Few of us need a fortune teller to know that in-stream video advertising is hot right now, and getting hotter.

Worldwide, around 200 billion videos are watched online every month, reaching a global audience of 1.2 billion people, according to comScore. In Australia, spend on video advertising grew 31% year in 2011 to $43.7 million, compared to sluggish display advertising growth of only 4%, according to the IAB.  Moreover, that growth is expected to more than quadruple to $200 million by 2014.

In Australia, demand for online advertising video inventory so outstrips supply that CPM prices for premium environments can exceed prices charged for broadcast television, which is rare in digital advertising.

Sure, new local media arrivals, like the music streaming site Vevo, will swell premium inventory, which might result in lower prices, but even without additional inventory, many advertisers recognise that in-stream video ads hold great potential for reaching online audiences more effectively than other types of advertising – digital or traditional.

For advertisers still weighing the pros and cons of online video advertising, here are four facts to consider:

1. Users are 200 times more likely to click on in-stream ads vs. standard banners

According to MediaMind’s benchmarks, the average click-through rate (CTR) for standard banners is 0.009%, while the benchmark CTR for in-stream video is 1.74%, an increase of nearly 2,000%. While clicks are an imperfect measure of advertising effectiveness, they are a proxy for the amount of traffic a campaign generates – suggesting that video can be a phenomenally effective way to increase traffic to your website and eventually sales.

2. 70% of in-stream video ads play all the way to the end

One of the main contributors to the effectiveness of a campaign is the time users spend with an ad. The longer you see the brand in front of you, the more likely you are to remember it. With pre-rolls and mid-rolls (in-stream ads that appear before and in the middle of video content, respectively), users must watch the entire ad before the content resumes. Our analysis of millions of impressions shows that an average of 70% of in-stream impressions play all the way through, and 75% play three quarters of the spot duration, providing plenty of exposure time for the money invested.

3. Video ads work particularly well for brand advertisers

Branding is all about telling a story – something video can do better than most mediums (aside from novels). According to research by Dynamic Logic and TubeMogul, video ads have some of the highest impact on brand metrics such as brand awareness and brand favorability, with FMCG and financial services campaigns benefiting most from the format.

4. Online video watching is growing rapidly and globally four billion videos are viewed every day

Worldwide viewing online video is becoming a popular pastime. While the average Australian internet user spends around 10 hours a month watching videos online, the arrival of widespread broadband will help us catch up to markets like the US. There already 57% of internet users view online video at least once per week, and 21% viewed online video daily, according to a 2011 research study by Frank N. Magid Associates.

But the real spur to the online video watching market will come with increasing convergence of internet and TV, giving us the choice to watch whatever we like on any screen in the home. Currently, only around 1% of Australians have internet connected TV, compared to around 14% in the US. But this number will grow, with younger consumers leading the way, as better, simpler solutions emerge from the current wash of Apple TV, IPTV, Google TV and Telstra’s T-Box products.

Massive growth aside, in-stream video is already getting results for advertisers – in terms of clicks and brand metrics. The proof is in the spend on online video advertising, which is growing faster than any other advertising type – in digital or traditional mediums.

As online video gradually commands a more prominent place in our living rooms and a larger share of people’s time, online video advertising will likely become a standard component of mainstream campaigns. If it is not at least on your radar, you may be putting yourself behind the competitive curve.

 

 

Carolyn Bollaci
BY Carolyn Bollaci ON 16 May 2012
Regional vice president, Australia & New Zealand, Sizmek