Online Video Leads Online Advertising

According to the results of its inaugural survey of leading U.S.-based online publishers by BrightRoll, video advertising is outpacing other forms of online advertising by at least 25%, say two-thirds of the respondents. Citing the medium's interactivity and ability to engage online audiences, 63% of publishers expressed optimism about the category's future, predicting higher CPMs leading into 2011.
BrightRoll CEO Tod Sacerdoti, says "As consumers continue to... engage with video online, advertisers are being forced to respond in kind and to shift campaign dollars... online video... offers interactivity, targeting and verifiable reporting that print and broadcast do not... "
Additional key findings from the report include:
    •    Pre-roll is still viewed as the most effective video ad unit: 94% of publishers who had used the unit said it met or exceeded their expectations.
    •    32% of respondents indicate targeting as online video's most valuable trait.
    •    Standardization (45%), interruption of user experience (33%) and lack of advertisers (29%) were among publishers' primary concerns.
    •    According to publishers, the most acceptable forms of targeting are content (73%), demographic (71%) and deep geographical (61%). Retargeting (41%) received the least support among publishers.
Publishers voiced some concerns about working with online video ad networks including standardization concerns, difficulty of integration and higher implementation times than those associated with display networks. However, many of these are reflective of the general concerns with the online video advertising industry as whole. Some general industry concerns also include interruption to the user experience (33%), integration with third parties (29%), lack of advertisers (29%), metrics (20%) and cost (10%).
According to the publishers specific concerns, voiced by their brand partners, 33% said reach, and 26% think targeting capabilities, are the most significant concerns held by brands, highlighting room for improvement in these areas.
Pre-roll continues to be viewed as the most effective means to reach consumers with 94% reporting preroll units with companion banners either met or exceeded their expectations. Removing the companion banner had some effect on performance, with 85% reporting met or exceeded expectations using preroll alone. Expandable, in-banner and overlay video trailed slightly, with 81%, 76% and 60% of respondents rating them as meeting or exceeding expectations, respectively.
88% percent of those surveyed indicated that their clients would be more likely to increase spending on online video if they had research demonstrating its efficacy. Additionally, 52% of respondents from BrightRoll's agency survey said that their clients had previously asked about research into the effectiveness of online video advertising. These findings further emphasize the need for credible research particularly pertaining to individual campaigns as a means to help advertisers optimize future campaign spend for maximum impact.
As online video advertising continues to mature, standardization is becoming increasingly important for the success of the industry's growth and development. The Interactive Advertising Bureau (IAB), along with publishers, advertisers, ad networks and other industry stakeholders have answered the calls for video standards with two initiatives: Digital Video Ad Serving Template (VAST) and Digital Video Player-Ad Interface Definitions (VPAID).
According to the IAB, VAST is designed to standardize communication protocol between video players and servers, while the VPAID standard is intended to meet the needs of emerging in-stream ad formats such as both non-linear video ads and interactive video ads, aiming to address the known interoperability issues between a publisher's video player and different ad technology.
The major players in online video have responded by largely accepting standardization efforts. BrightRoll's publisher survey shows nearly 78% of publishers claim to be VAST compliant, and 69% said their systems are VPAID compliant. Of the publishers surveyed, 77% responded that their sites were compliant with both VAST 1.0 and 2.0, 14% said they are VAST 1.0 compliant only, with 8% VAST 2.0 compliant only.
The majority of survey respondents (63%) predicted that CPMs would be higher in the second half of 2010 leading into 2011. Such forecasts are a testament to online video advertising's growing viability, but respondents also suggested that search would reign supreme, possibly generating the highest revenue in 2011. Respondents pinpointed several other areas of anticipated revenue generation, including mobile, rich interactive media and in-game video, highlighting video's trend toward monetizing non-video content. Survey respondents feel in-banner display will edge out both in-banner video and in-stream video (pre-roll and mid-roll) as revenue generators in 2011.
The report concludes by noting that although 2010 began with falling CPMs and economic uncertainty, publishers have expressed optimism for the future, predicting CPMs will rise in 2011 and online video will outpace all other forms of online advertising by nearly 25%. Looking at both the agency side and publisher side survey results, it becomes clear that both sides agree: standardization efforts, technology innovation, effective targeting capabilities, verifiable reporting tools and mobile applications will be the factors that drive growth for 2011 in the online video advertising industry.
-Jack Loechner, MediaPost