It’s no secret that online video consumption has taken off in the past year. Networks and other rights holders have given consumers ever-greater access to high-quality video content — and consumers have responded by watching more online video than ever before. In Forrester’s latest survey, 64 percent of online users said they had watched online video in the past month. And according to comScore, the average American watched more than 110 videos online in April 2009.
So it’s no surprise either that a growing number of advertisers are trying to reach the online video audience. Nearly a quarter of U.S. interactive marketers tell Forrester they plan to run pre-roll ads this year — almost twice as many as ran pre-rolls last year. And in some cases, despite the weak economy, in-stream ads are still fetching higher CPMs than 30-second spots on prime-time TV. As a result, we’ve forecast that marketers will spend $870 million on all types of online video advertising in 2009, rising to more than $3 billion in 2014.
When I talk to marketers who buy in-stream ads, they’re primarily focused on two key considerations: hitting their target audience, and placing their ads on the best possible video sites. Fair enough; no one wants to waste their money reaching the wrong consumers, and no one wants to sponsor low-quality or inappropriate content.
But in my research over the past few years — conducting over 100 detailed evaluations of online video sites in the U.S. and Europe, as well as surveying and interviewing hundreds of online video advertisers — I’ve seen the emergence of a third consideration that’s largely ignored by marketers, but which I think can have just as great an impact on the success of their online video campaigns: ad clutter.
As recently as a year or two ago, there simply weren’t enough in-stream advertisers spending enough money for clutter to pose a problem on most sites. But as interactive marketers have begun to dedicate more budgets toward video advertising, many publishers have seized on the opportunity by accepting more in-stream ads than ever before — and many have gone too far. I’ve seen sites that run two in-stream ads alongside every short video clip, and others where advertising accounted for 20 percent of the time users spent watching video — nearly as much as people see on TV. One site I examined ran the same exact pre-roll ad in front of 10 consecutive videos, and then ran another pre-roll ad nine times in a row.
Overall, more than half of the sites I’ve studied in the past year exceeded our recommendations for ad-to-content ratio. And I’m not talking about third-tier publishers and unnamed run-of-network sites; I’ve seen this type of oversaturation on some of the biggest and best-known sites in the world and as recently as last week.
But despite these problems, many video advertisers continue to buy inventory on cluttered sites. In a recent Forrester survey, less than a quarter of in-stream advertisers said a site’s ability to control ad frequency played a role in their decisions about where to buy in-stream video ads. Six or 12 months ago, advertisers may not have had much choice in the matter anyway — premium in-stream ad inventory was scarce and marketers were happy just to find space in high-quality content. But today, despite lingering high prices, sell-through on most video sites has fallen. Marketers have more choice and more power, and they need to start demanding more of publishers.
So what can you do to avoid all this clutter? First and foremost, make sure you’re buying from sites and networks that carefully limit in-stream ad frequency — not just the frequency with which they show your ads, but also the frequency with which they show any in-stream ads. The best in-stream ad implementations I’ve seen average around one ad for every two-and-a-half video clips — and rarely let advertising exceed 5 percent of the total viewing time.