Continued Growth Expected for Video Ads

May 4, 2009

This article is included in these additional categories:

Agency Business | Analytics, Automated & MarTech | Financial Services | Media & Entertainment | Television

Interactive ad agencies are confident that the video advertising category will continue to perform, despite a challenging economy and an increased focus on performance advertising, according to a survey by BrightRoll (via MarketingVOX).

The survey is part of BrightRoll’s Q1 2009 Video Advertising Report (pdf). Brightroll polled nearly 150 US advertising agencies’ attitudes about online advertising in the context of the current economy, with a special focus on video advertising.

Some findings:

  • 87% of agency executives plan to spend more of their online advertising budgets on video in 2009.
  • 71% of survey participants view online video advertising as a complementary medium to television.

brightroll-video-advertising-tv-advertising-q1-2009.jpg

  • A majority of respondents estimates CPM prices to be at their lowest, and 20% think the price of pre-roll will drop to half of what it is today.
  • Prices of pre-roll continue to fall (early Q209 data suggests this trend will continue).

BrightRoll’s average CPM (cost-per-thousand impressions) numbers from the industry at large confirm the trend:

  • Average pre-roll CPM: Q408 vs. Q308: down 12.5%
  • Average pre-roll CPM: Q408 vs. Q407: down 25.0%
  • Percentage of campaign revenue from rre-roll: Q109 (80.6%), Q108 (63.1%)

The drop in CPM pricing “could be a good thing,” because cost may have been limiting growth, TechCrunch observed,? saying if prices come down further, say to $7-9 instead of $20, they’ll be more comparable with TV commercials, which range between $15 (primetime) to $50 (niche, targeted cable channels).

In addition to cost (27%), 31% of agencies cited “lack of targeting capabilities” as a factor limiting online video ad growth. Some 18% said online video has limited reach, and 12% cited ad format limitations. Just 7% thought it was held back by poor inventory quality.

The survey also found that reach and targeting capabilities are the aspects of online video advertising that respondents say their clients are most concerned about:

brightroll-aspect-online-video-significant-concerns-q1-2009.jpg

Both pre-roll and in-banner ads were regarded as preferable units, with one out of two respondents saying their use of one or the other depended on the situation and advertiser goals. Reasons for their preference, according to the survey, are guaranteed impressions, overall engagement, and noticeability.

The most surprising finding of the survey, Marketing VOX said, was the lack of data and effort around video advertising efficacy; 87% have not performed any in-house research around their online video campaign efficacy.

Asked what they would want to know if they were to conduct research:

  • 39% would explore the impact of online video advertising on offline purchase behavior.
  • 36% would explore changes in purchase intent / brand lift.
  • 25% would measure efficacy vs. television advertising.

A recent Forrester report concluded that interactive advertising is heading for growth over the next seven years.

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