Advertisers Now Taking Online Video Seriously--Report

A new report by research-boutique Off The Record suggests that, after a couple of years of dabbling, big advertisers are now taking online video advertising seriously.  This is good news for traditional TV networks–Disney, Viacom (VIAB), News Corp (NWS)–and it’s good news for Google.  The report was based on 10 interviews with ad-agency execs conducted from Sept 21-Oct 4.

Key points:

  • Video ads growing faster than ad execs expected.
  • Video ads still account for only a tiny percentage of overall web ads but are expected to be the fastest growing category for the foreseeable future.
  • Auto and entertainment categories strongest, with good growth in consumer products, technology, and fast food.

Primary Beneficiaries:

  • Traditional TV networks, which are now finally taking online video ads seriously: Disney, News (MyFox), Time Warner (CNN).
  • Among the networks, VideoEgg and YouTube are doing well.
  • Among the portals: AOL OK, Yahoo stinks.

Important Trends/Facts:

  • Video CPMs declining.  Advertisers reported average decline of 8%-13% y/y [Anyone who still believes the hokum about how the 37 me-too YouTube competitors are going to be saved by “rising CPMs” should reconsider.  Fast]
  • Video spending is coming from 1) budget growth, and 2) offline budgets. [This last fact should sober up those who view the TV networks’ strength here as awesome news for the networks.  At best, video strength will be mostly offset by the loss of traditional ads]
  • Advertisers are wary of pre-rolls and post-rolls, which they regard as the next “pop-up ads”  [Google way ahead of this curve.  Hulu and Joost way behind it.]

See Also:
Economics of Online Video: One Tough Business
Why Hulu is Screwed, Part 1
CBS’ Quincy Smith: Hulu Strategy a Waste of Time, Money

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