Is online video advertising more effective than conventional TV advertising?

Budgets are rapidly shifting to Online Video adverting. A Nielsen survey established that online video ads had a 65% general recall compared to 46% for TV ads. Brand recall was also higher for online video ads  -  50% compared to recall for TV ads – 28%.

Video ads have higher click through rates 0.4 – 0.74% as compared to JPG of GIF images where CTRs tend to  be between 0.1 and 0.2 %.

Ad agencies have also begun to realize this shift and an increasing number of agency media planners/buyers are planning to invest in online Video ads. 94 % in Q1 2010,  up 7% from an already high 87 % in Q1 2009’. See table below-

Why is online video advertising bigger than TV advertising?

Interactive v/s static

The ‘interactive’ quality of a video ad is at the heart of its effectiveness. Users click the ‘play’ button twice more often than they click thru’ a JPG of GIF image.

On a TV commercial you cannot question the company producing it. Some of the (mis)information  keeps rankling the viewer’s mind. An online video ad, on the other hand is more interactive. The viewer has the advantage of clicking through and reading more information on the product/service. Depending  upon how the video ad is run, the viewer also has the option to ask questions seeking clarifications. Questions can be asked thru’ the website’s interactive page, thru’ instant messaging etc. Clearly, online Video advertising is much, much more powerful user experience in terms of interactivity and clarity of the product/service.

Relative newness of the Video ads

Video ads are clearly at the growth stage of the product life cycle (PLC), if there was one for video ads. The novelty value contributes to higher CTRs.

Flexibility

The psyche of the average consumer is that he/she doesn’t like to be compelled into watching a video ad. There is no running away from TV ads. The only option the viewer has is to switch off the TV. The online video ad experience, on the other hand, is elective.  The viewer is not put off a video ad – because there is no compulsion to watch it. On the other hand a clever copy or tagline will encourage the viewer to click thru’ and see what it is about.

Targeting

TV ads are targeted to the mass market. Content has to be middle-of-the-road – appealing to the average user. Targeting is more generic and  less effective. Online Video ads, however, can be targeted at a specific demographic and content tailor made accordingly. Focused content gets better results because it appeals more powerfully to the target market.

Online video advertising thus has everything going for it at the minute. Handled well, it is here to stay.

Video Advertising

The effectiveness of Online Video advertising over conventional TV advertising is very much in the news these days. There are a variety of reasons ascribed to this effectiveness.

In these series of articles, I am going to be discussing Video advertising for what it is, different types of video advertising and why Video advertising is more effective than TV advertising.

To discuss the basics, let’s first understand Video Advertising for what it is and its different shapes and forms.

Websites, especially news websites, routinely have fairly long video clips – either a news item, a discussion on a subject, a chat show – that the internet users can access and watch. This is an excellent opportunity for the advertiser to hit his target market.

Pre-roll, mid-roll and post-roll

An online video clipping can plug in an advertisement –

Before the clipping begins – ‘Pre- Roll’

At some point during the video – ‘Mid-Roll’

At the end of the clipping – ‘Post-Roll’

Pre-roll, mid-roll and post-roll ads are usually 15 – 30 seconds long and appear before, during or after a video clip. These formats are most commonly used, with the advertiser being able to get data on the user – who is watching the ad, where he/she is watching it etc..Having to view an ad before the clip they wish to see, is a put off for some viewers, however. It is also not interactive.

These types of ads are seen on different sites – msn, cnn, ndtv, ibnlive etc. Among the prominent advertisers who use this format is IBM.

Interactive

An interactive ad is a pre-roll, mid-roll or post-roll that offers some form of interaction – entering a post code, telephone number, playing a game. The ad may go on for more that 15 – 30 seconds, if the user interacts with it.

Overlay

An overlay is a text of graphic that appears at the bottom of the video. On clicking on the text, the user can often go to the advertiser website. This format is not alien to the user – the ticker running at the bottom of the TV screen is pretty common. Viewers can find overlay an irritant and often the view doesn’t recognize it for an ad.

Companion Ads

These are text, display or rich media ads that wrap around the actual video clipping. They come in different shapes and sizes and run along with the video clipping. The main objective of the companion ad is to offer continued advertiser visibility throughout the video clipping. Companion ads can be interactive, allowing the viewer to click thru’ which will result in expansion of the ad allowing the user to actively more interaction opportunities.

This is a bit of a background on different types of video ads. In my next submission, I’ll be discussing the hype and hoopla around video advertising and why it is considered more effective than TV advertising.

Mobile Advertising

Mobile Advertising is in its infancy. But predictions are that before long businesses will start to rely on mobile advertising as much as they do on internet advertising now.

I recently read an article on how mobile advertising helped a homeless couple into a new home! The homeless man in question was, at specific times of the day, asked to stand on a bill board whose copy read like this –

I am Danny

I am homeless

I am HERE

The message on the billboard was to Text Danny to a particular number to donate $ 10! By humanizing the homeless population, this campaign moved passers- by to stop and have a look. And ACT. The campaign was hugely successful enabling Danny and his handicapped wife move into a new home within a week’s time!

Types of Mobile Advertising

SMS Advertising

In this form of advertising, a current or potential customer subscribes to mobile advertisements from the merchant. The customer then receives text message advertisements. Vendors who send coupons or notices of limited time discounts find great success in this form of mobile advertising

Run of Network (RON) campaigns

RON campaigns on mobile work the way they do on the internet. There are obviously no targeting options in this type of advertising. CTRs are low. CPC is the norm, with campaigns being low value US $ 0.01 CPC. Publishers typically get 55 – 60% of this low ad revenue.

Run of Site or Targeted Campaigns

This is a premium mobile advertising option with a wide range of targeting options based on profile, contextualization and location. Higher click thru’ rates are a feature. Values are higher as well CPMs can be in the $ 5- $ 75 range and CPCs in the $ 0.05 – 0.5 range. Publishers have a large slice of the advertising pie – they can negotiate 70 – 80% of the ad revenue.

Mobile advertising is really the future. With increasing mobile ‘real estate’, it is making more and more sense for advertisers to jump on this channel in a structured, targeted way to get quick ROIs.

Mobile search wars

The telecom companies are colliding head-on in competition for control of the consumer mobile search business.
Telecom carriers, handset manufacturers, publishers, directory and yellow pages companies, local search companies, Silicon Valley giants and a foray of start-ups are squaring off to contend for the title of mobile search champion. Each is trying to convince marketers that it is the natural inheritor of mobile search !
“Mobile search is a battle to define perhaps the most important new interface with the consumer,” says a eMarketer Senior Analyst and the author of the new report, Mobile Search: Clash of the Titans. “Whoever cracks the consumer and commercial code for delivering and monetizing relevant answers for people on the go will secure a license to print money, at least for a time.”
Depending on a researcher’s particular bias toward telecom, Web or technology factors, the published forecasts for mobile search vary from $1.5 billion by 2011 to over $11 billion by 2008 according to research.
Forecasts says that the general mobile ad spending market — along with ad spending that supports mobile multimedia — should reach over $13.8 billion worldwide during the same period.

Mobile Advertising Spending

Of that total, mobile search is expected to account for 17%.

Worldwide Mobile Search and Revenues

May be now, the figures might not look very big compared to that of the online search market. But, it carries a promise of radically changing the way people access search information and make buying decisions. If seen this way, the mobile search market goes beyond this specific search industry.
Regardless of its relatively small size, mobile will continue to attract investment and talent because it is one the best platforms for connecting marketers to consumers with short-term or immediate purchase intent.

Mobile entertainment revenue worldwide

For instance, Informa predicts that global mobile entertainment sales will reach over $38 billion by 2011. Of that market, the top three subcategories are music ($13.6 billion by 2011), mobile video and TV ($8.3 billion) and mobile games ($7.2 billion).

“The days when mobile search need only organize a mobile carrier’s content retail store are rapidly drawing to a close,” say experts.
Too much money, talent and technology are moving into the mobile marketing space to expect that users, let alone advertisers, will stay content to search within the walled gardens that predominate today.

Statistics Courtesy :

emarketer report : Mobile Search: Clash of the Titans

Online Marketer and Advertiser – A win-win model (contd)

In my earlier article I had suggested running a ‘test’ CPC campaign which helps the marketer optimize the campaign to ensure that the eCPA goals are met. The key objective of such a test campaign could be for both the marketer and the advertiser to be convinced that the campaign is a performing one.

Speaking of test campaigns, another very effective way of ‘testing’ the waters, is to run a combination of a CPM and a google adwords campaign. This model is best explained by an example. Let’s assume a campaign for sales of mobile handsets. This campaign ideally lends itself to a CPM + google adwords campaign. The way it works is that on the one hand we run a CPM campaign on relevant inventory. And on the other hand, we buy google adwords. Inventory for such a CPM campaign should be chosen very carefully. Likewise, the adwords we use on such a campaign should be thought thru’ very carefully. A balance needs to be drawn between buying the ‘dearer’ more effective adwords and the ‘cheaper’ commonly used – and relatively ineffective – adwords. Admittedly an initially higher outlay might pinch in the short-term, but the long-term results in terms of eCPAs would justify the means.

Where does this all lead to? Our friend the advertiser is still looking at ‘performance-based’ campaigns!

Well the answer is pretty obvious. Whichever route we take, we should ( hopefully) have an effective test campaign. Given the effectiveness of the campaign in meeting the CPA goals, the advertiser should have no complaints rolling out a full-fledged CPC or CPM/Adwords campaign. By the same token, the marketer will not baulk at the idea of converting effective test campaigns to CPL/CPM campaigns.

Is there a better example of win-win for the marketer and advertiser?

Do online advertising companies need an external agency to encourage ‘best’ practices?

In the UK, the online advertising industry is ‘regulated’ by IASH. IASH’s purported objective is to ‘to encourage best practice among online advertising sales houses through the adoption of an effective code of conduct. The membership fee to the IASH costs £ 5,000. Annual  audit fees for a network is £ 3,500/-. If  audits are not done regularly, the network is de-regsitered.  I wonder if membership to IASH is really all that necessary? And at such an exorbitant fee? Can members of the online fraternity not form an informal assocaitoin and self-regulate?

I was talking to my friend in the US the other day, and he mentioned that there is no IASH equivalent in the US. And the online marketing industry in the US is working just fine. Eventually, it is down to the networks themselves to formulate a code of conduct and adhere to it. I’d love to hear views on this subject.

Online Marketer and Advertiser - A win-win model

There was a time a few months ago, when there were quite a few requests to run CPA – performance based – campaigns. I understood the rationale behind CPAs – using CPM inventory but pay CPA. From an advertiser perspective, it is win but from the online marketer point of view it is lose.

Why so?

Typically, when a campaign is kicked off for the first time, the marketer mobilizes inventory which he thinks is ‘relevant’. Having taken this important first step, he then gets the campaign going. Even after all the due diligence of selecting the correct inventory, targeting etc, there is still the process of optimization of the campaign to ensure that you keep the highest performing inventory on the campaign. In a keyword based campaign, it would mean selecting and retaining the keywords with the maximum hits. After all this, the product/service being advertised must ‘motivate’ the user to buy.

To sum things up, a CPA campaign is heavily stacked against the advertiser in terms of ROI. But the advertiser’s point of view is also relevant… After all, he is the person with the Money, Authority and Need.

How do we strike a balance between advertiser and online marketer concerns?

The answer is to run a ‘test’ CPC campaign. An appropriate test budget – US $ 5,000 – is a good investment to test the waters. The marketer and advertiser can work closely monitoring the campaign, with the client keeping an eagle on ‘effective CPA’ – dollar spend for each sale effected from the campaign. In the initial stages of the campaign, the marketer and the advertiser can work closely, keep tabs on the campaign performance. This would result in the marketer ‘tightening’ the screws on the campaign to ensure better CTRs resulting in better ‘effective CPA’ for the advertiser. This would be the ideal win-win model for the advertiser and marketer.