The State of Online Video Advertising 2011

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It should be no surprise that the online video advertising market continued to grow in 2010. Online video advertising spending is projected to continue its growth to $2.1 billion in 2011, according to eMarketer. Advertising dollars are expected to continue to flow in subsequent years and reach more than $5 billion in 2014. And these numbers are for the U.S. market alone. In November 2010, comScore reported that 5.4 billion video ads were viewed by the U.S. market. Among the video ad networks, Tremor Media and Adap.tv generated nearly half a billion impressions each. Hulu led the entire market with more than a billion ad impressions. Overall, video ads reached 49% of the American population an average of nearly 37 times during the month.

I recently had the opportunity to speak with executives across the online video advertising landscape to assess current growth, plans, and the advertising medium’s future. Many times, I heard similar statements: Advertising dollars will continue to pour into video advertising, advertisers and publishers want to target specific demographics, the customer continues to be king, and monetization is obviously the lifeblood that keeps the whole industry growing. I asked each executive to speak to these issues and explain how they plan to serve the market. 

An Online Video Advertising Primer

Perhaps a brief overview of the online video advertising space and how it works would be helpful. I asked Jason Krebs, senior vice president and chief media officer of Tremor Media, for a summary. In a very succinct statement, he explained the basics of online video advertising. There are thousands of websites that source content and have an audience. Now that there is an audience, the clear way to make a business out of it is to sell advertising. However, if the audience is not large enough to warrant the economics of a sales force, the business will hire an external sales force. Tremor Media would then be that external sales force, or more pointedly, an “external monetization firm.” This is what video advertising networks provide, and each of the video advertising networks is developing an advanced ecosystem to integrate advertising into videos. As Krebs stated, “It’s a combination of science and technology behind reaching consumers in the most efficient way.” He pointed out that they respect the consumers’ ability to choose what videos and ads they watch, they are focused on providing ads that are relevant to consumers, and it is very important to prove effectiveness to advertisers and publishers that are spending their hard-earned dollars. Much of the ecosystem of online video advertising is being built along the lines of the state-of-the-art banner advertising according to Teg Grenager, vice president of product and co-founder of adap.tv.

­I also asked the executives to walk me through the process that I as a customer would take to get my ads and videos into the networks. From the high-level view, it seems to be a straightforward process. Of course, it all begins when I contact one of the companies’ sales professionals, who will guide me through the process. I would next discuss my specific marketing goals and outline my essential focus. For example, I might definitively state that “we want to show working mothers that our automobile is safer than our competitors’.” Tremor Media does not serve any ads until it has had the opportunity to view what the consumers have already seen. As far as the time required to get my ads rolling online, all of the networks were confident that with camera-ready art and video, they could have me up and running in as little as a few hours to a day or two.

Types of Online Video Advertising

Video advertising networks are relatively new. Most of the ones I address in this article have only been in the video advertising business for 5 or 6 years. They really became viable with the advent of high-speed broadband to the home. Everyone remembers the choppy postage stamp-sized video of old. What advertiser would want to be associated with that?

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