Online Video Ads Ride High During Tough Economic Times

Doom and despair are the watchwords for the advertising and publishing industries as our economy nosedives into a recession. In times like this, it is easy for advertisers (dragging their agencies with them) to simply retrench and wait for better days to market themselves. It's also easy for advertisers to stay away from "newer" ad types like online video -- ad types that could be deemed risky or peripheral to a core media campaign.

In looking at some history involving past economic slowdowns, much has been written about advertisers that took a different tacj and ended up on top. These were the bullish advertisers of yesteryear which, upon seeing their competitors retreat or retrench, moved aggressively forward. Many were big brands, like Kellogg, which bested C.W. Post during the Great Depression and became category leaders. These winners were clearly strategic but what they really had was the guts to push forward when the data told them to do otherwise.

Today's advertisers don't need to be quite so bullish. And the good ones don't fundamentally rethink their strategy when times are bad from when times are good. Why? Because the smart ones have long been focused on driving results, testing and measuring what works and what doesn't -- all the while, optimizing over time for what does work and eliminating what doesn't, while often gauging the ROI on campaigns run over cycle times measured in months, not weeks.

In these tightening economic times -- borne out in recent reports from analysts from the Kelsey Group and Borrell Associates, both of which continue to forecast higher online ad spending -- smart advertisers will seek the higher ground that advertising on the Web offers, largely because it is so measureable, especially in applications like online video.

Where does online video advertising fit in?

Online video advertising takes effectiveness and measurement to the proverbial next level. No one argues the impact of sight, sound and motion and the brand-building benefits of video. But coupled with the ability to drive direct response and gather deep insight into performance, video is taking a powerful new role in the marketing mix.

Case in point: We've been working with dozens of local publishers who have incorporated video into their standard 300x250 display ad packages. Our publisher partners are finding that advertisers have a tremendous appetite for running in-banner video for several reasons:

  • First, larger advertisers find it easy to repurpose their existing video content, while smaller ones find that they can create a low-cost (high-quality) video ad that drives action. Lowering the creative barriers and making video more accessible is big for both advertisers and publishers.

  • Second, advertisers are seeing measureable performance results that exceed what they expected if they were running regular display ads. Beyond click-through rates and possibly conversion data, advertisers are seeing a new set of metrics emerge: Video ads offer brand exposure (we've seen video ads run that are longer than two minutes); video ad interaction (repeat plays, sharing, expanding the player); measurable engagement (play through, exit point); and conversion (lead generation, clicks).

  • Third, advertisers take this data and turn it into insights on how effective their creative is: How many leads am I getting and when in the video do they occur? How much are viewers watching? When in the video do they abandon watching my video ad?

    It's this kind of deeper measurement and insight that online video advertising provides and which is getting advertisers and publishers alike excited, especially in an economic environment that demands accountability.

    Execution vs. Optimization

    In tough economic times, it's also tempting for advertisers to focus on tactical execution rather than more strategically optimizing for results. I've heard it said that yesterday's media planners spent 90% of their time on planning and 10% on optimization -- but today's interactive media planners spend their time in reverse. The days of simply deploying ad campaigns, sitting back and checking spend levels against impressions are over.

    Today, we're seeing numerous companies leverage online video advertising platforms to focus much more on the optimization piece. In one example, an advertiser tested two video ads in the same banner ad campaign, running them in A/B rotation, and saw that one was getting a click-to-open rate of .40% (not bad vis-a-vis a regular display ad) but the other one was getting a click-to-open rate of 2.7%!

    Launching a campaign is just the beginning and it is optimization that is the means to the end.

    Advertisers are demanding answers to questions on what works and doesn't, an understanding of the efficacy of their advertising spend and creative, and an ability to act on it. Online video advertising is poised to be a steady and consistent answer, both in good times and in bad. And yes, it always takes guts for marketers to break new ground, but with video, they have numerous means to measure what really works, getting a true gut check as to whether they're on track all along the way.

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