Why videos are vital to online ads

Online Video Advertising

I don't know if you've noticed, but many of the world's largest news websites are starting to become more like TV channels than newspapers.

Bloomberg, CNN, WSJ - they are all featuring videos more and more on their homepage, and in some cases users encounter a moving advert even before they reach the front news page. The reason is not complicated - commercial value.

Last year, there was concern that as a result of the global financial crisis budgets for online video advertising would shrink massively. As Clickz.com reports, ad rates across the business sector, including those for online video, fell as much as 25 percent and many of us held our breath to see how budgets would be affected.

But when it comes to online advertising, videos are still the most effective way to get results, if done in the right way that is.

Video ads are booming

At a time when other categories of advertising dollars are shrinking, video ads are booming. And as The New York Times reported in its 10 November issue, news sites are adding more video inventory to keep pace with the demands of advertisers, and benefiting from the higher cost-per-thousands that ads on those videos command.

However, there are still a number of obstacles in the way of an online video ad becoming successful, most notably videos being confusing to the consumer. People still seem unsure over the "rules" of online video ads, such as can an ad be skipped, and what happens when you click on a banner or link.

The challenge for advertisers is tailoring their various ads to a host of different standards, and then coming up with a way to measure the effectiveness of a broad range of approaches.

Get it right and the benefits are clear

"With so many different formats for video online, we incur incremental production costs every time we enter a new format," Nancy Ryan, media director for insurance company Allstate, told BusinessWeek.

But get it right and the benefits are clear as growth in the industry has encouraged investment and interest in video production. For instance, The New York Times, Gannett and Tribune each reach more than a million viewers a month with video streams, comScore says.

But beyond news-based websites, video is now the fastest-growing segment of online advertising, and digital video amounted to $477 million in revenue in the first half of 2009, up 38 percent from the same time period in 2008, according to the Interactive Advertising Bureau. Search still remains the dominant force in online ads, but this is not expected to continue.

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