With close to ten billion videos being viewed online every month and the average person watching close to eight hours per month, we’re seeing many publishers and advertisers jumping on the online video bandwagon.
There’s not much going on in terms new advertising models for online video. For the most part, it’s a game of pre-roll and post-roll. There are some companies attempting to do lots more. Just this week, YouTube launched their click-to-buy initiative where contextual ads are running underneath the videos with "buy" buttons for music and games (see here – Associated Press – YouTube Flips Switch On New Sales Channel). It sounds like YouTube is turning everyone’s video into one long-form succulent infomercial.
How well does advertising in online videos perform?
Web research company, iPerceptions, leveraged user-generated feedback from 14,000 visitors to some of the leading media sites to gather insights into which types of online advertising gets people to click. The results may surprise you.
"The study found that, despite current buzz around video ads, marketers do not need to spend on fancy interactive ads in order to reach consumers. In fact, consumers are most likely to click on simple text ads (25% of respondents). Display ads follow in popularity, with 20% of respondents likely to click on right banners and 12% likely to click on top banners. A surprising finding of the study is that video ads are not very popular among most consumers; only 11% of consumers said they were likely to click on video ads. And 25 to 34 year-olds show no special affinity for video, being just as likely to click on video ads as text, right and top banners. The only consumers who seem to be engaged by video ads are young people under the age of 25, a group that accounts for nearly one-third of the video-ad viewing audience."
In terms of "what clicks" in online advertising, here is the order (according to this survey):
1. Text ads – 25%.
2. Banner ads (right-hand side) – 20%.
3. Banner ads (top of page) – 12%.
4. Ads in online videos – 11%.
You can read more about their findings here: iPerceptions Study Uncovers Consumers’ Real Online Ad Preferences.
The report has an additional fact that is interesting:
"The likelihood that a person will click on an ad goes down as their income rises. On average, 40% of consumers likely to click on any ad make less than $50K a year – and only 15% make over $150K. The income gap is most pronounced with video ads, with 49% of consumers likely to click on video ads making less than $50K a year – and only 13% making over $150K."
Is there a silver lining for online advertising in this economy?
According to Jonathan Levitt, Vice President of Marketing for iPerceptions:
"Our research clearly shows that media sites that offer consumers compelling content and features – encouraging repeat visits – generate much better ad clickthrough rates than less engaging sites. Marketers that want to reach high quality audiences should focus ad placement on sites that deliver the highest customer loyalty and repeat visitor traffic."
If you are building community, providing value and enabling consumers to connect to one another, your advertising and offerings will perform better. Do you agree?
(full disclosure: iPerceptions is a client of Twist Image, I sit on the iPerceptions Advisory Council but Twist Image had nothing to do with this research, and I only found out about it via my Google Reader).