Fear of Preroll Ads Eases

New Study Helps Dispel Belief That Online Video Viewers Will Surf Away

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LONDON (AdAge.com) -- The perils of preroll appear to have been vastly overstated, according to Nate Elliott, research director at Jupiter, who suggests audience loss as a direct result of prerolls could be as little as 5%.

The figure comes as Jupiter releases a major European report about online video and in-stream video advertising.

Online video and ads surging
The research firm found Europeans are watching double the amount of online TV than they were a year ago, and that online video advertising is keeping pace with the trend. It is expected to account for 20% of Europe's online display ad spend -- or nearly $1.4 billion -- by 2012, up from 6%, or $224 million, in 2007.

"When I was doing the research for this report, I asked sites how hard their traffic had been hit by the introduction of in-stream ads," Mr. Elliott said. "The answer was very little. Usually they reported flat growth for a month or two or a few percent down before normal growth continued."

Netherlands-based video-content network Zoom.in reports that 17% of its 15-second preroll ads are abandoned before completion. U.S.-based video ad network Tremor Media, which plans to launch in Europe next year, says 20% of its 15-second preroll ads are abandoned before completion.

By comparison, many sites report that at least 10% of users abandon videos within 15 seconds even when there is no preroll ad.

'Like flicking channels'
Mr. Elliott said, "Half the people that leave because of the ad would have left because of the content anyway. It's like flicking through channels on TV." He calculates that on sites that do it well, only a 5% loss is directly attributable to advertising.

"It makes sense that in-stream ads are more popular, because everyone has broadband now and we expect to see richer content on the web," said Jeroen Matser, strategy director at Tribal DDB, London. "It's also a return to allowing people to sit back again. People can relax and be entertained, which might be refreshing in this cluttered, call-to-action environment."

As consumers grow to accept online video advertising, so do marketers and web publishers. In 2007, only 26% of European sites accepted in-stream video ads. This year the figure is 55%.

Traditional media properties have embraced in-stream advertising more quickly than internet-only brands: 69% of TV channel websites and 63% of newspaper websites accept in-stream ads, compared to only 43% of "pure play" internet properties.

Sites that rely on user-generated content and promotional material will inevitably find it more difficult to introduce in-stream ads, but for sites with professional video content it is a whole different story.

"They give online publishers access to a revenue stream that many are still missing out on," Mr. Elliott said. "They are frightened to accept ads, because consumers always say they don't like them and YouTube terrifies them by saying that ads lose them the 'vast majority' of traffic."

YouTube holds off on prerolls
YouTube has said a preroll can cause a video to lose 50% of its audience, which may seem high until one considers the site's environment; YouTube is loaded with short-form, user-generated clips. The company hasn't ruled out preroll but right now doesn't offer it.

Mr. Elliott admitted he is "an unabashed supporter of online video ads." But, he said, if done poorly, they "can be horrendous for viewers."

Europeans prefer to watch free ad-supported online video than paid online video, with 48% opting for ads and 26% preferring to pay. Marketers can capitalize on this new acceptance as long as they obey a few golden rules, Mr. Elliott said.

First, they need to control the frequency of online video ads, especially when dealing with short-form clips. One ad for every 2.5 clips is about right.

Next, they need to keep the length of the ads to no more than 15 seconds. Not surprisingly, the longer an ad continues, the higher the level of viewer abandonment; 12% of an audience left within 10 seconds, and 17% within 15 seconds.

Prerolls just part of the picture
Clutter is also off-putting and needs to be controlled. A preroll, plus companion banners, plus as many as eight other ads on a page will frighten consumers off. And lastly, creative rotation is also key for a better user experience.

Consumer acceptance "still comes down to how creative you are: As long as you provide interesting things to watch, people will watch it," Tribal's Mr. Matser said. "Most in-stream ads come from brands with engaging content, like entertainment properties and cars. We'll see what happens when the washing powders catch on."
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