• by Mukund Ramachandran , September 25, 2013

Video is hot. In June, 183 million Americans watched more than 44 billion online videos, according to comScore. They also watched a record of more than 20 billion video ads, which reached more than half the U.S. population.

These are impressive numbers. But did these ad campaigns enhance the company’s brand with the right consumers? Answering this question conclusively is the key to the continued growth of online video advertising.

But before we come to the answer, let’s quickly evaluate the tools that are currently used in the most prevalent form of video advertising: TV advertising.

Since its introduction in 1941, TV advertising has largely been transacted on the basis of GRPs (gross rating points). The beauty behind the GRP approach is its inherent simplicity. GRP is a metric that help the advertiser understand what percentage of the target audience actually saw the ad, which makes it easier to buy ads -- and more importantly, gives a simple, elegant method for comparing marketing campaigns.

The question raging in the online video industry today is whether the adoption of the GRP to this new medium will accelerate the migration of marketing spend to online video. Yes, probably. But I don’t believe the GRP goes far enough in reflecting either the targeting or the analytics capabilities of online video today. 

Get Precise

The whole beauty of the online world is that we can collect data about who is watching and engaging with our advertisements. This information in the hands of marketers makes them smarter, so future campaigns will be more effective. Once marketers are fully able to appreciate this fact, they will begin to shift their thinking about ad effectiveness, in addition to the absolute reach & frequency metrics that are prevalent today.

There is also another viewpoint today: that data, in the context of an online video campaign, is largely targeting data applied only at the front end to ensure that the campaign hits a particular demo. However, the real power of data actually comes from the rich understanding of who is viewing and engaging with your ad. Even if you do begin by applying the broad brush formula —f or example, showing your ad to men between the ages of 25 to 54 — data in the online world may tell you that the most engaged users were city dwellers in New York and Chicago with incomes of over $100,000 and an affinity for high-end foods. Or a soda company may start out targeting women from the ages of 18 to 34 for its diet product, but response data might show that the most engaged women were not only women in this demographic, but also women who were slightly older and had a deep interest in sports & fitness.

In both cases, this was data you didn’t start off looking for, but due to the ease of gathering this information, can be used to give you insights for the future on whom you should target. This is gold in the hands of savvy marketers, who can take advantage of it to widen or narrow their targeting universe, change or develop specific creative messages for sub-audiences, and even  rethink how they allocate the media spend to various outlets. This is “advertising as research”: a new way of thinking about audiences that is gaining wider acceptance today.

In the end, marketers may still decide to continue to target the traditional way, using age & gender, defining a frequency goal and delivering ads to those users within a desired time frame. But with online video, even if marketers continue to use that method of buying, they have learned a lot from the data generated by their marketing campaigns – and now understand their customers better. Now what television ad can compete with that?
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