Before going further, let's just remind ourselves that referring to "online video" as if it is a homogeneous entity is totally misleading. Recent analysis by Dynamic Logic confirms that, just like TV ads, online video ads vary dramatically in their effectiveness. According to Dynamic Logic's MarketNorms the best online video ad creates over twenty times more brand-linked awareness than the worst. Higher ad awareness typically translates into a difference in purchase intent. This varies from a difference between exposed and not-exposed cells of +6.9% for the best ad tested, to a drop of -1.5% for the worst.
While online video may suffer just as many successes and duds as its TV counterparts, its effectiveness compared to other online ad formats is certain. Currently video creates twice the average lift in ad awareness compared to all ads in MarketNorms database, and nearly twice the lift in purchase intent.
So what does the future hold for online video? I believe it will become an important means to build brands in an online environment, allowing advertisers to reach out to and communicate with people who are not yet thinking of buying their product or service category.
Most online ad formats are neither engaging nor interesting unless the person seeing them is actually looking to research or buy the category. Some, like the dancing silhouettes used to advertise cheap mortgages, are not only irrelevant but are actively distracting and irritating to those of us not looking to refinance our homes. Online ads that are engaging in their own right are few and far between, and the rest are easy to ignore. Therefore, response depends more on good targeting and placement -- ensuring that people who might be in the market see the ad at the right time -- than on good content. By contrast, video offers a far better chance to engage people who may not be interested in making an immediate purchase, provided the content is judged worth watching.
To online marketers who are used to using the Web as a direct response medium, this rationale must seem crazy. Surely, the whole idea is to reach people when they are actively engaged in researching or making a purchase? Not to brand marketers intent on developing a real relationship between their brands and consumers. If you seed ideas and preconceptions before people even think about buying a product or service, you can gain a head start over the competition. If you do this well enough, then, when people do experience a need, your brand will be more familiar and desirable than the competitors.
Video advertising on TV has always been the bedrock of long-term brand building. As online video becomes more prevalent, I expect it to perform just the same role.