The oncoming video ads movement

September 7, 2006 | Auren Hoffman | Comments | |

(Editor’s note: Back by popular demand is Auren Hoffman, whose last post about the Black Hat Tax has been the favorite among all the contributors so far at SiliconBeat/VentureBeat. This time Auren, who runs a comany called Rapleaf, writes about video ads.)

Web video ads are scarily potent.

When you’re watching a video on the web, whether it is on YouTube, Break.com, or Blip.tv, all your attention is focused on that video. You block out everything else you are doing and focus strictly on that video.

And an ad in the video, even at the end of the video, has your complete attention. Complete. The only ad medium that captures a greater percentage of your attention are urinal ads…especially after a few soy caramel macchiatos.

Interested in the video ad effectiveness stats, I caught up with Tod Sacerdoti, CEO of Silicon Valley company POSTroller, which is now the largest video ad network in the galaxy, in terms of video ads per day (I don’t know any others that are serving millions of streams across a wide array of sites.)

[Full disclosure: I am a founding advisor and active investor in POSTroller] Here is what I learned:

Post-roll ads – ads that appear after the video has played – have 10-100 times higher click-through rates than banners. And pre-roll ads are even more effective.

Whoa!

And with all the talk of YouTube’s high bandwidth costs, putting a little post-roll ad on your video makes every stream profitable.

One great asset of video ads is sound. Sound is something that banners (or even urinal ads) don’t have (talking banner ads are really annoying and talking urinal ads … well let’s not even go there). Sound is very effective within videos since the viewer needs sound to fully experience the media, and it works particularly well when selling movies, TV shows, ring-tones, and music.

And while I think YouTube is cool, it is much more likely that the long tail will be the innovator here and YouTube will be the advertising laggard.

(Editor’s clarification: If you’re wondering about the urinal references, here’s the back-story)

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About the Author, Auren Hoffman

Auren is CEO of Rapleaf -- portable ratings for buyers and sellers. He was formerly Chair of Stonebrick Group and the Connector Group. Previously, he founded and sold three Internet companies before age 30: BridgePath (sold in 2002), Kyber Systems (sold in 1997), and GetRelevant (sold in 2002). Auren is a trustee of the Junior State of America Foundation and Chairman of Lead21. He is the founder of the Silicon Forum. Auren holds a B.S.E. in Industrial Engineering and Operations Research from the UC Berkeley. He writes a widely read blog called Summation (www.summation.net).

  • There are good reasons (including myriad of others) that google does not allow adsense ads next to videos. . . . no one looks at them . . .
  • Auren:

    Don't confuse novelty with durability. New forms of advertising on the Web always have high initial CTRs. This was true when Animated GIF were introduced in banners, when java ads were introduced, etc. However as viewers get inured to the novelty, they quickly learn to screen them out.

    It doesn't make sense that in-line ads on YouTube would be so compelling, long term, as to have unusually high CTRs while we TiVO users use the 30 easter egg to skip ads.

    I'd like see the CTRs 18 months from now. My guess is they will be no better, and perhaps worse, than equivalently targeted text ads.

    Go back to the perusasion research of the 1960's and 1970's in social psych. What you'll see is that reading is a high involvement medium and broadcast is low involvement. Low involvment media are less persuasive -- 1970s speak for CTRs. Streaming video is lower involvement than text.
  • A simple point of clarification. I am not suggesting text ads next to videos will be as effective as video ads in-line. I am suggesting that from the advertisers' POV, the efficacy of streaming video ads in videos will likely resemble the efficacy of banner ads on text web sites. Perhaps lower, because they require less cognitive involvement to process than reading text. If so, they will require more exposures to achieve equivalent levels of awareness, retention, and action. Hence, lower efficacy per $1 of ad spend.
  • I don't think video ads are about click throughs. They're about impressions and branding, something the traditional media understand and why the appetite for pre-roll or post roll will be huge. BTW: I predict the best form will be what I'll call "MID-roll." If you watch part of the video, you're more likely to sit through an Ad to watch the rest, where Pre- is a blockade and Post- gets ignored.
  • Saar
    It depends who the advertiser is. If you want to generate a user-action from the ad, as many direct response advertisers do, post-roll (or a combination) can be more effective. In post-roll the user has already consumed the content that they originally clicked to see and are then "finished" and "open" to a new experience. Branded advertisers are best for pre-roll and mid-roll because users are often focused on watching a video and unlikely to link out of the experience and create an action.
  • Regardless the YouTubes of the WWW will still need to control the Bandwith Cost, the only solution is bandwidth on demand. Plus the revenue generated from a click through is not enough to offset the cost of bandwidth for the average video clip that is show on YouTube. This is an issue that seems to be neglected.
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