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The State of Online Video Advertising 2011

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There are commonly two methods of video advertising: linear and nonlinear advertising. Anupam Gupta, president of Mixpo, describes them as in-stream and in-display. We are all familiar with the linear in-stream preroll advertisements we get to watch prior to viewing our chosen video. But there are also the midroll and postroll ads that advertisers are using successfully.

FreeWheel, in its “Video Monetization Report” from 3Q 2010, claims that preroll ads accounted for 91% of all video ads in the quarter. Yet perhaps what is most interesting is that while midroll ads comprised only 8% of all video ads, FreeWheel has shown a 693% gain from 1Q 2010. The report further states, “While the majority of ads are pre-rolls that appear before content, ads that appear within content—mid-rolls—are the fastest growing ad format in the market, indicating that ad loads are becoming more like television.” 

What is important to note in these figures is that we are talking about well-produced, long-form, professional content. The growing completion rates and the midroll video that is actually watched by the viewer are similar to television in that if the viewer is interested in viewing the long-form content, he or she will view the ads if they are compelling and interesting. 

This speaks directly to the ability of online video advertising networks to specifically target viewers using geotargeting, demographics, and behaviors. This increased engagement is exactly what advertisers are looking for, according to Grenager at adap.tv. “Video in both content and ads is so much better now,” he says. “We can exactly target and measure viewing and we can tune advertising spending to produce much better ROI.”

Overlay, or in-display advertising, appears on a video at a website. Depending on how the current targeting method is being applied, the viewer will likely see an overlay that he or she chooses to engage. These are clickable images that usually appear on the lower third of the video. One of the advantages of in-display is scalability. For instance, a large segment of Mixpo’s advertisers have been doing television advertising, which Mixpo repurposes in in-banner video ads. The high-production-value creative assets and video to tell their story already exists. The question for the advertiser becomes, “How do I get that message in front of the same number of consumers that I have with television?” This is where the targeting comes in. Different advertisers have different needs, so if you are geotargeting an audience for a neighborhood store, you want to make sure that there is not much advertising wasted on a much larger geographic area. 

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