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Almost Grown: Advertising Year in Review

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In 2007, rich media advertising continued to thrive. In all key categories—stand-alone rich media advertising, advertising integrated into other rich media content, and hotspotting—video ads have taken on their more established counterparts in over-the-air and cable and held their own. With 2007 marking the first year that more than half of the total population in the U.S. had broadband connectivity, some pundits are calling 2007 and 2008 the watershed years for online video, with projections for 2008 reaching more than 155 million users viewing online video—putting online video viewing in roughly the same category as many cable television channels.

The Role of Preroll
In some ways, 2007 marked the fulfillment of goals established for online video advertising in 2001. That’s when the Interactive Advertising Bureau’s (IAB) Rich Media Task Force, in an effort to improve interactive and rich media as an advertising medium, announced a set of guidelines for rich media advertising. The IAB’s intent with these voluntary guidelines was to "develop advertising content consistent with the specifications accepted by many of the leading" publishers and "to lend efficiency to the online ad-creation and media-buying communities."

One of the original guidelines was that preroll content should last no longer than 15 seconds. Sure enough, common wisdom in 2007 was that preroll content should be a maximum of 15 seconds, but it could potentially be even shorter if the clip someone was about to watch was less than 2 minutes long. In essence, 2007 brought sanity to preroll video advertisements, limiting the length of the advertisement to a level that was bearable to the viewer while still long enough to get the advertiser’s message across.

The TV Networks Weigh In
Perhaps no one recognized the opportunities for online video ads to deliver comparable value to TV and cable advertising more clearly than the TV networks themselves, as they continue to push their content on to the web.

"Ad-supported streaming is absolutely the future," said Quincy Smith, president of CBS Interactive, in a recent article in the Financial Times.

Albert Cheng, VP of digital media at Disney-ABC Television Group, which recently inked a deal to distribute its programs via streaming on AOL, agreed in another reminder of the TV networks’ continued efforts to leverage the web. "This is definitely something that’s here to stay," said Cheng.

Some of the television networks are attempting to use interstitials—video ads inserted into the middle of other video content, much like TV ads that are inserted into the middle of programming—as they move their most popular programs to the web. NBC’s use of interstitials during online episodes of The Office—posted online 1 day after the original TV run—is about 1.5 times the number of interstitial breaks as run during the television broadcast. While this might be acceptable, the fact that the two ads shown are from a primary and a secondary sponsor makes the repetition of the ads seem laborious.

Also, as with any newer technology, sometimes the ads don’t always go away in the time that the countdown timer on each ad promises. Sometimes the ads play in multiple sequences back to back, as I found recently when I opted to skip ahead to a chapter late in the program. Since I had passed four interstitial breaks, I was subjected to the eight ads I had missed, which meant watching the same two ads four times each.

Market Projections
While the technologies continue to be refined, trends show that online video and video advertising will continue to grow in 2008. Back in 2004, only 2.2% of the $9.5 billion online advertising space was spent on video advertising, but a report released by eMarketer noted that online video ads continued to grow in 2007.

2007 online video advertising grew 89% from 2006 to top $775 million. "More significantly," the report notes, "the growth rate will remain near or above 40% through 2011, when video ad spending will reach $4.3 billion." eMarketer also notes that the figure for streaming video alone is expected to rise to $1.3 billion in 2008 and top $2 billion in 2009.

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