Online video ads see big growth

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Online video ads, which have slowly been gaining acceptance by advertisers as the technology improves, are poised for significant growth in the next two years, according to a November report by Internet research firm eMarketer.

EMarketer projected that online video ad spending in the U.S. will reach $640 million in 2007, approaching triple this year's online video ad spending of $225 million. By 2009, advertisers will spend $1.5 billion on video ads online, the report projected.

"Broadband has encouraged more and more video content online," said David Hallerman, senior analyst at eMarketer and author of the report. "With more video content online, that creates an environment that begs for video advertising, and it gives direct opportunities for video advertising when the ads are run as pre-roll [before the video content]."

"A static ad in an environment with more video content seems pallid," Hallerman added.

EMarketer also projected that online video ad spending as a percentage of rich media ad spending will increase from 17.9% in 2005 to 42.4% in 2009. The report defines rich media advertising as any ads that include motion, sound or interactivity. Rich media ad spending in the U.S. will total $1.26 billion this year, growing to $3.54 billion in 2009, according to eMarketer.

Also expected to advance the growth of online video ads are new guidelines released in late November by the Interactive Advertising Bureau.

The broadband video commercial guidelines were developed by the IAB's broadband committee and are designed to improve the planning, buying and creation of online video ads.

"We are confident that this final recommendation will benefit advertisers, agencies and interactive publishers," said Greg Stuart, president-CEO of the IAB.

The IAB broadband committee worked closely with the American Association of Advertising Agencies to solicit feedback on the guidelines. According to the guidelines, broadband video commercials are defined as online ads that may appear before, during and after a variety of content, including streaming video, animation, gaming and music video content in a player environment. The definition includes broadband video commercials that appear in live, archived and downloadable streaming content.

The creative guidelines include the following: In-stream commercials may be up to 30 seconds long for pre- and mid-roll commercials; publishers may offer custom lengths for post-roll commercials; and a minimum of 200 kbps is recommended for encoded bit rates.

Also, the minimum player controls present in online video ads should be start/stop and volume on/off and a softer/louder control.

Other recommended buttons include fast forward/rewind, pause and zoom. All buttons should be enabled throughout the play, with the exception of fast forward.

IAB publisher members that are or will be in compliance with the broadband video commercial guidelines within six to 12 months include BusinessWeek Online, CBS, CNET Networks, Fox Interactive, MSN, New York Times Digital and Yahoo!

"It is a huge accomplishment," said Adrian D'Souza, director of ad product development at CNET Networks, who serves on the IAB broadband committee and helped develop the guidelines. "Everyone has been talking about online video for the past two years, but there has not been a standard. The standard creates a framework for both the buy-side agencies and advertisers—as well as for publishers and vendors."

CNET, a pioneer in developing new ad formats, first began offering online video commercials in 2002. It is 100% compliant with the recommended guidelines.

Wireless phone provider Vonage has been using online video ads since early 2004. "People do tend to interact with them, and there can be other benefits such as branding and educational purposes," said Caroline Finch, director of marketing at Vonage.

However, she added, "On a CPA [cost-per-acquisition] basis, it's harder to justify usually because the cost of running rich media [is] more."

IAB members that are in compliance with the guidelines will receive a seal they can display on their sites. Compliant publishers agree to accept any agency or advertiser creative executions that follow the guidelines' specifications. Technology providers that support the serving of ads conforming to the guidelines are also deemed compliant.

Technology companies that are in compliance with the guidelines or plan to be in compliance within six to 12 months include Eyeblaster, EyeWonder, Lightningcast and Unicast. 

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