).

The survey suggests that this trend will persist into 2010, as advertisers continue to purchase through both ad networks and specific sites (72%) as compared to just through ad networks (12%) or just through sites (16%).

In 2010, the majority of advertisers plan to spend their creative budget on:

• Interactive pre-roll (54%)
• Branded entertainment (20%)
• Consumer content or webisodes (15%)
• Other forms of creative content (11%)

The report concludes by noting that, what was a down year for most sectors of the advertising industry, was a year of maturity, development and growth for the online video ad category. Agencies saw increased value for their video ad spend as they committed more of their budget to the medium than ever before.

For additional information about the study, and access to the full PDF file, please visit BrightRoll here.