Academy blog

How is video streaming important to online advertising?

Online streaming has become exceptionally popular and is reflected by the increasing number in advertising companies who now stream their content online. Comscore has announced that 191 million Americans watched online content via a desktop computer in April 2015  which has led many organizations to experiment with advertising products optimized for various devices to see how they can most effectively take advantage of this new opportunity.

Recently, companies have begun focusing on mobile phone advertising. Cisco predicts that 72% of mobile traffic will be made up of video content by 2019 which shows why advertisers are so interested in this medium. A review of our global statistics found that the average consumption of content is about 43% on mobile devices,  the second highest after desktops. Mobile ad spending is growing faster than any other digital advertising format in the US, but still has not caught up to traditional TV video advertising.

Advertising executives feel that online advertisements are more effective than direct responses and display72% of agencies say that online video advertisements are equally or more effective than TV, which goes to show how the internet is changing our world. Not only are the relevance of the ads especially important for agencies but also the fact that audiences are able to be measured accurately and precisely, something which wasn’t possible before.

The growth of advertisements has got to the point where YouTube is even planning to offer an ad free service to its customers for a monthly fee, showing how it understands the impact of advertisements on its customers . It is also interesting to note that advertisers also plan to run video advertisements on Facebook more than any other network . This is of particular importance considering that Facebook gained traction over YouTube thanks to integrating the ´autoplay´ feature into their service but ensure that the videos play without sound so as not to annoy the viewer.

Google carried out an experiment on video advertising which showed some interesting results. They modified an advert and produced three different types of ads: one that was the 30 second ´classic´ad with a story arc and action. Another which was a 31 second mobile ad that showed the product at the start and then dropped the viewers into the action. And also a 93 second ´Pure fun´ad which dropped viewers into the action without music. What did they find? Mobile viewers watched the ´pure fun´ more(even though it was longer) and overall watched more of the ad on their mobile. Their analysis concludes that ´ads do not need to be shorter, quicker and more snackable, they can be longer, richer and perhaps even a bit stranger´. You can watch their video on the experiment or read their complete findings here.

So what does this mean for the video streaming world? Video distributors need to decide whether to show advertisements at the start of their videos as this may bring in more revenue but may drive viewers away. Furthermore, the number of pre roll ads is also extremely important; the current trend is to get 3, 4 or even 5 before the show starts. Broadcasters and content distributors need to obtain an equilibrium between the amount of ads shown and the viewer’s´ tolerance to the ads before they exit the video.  This is similar to buffering where the customers becomes frustrated at having to wait for their content if the advertisement does not engage with them properly. Furthermore, our records show that if you combine ads and bad buffer ratios, this leads to a complete disaster: if ad buffer goes above 1%, audience consumption drops 38% causing a significant impact on the number of ads viewed which means revenue is lost.

Online advertising is relatively new compared to TV advertisement, so new techniques will need to be found. Even though there are a whole range of things to be discovered, what has proven to be successful is to provide meaningful content with relevant sponsored content for the user with the best possible quality of experience.

James Noeker on September 21st 2015

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