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Four Online Video Advertising Trends You Should Be Thinking About

August 11, 2015 | By Todd Krizelman, CEO – MediaRadar @ToddKrizelman

For all the similarities to linear television advertising, there is actually quite a lot that is unique to the market for online video ads. These findings explore the most recent trends we observe in the data. One thing is for certain: Online video advertising is a moving target.

Here are a few things to consider,  based upon the insights we’ve gained:

1. Are there shifts in ad duration? Despite the research that reveals that shorter ads have higher completion rates (Wistia did some excellent research as far back as 2012 and TubeMogul just this last week), there isn’t a sudden pivot towards short video ads in preroll. Looking through the six quarters from January 2014 through June 2015, the distribution of ads by duration reinforces this. There are increasingly shorter ads with 15 second spots most popular (38%), but 30 second spots are next runner-up (36%). Very short video ads, sometimes called “snackable clips” are rare in display. They account for 1.3% of all video ads. Why don’t we see an immediate shift? There are many who have a strong disincentive to give into shorter length video. In traditional linear television, ad duration generally strongly correlates to spend. e.g. A 30 second spots is approximately half the price of 60 seconds.

One interesting surprise is the expansion of long form video ads (> 60 secs). In Q1, 2015, 16% of videos running are greater than 60 seconds. While this isn’t up significantly from Q1, 2014 (15%), the total number of advertisers buying in video is up 110%! In short, long form video ads continue to be actively produced and it’s keeping pace with the rapid expansion of video advertising!

2. To Skip or Not to Skip? Video ads without skip options continue to be the most common type, with 89% of all ads viewed offering no option at all. While video ads with a skip option exists, only a handful of sites use it. These include more traditional broadcasters such as CNN and CBS, as well as YouTube.

3. Why Are Skip Buttons Going Away? There are a couple of key reasons that 89% of video ads don’t have the option to skip:

Reason 1:  Video ad Inventory is scarce! Most websites have too little video inventory to sell. They can’t very well have their ad inventory chewed up by users clicking “skip”. Many sites won’t charge the advertisers for ads skipped, giving them a strong incentive to remove it.

Reason 2:  Advertisers want to know that there ads were seen. By eliminating the skip button, the odds improve greatly. For example, Vevo eliminated the mute button also, another move benefiting the advertiser.

And, of course, we can’t discuss video without discussing YouTube. YouTube has so much inventory that they can afford to allow its users to skip. They guarantee advertisers they will only be charged for ads seen through completion.

4. What industries dominate Video Ads? With 27% of all ads, entertainment and media advertisers are the most prevalent. This is over 2x more than the second place category—finance and business (which includes insurance). Video ads for TV, film and DVD/on-demand releases were the most common. Some surprises: Automotive, which dominates terrestrial TV, has a lower proportional share; just 8% is from automotive. And food, which is 9%, we see several brands testing online video they don’t buy in traditional broadcast TV. For example, companies like Ghirardelli chocolate are experimenting with video ads for more niche products.

So while TV ad spending continues to dwarf online video ads, innovative companies like those in entertainment know that “video advertising is the future,” as Mashable recently wrote.

Methodology: MediaRadar measures online video ads across almost 200 of the largest media brands, including traditional broadcaster websites and Internet pure plays. To understand the overall market, we have normalized YouTube, so it does not wash out all other sites selling video ads.

Todd Krizelman is Co-Founder and CEO of MediaRadar (@MediaRadar). Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House. With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007.

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