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InContext / An inside look at the business of digital content

Mid-roll ads take off in the video boom

September 22, 2016 | By Mark Glaser, Founder and Publisher – MediaShift @mediatwit

A new report from eMarketer found that digital will overtake TV ad spending for the first time this year. By eMarketer’s forecast, digital will represent 36.8% of total media ad spending in the U.S. by the end of this year, whereas TV ad spending will compromise 36.4% of that total.

They might sound like something that was inevitable, but when you look at what’s driving digital growth, the results are clear: Video ad spending is increasing by double-digital percentages, and will comprise 14.3% of all digital ad spending this year. Next year it’s projected to rise to 15.1%. And spending on mobile advertising, including mobile video, will grow by 45% this year to reach $45.95 billion. That’s more than half the amount projected for TV advertising (which eMarketer anticipates will reach $71.29 billion).

Of course, these numbers only underscore what’s already obvious to the industry, which is that monetization from video is a must. The demand for revenues from video prompted Mashable’s round of layoffs earlier this year and BuzzFeed’s recent announcement that it’s splitting into two divisions, one focused on news, the other entertainment — with both divisions pushing even more video.

Mid-Roll Ads More Effective
So it makes sense that advertisers, and advertising platforms like Facebook, are testing the market’s capacity for what they hope will be a better kind of video advertising — mid-roll advertising. That nice “commercial break” in the middle of online videos, pioneered by YouTube, is attracting attention because of the multitude of ways to sell video ads now. Pre-roll may be good for boosting brand awareness, but it runs the risk of annoying the viewer before they have a chance to become invested in the content. Post-roll ads, meanwhile, might be good for calls to action, but are also awkward.

Mid-roll advertising, on the other hand, captures the interest of an invested user who likely has his or her sound on already, which has been a big problem for publishers, since many pre-roll ads run with the volume turned off. Viewers watch to completion 90% of the time, compared with pre-rolls’ 78% completion rate and post-rolls’ 65% completion rate, according to figures from Ooyala, an online video and analytics platform.

Mid-rolls are already in effect as the nice in-between that Snapchat inserts in its Snapchat Stories, and Twitter is inserting them in its live-stream of sports with “sponsored breaks.” Even if Twitter’s inaugural NFL live stream attracted low viewership numbers, it reported a 98% ad completion rate to its sponsors.

‘Ad Breaks’ on Facebook Live
Meanwhile, Facebook’s play in mid-rolls, its “ad breaks,” are attracting particular attention. Facebook started testing the advertising format in August with some of its top publishers — whom they are paying to use live video — and it’s expected to expand to other videos native to the platform as well. It’s one of the ways brands and publishers can make money directly on Facebook, rather than “just from the actions that people take off of Facebook,” the social network’s vice president of partnerships, Dan Rose, told Poynter’s Benjamin Mullin. The ads last up to 15 seconds and are eligible to appear in a live stream after the five-minute mark, according to an agency exec who spoke to AdAge’s Garett Sloane. Facebook also said the video ads would come from within its so-called walled garden, the “promoted video campaigns already running on the platform.” Some brands can opt out of having their ads appear live, however.

But should all Facebook Live videos be considered for monetization, even if they are of the less annoying mid-roll variety? It makes sense for some of the more light-hearted fare that gets posted on the platform, but not necessarily for more serious events, like the live streaming of police brutality that made headlines this summer. Monetizing live also requires a more strategic understanding of audience size, which is pretty inconsistent with Facebook Live videos at this point.

Yet that question may answer itself with this new endeavor into mid-roll. That publishers and brands can reap financial benefits will likely encourage them even more as they continue to test what the “winning formula” is for live video. And that’s something Facebook is gambling its audiences will come to accept, and watch, as they are increasingly confronted with these in news feeds.

“People really understand the concept,” Facebook product director Fidji Simo said at the recent ONA Conference in Denver. If other platforms and advertisers follow suit, it might not be too long before “mid-roll ads” are our de facto “digital commercial breaks.”

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