Online Video Comes Of Age

Online Video Comes Of Age
by Chris Young, Monday, March 6, 2006

I RECENTLY PROMISED MYSELF THAT I would never again say "tipping point" or "perfect storm." Enough already. Yet, just as I've slipped on that daily gym workout resolution, I just can't think of another term to describe what is happening with online video than to call it a perfect storm.

Nearly every major player, from YAHOO to Google to Microsoft, is preparing a new platform that will make it easier for users to find and view online video. Companies like Scripps and Viacom have launched broadband "channels" where nearly all the content is video clips. And suddenly all of the major traditional offline content companies (OK, let's call them broadcast networks) have discovered there is a market for paid downloads of their shows. A perfect storm, indeed.

None of this has been lost on the advertising community. Just a few short years ago, the online video business was the sole domain of entertainment companies-- films, games, music--who used their product as online trailers. These companies are still major player (although using far more sophisticated ad units, often with interactive components that tend to hold audiences longer) but more and more, every industry is starting to use online video. For example, virtually all of the clips on Scripps' new broadband channel (HGTVKitchenDesign.com) are preceded by a commercial by such companies as P&G, Kohler and Lumber Liquidators. Same is true at ESPN.com. Increasingly on many other Web sites you are blocked from accessing free content until you have watched a short commercial video. Video networks are providing huge value, too. Take for example, Broadband Enterprises, which has aggregated 450MM impressions from niche sites all over the Net.

Even the video download business has a stake in advertising. A new report by Points North Group says that online video downloads have a greater chance of success if they're ad-supported rather than paid. The firm found that by a margin of more than three to one, users prefer watching ads versus paying the now-standard $1.99 for commercial-free programs.

Demand for online video advertising is so great now that there is a shortage of inventory to support all of it. The demand is coming from every direction: auto makers, tourism, consumer packaged goods, even book publishers. And why shouldn't demand be great? Online video marries the best of television advertising with the interactivity and accountability of the Internet. But there are some significant differences in broadcast video and online video that advertisers need to be aware of.

William Crosby, senior vice president-broadband at Scripps, tells me that he has well over 25,000 hours of video content from various Scripps TV networks to work with online, and he likes original content shot specifically for broadband. "One of our challenges in producing broadband vertical sites is that TV doesn't always work on the computer screen. We have some brilliant producers who are excellent at working in the online medium and picking the best stuff from our library that does lend itself to the small screen," he says. "We have a phrase that summarizes how to work in this new medium: shoot tight, light, bright."

On the other hand, we have found that repurposed video can work very effectively if carefully edited and mounted in the right ad unit. Utilizing the entire screen for video viewing makes the viewing experience more enjoyable for the user.

There has been endless debate in the advertising community about the optimum length of online video spots. Some have advocated spots as short as :10, claiming that because users have the control to click the ad off, they won't stick around very long. But, from a review of over 500 online campaigns, we know that on average people watch 21.04 seconds of a :30 online ad (equating to 70 percent of video content consumed.) We also know that adding interactive elements engages users and increases branding. An enhanced ad unit is one with more than just the standard [play, pause, stop] buttons. They have a higher rate of interaction across all verticals, and that rate increases as more clickable features are added.

There was a time that buying online video was like giving a speech at the UN without translators. Everyone had their own codex and players, which meant having to alter how the video was delivered to each different site. Now, there is great momentum in the industry toward ad management solutions guaranteed to be compatible with any video player and to run flawlessly on any Web site showing 15-30 second video ads before the streaming content that the user has selected to view.

Online video is big and growing fast. But there is a learning curve for agencies and clients alike. Fortunately, we have enough history to help avoid the potholes and bring online video to its fullest potential.

Chris Young is CEO of Klipmart. Klipmart (www.klipmart.com) is the largest provider of online video delivery and management services.