VideoEgg

[ 2008.03.26 | News Article ]

Pre-rolls or non-interruptive overlays? Sean Hargrave examines which video ad format will become standard.

Traditional broadcasters and pure-plays have very different views on how online video advertising should appear. For the broadcasters (which effectively means ITV and Channel 4), the general sentiment is that while online innovation is a good thing there's no need to reinvent the wheel. TV advertising already exists, so why not allow an advertiser to dominate the screen with a 15- or 30-second ad before the main entertainment begins? For pure-plays, this misses a crucial point. To them the web is a new medium that requires and deserves an innovative approach rather than simply transferring cut-down TV ads from the living room to the computer.

Last month, when YouTube unveiled how its UK commercial partners, which include the Daily Mirror and Reuters, can commercialise their video content, it was through a rollout of its InVideo technology, available in the US since last August. This places an animated overlay across the bottom of the video screen which, if clicked on, pauses the content being played and replaces it with the advertiser's video.

As such it's similar to the service YouTube used to offer, before its acquisition by Google, through overlay provider VideoEgg. It's used by around 200 sites, particularly social media services like Metacafe and Hi5. Jordan Ferguson, MD of VideoEgg, is a staunch advocate of overlays, which only dominate the frame if the user engages with them, as opposed to pre-roll ads that appear before the content can be enjoyed.

"Pre-rolls are just a spill-over from the TV age," he says. "Brands shouldn't be getting in the way of people consuming video. Ads should be for users to engage with, not something they must get through before they can enjoy a video."

VideoEgg has extended this concept with its AdFrames technology, launched in March through campaigns with Microsoft and O2. This places an ad in a frame on a web page, with a call to action to find out more about the brand. If the user hovers their mouse over the space throughout a three-second countdown, the ad is run. Crucially, the brand is only charged per thousand views, not for those times the call to action is seen but not acted on. "Brands know that they're only paying for videos that are viewed," says Ferguson.

Quality and familiarity

Broadcasters like to point out that there's nowhere else for viewers to go for their content. Unlike user-generated videos that can be found dotted around many social media sites, the full-length shows, catch-up highlights and behind-the-scenes videos broadcasters offer can't be found elsewhere (at least legally).

Add to that each show is a well-known brand and Gary Cole, head of online revenue at ITV, believes it offers the branding attributes that advertisers want to be associated with, which user-generated content can't guarantee. Viewers on ITV.com will see a 15-second video ad at the start, end and middle of a full-length show, and a single 15-second pre-roll for short-form programmes (usually two or three minutes long).

"We're driven by what the advertisers and agencies want and want viewers will accept," says Cole. "Brands want their messages to be seen next to quality programming that people have a history with and an emotional affiliation with. Because our programmes are quality brands in their own right, viewers accept a short ad before they view a show.

"A lot of nonsense is spoken about pre-rolls. I think overlays are weird. They're some text floating around in no-man's land. I think advertisers would far rather have an ad in front of a quality programme that people enjoy than next to a short clip someone has done on YouTube."

Ed Couchman, group commercial manager for Channel 4 online, agrees. The broadcaster has short clips on channel4.com that have a 30-second pre-roll, and full-length programmes on 4oD that feature a minute's worth of pre-rolls - usually two 30-second adverts, although having four 15-second slots is being considered.

"The death of the pre-roll is completely overstated," says Couchman. "We're having to make them work harder. We're working on launching behavioural targeting in Q2 this year, so advertisers will be able to buy far more accurately around demographic and behaviour, as well as the type of show being viewed.

"We think that the optimum length, particularly for short-form, is 15 seconds, although our research with viewers is finding that people don't mind two 30-second ads as long as they're good, because they're waiting for a show they know they're going to like. It's not like watching a YouTube clip where you don't know whether it's going to be any good or not."

Both Couchman and Cole admit the post-roll is not quite the force it was hoped it might become. Because it relies on people carrying on watching an ad after they've consumed their choice of video content, it's generally included in pre-roll deals to provide a signing-off message at the end of a show.

"They're a good way to end the story or take it forwards from an ad a viewer might have seen in a pre-roll," says Cole. "They have to be shorter because people aren't going to hang around after they've watched a programme. If they're bought on their own, we only charge if they've been watched all the way through."

Pre-roll comes first

So on one side the pre-roll is prehistoric, on the other video overlays are in no-man's land. Perhaps a look at the economics could settle the argument? If so, then the broadcasters would appear to be in the ascendancy. Both ITV and Channel 4 confirm they will typically get £35 or more per thousand for pre-rolls, while the cost of overlays is typically a little under half that figure, according to Matt Cannon, commercial director at eType Video.

If neither side is going to give up its format of choice, they could end up meeting in the middle, using new technology that offers advertisers a little more bang for their buck so high CPM rates can be maintained (see box). But for the time being, as far as ad agencies and networks are concerned, there seems to be a consensus that the pre-roll is the nearest format there is to a standard.

Richard Kidd, senior director of rich media at DoubleClick, says that for standalone video advertising, expandable banners that play video when hovered over are becoming popular, as are MPUs containing video. For advertising next to content, however, he believes, "Pre-rolls will almost certainly become standard."

Brendan Condon, international MD of AOL-owned Advertising.com, agrees. "The closer you make video advertising to TV, the more consumers and advertisers will accept it, because TV advertising has been successful for decades. At the moment advertisers want a clear lead so they don't have to make different ads for different sites. The publishers need to get together and just say the standard is a 15-second pre-roll."

The advantage of such standardisation, Cohen explains, is that it would still allow advertisers to buy two slots to run 30-second pre-rolls. "Our research has shown that while 15-second ads get the most click-throughs, 30-second ads get the highest conversions because you have time to truly engage someone," he says.

Last week NBC Universal's Hulu online video site came out of beta in the US. It runs traditional 30-second ads in long-form content, scheduling only a quarter of the number of spots that US TV would. For short-form content, it offers 10- to 15-second overlays and clickable logos. Such experimentation will continue, but for the time being pre-roll looks like being the nearest the industry has to a standard.

Nearly a year ago, Jill Orr, head of consumer media at CNet Networks, told NMA, "Pre-roll advertising could become as loathsome to users as pop-ups if it's not done in a way that's sensitive to the user." So far her fears haven't been realised and it looks as though pre-roll ads are here to stay.

Quick facts

• Online video is in such an early phase of development that a variety of ad formats are being tried
• Despite warnings over a year ago that pre-roll could become unpopular, broadcasters are treating it as a de facto standard
• CPM rates for pre-roll currently start at £35, double the rate for overlays
• Both 30-second and 15-second slots are being tried for ads around long-form content
• Some advertisers are calling for publishers to make 15-second slots the standard

Alternative online video ad formats

Between the top layer of premium content offered by traditional broadcasters and the lower level of UGC submitted to social media sites, there are traditional publishing companies that incorporate the best of both. This is being monetised through a combination of pre-rolls, companion ads and ads placed within the skin of the player itself.

Emap runs several video sites for its magazine and music TV brands, including FHM, Kerrang!, Q and Empire. Its head of online sales, Kurt Edwards, says it's maintaining CPM rates by giving advertisers pre-rolls as well as branding in a frame around the video screen through a relatively new technology called InSkin. "There's still a lack of quality video online, but as more becomes available I think you'll see publishers move beyond just pre-rolls," he says. "This doesn't lead to a rise in CPM, it just gives more for the same. That's why we use InSkin. An advertiser can have a pre-roll and then the main content plays, but their message is still around the video window and people have longer to interact with it."

A similar approach is being taken by Perform, which runs online streaming sites for the likes of Virgin Media's football highlights and Warner's Comedy Box service. It offers pre-rolls but also carries on the message in a banner above the video, as well as a companion ad to the right of the main screen. Perform's sales director Olly Smith reveals that it's working on adding animated logos from Dutch company Adjustables, which users could click to launch an ad, as well as considering MirriAd, a new technology that can put images inside video. "We're thinking MirriAd could work really well for Comedy Box," says Smith. "We could use it to superimpose a sponsor's logo in the background or maybe have a sponsored label on the microphone of a stand-up comic. This would be in addition to the pre-roll, banners and companion ads we currently offer so we can maintain our rates of around £25 per thousand."

Calum Chace, VP of business development at MirriAd, says he's in talks with ITV and Channel 4 - confirmed by both parties - to superimpose ads within their short content. He believes the EU's lifting of a ban on product placement will mean the current public debate held by Ofcom on the level allowed will lead to broadcasters wanting to use the system. "From the discussions we're having, broadcasters don't currently want to use MirriAd in full-length shows because they appear online as they did on TV and they don't want to anger Ofcom," says Chace. "They're more interested in it for short-form content that hasn't appeared on TV, so isn't subject to the product placement ban. It'll be a very interesting year for us because we don't get in the way at all. No one really wants a pre-roll and no one wants text and icons popping up all over the screen We're more discrete than that."

Matching ad formats to how viewers watch online video

The traditional contract between advertisers, platform owners and viewers is in a state of flux. The once-simple deal of TV, where content was free in return for watching ads, is getting obscured in a welter of new models.

That's the conclusion of an in-depth qualitative research study undertaken by Simply Media and Work Research, whose findings are reported exclusively in NMA. Using face-to-face interviews and video diaries, the study tracked attitudes towards content and advertising among a group of online video viewers ranging from 18 to 40 in London and Manchester. All participants had broadband access at home.

The study's authors, Justin Gibbons from Work Research and Matthew Halfin from Simply Media, believe their research explodes the misconception that online video is all about homemade comedy and soap catch-ups, and that it proves online video is a mainstream activity and a compelling new ad medium.

Fundamentally, Gibbons and Halfin conclude, the web is largely considered by consumers to be free media. Advertising has been a part of people's web experience since day one, so it's an accepted part of the landscape.

The research categorised online video content into Snippets, Specialist and Catch-up and found each type met a distinct need. The study focused on video ad formats and found that different formats are suited to different types of content. In interviews, video advertising in the Specialist and Catch-up categories - mainly pre- and mid-roll - fared well. In most cases the ads are short and perceived as unavoidable, with countdown timers used to manage the viewer's patience.

In these categories most viewers perceive the value of the content highly and appreciate that free content is too good to be true. Some even reported positive experiences when ads are relevant to their specialist viewing.

Gibbons and Halfin also found UK viewers gave full attention to online video, and when watching longer features displayed classic lean-back TV watching behaviours, such as sitting back on the sofa or pausing streaming. But as the length of content shortened, consumers become more negative about advertising. The authors conclude there's still a debate around whether it's appropriate to have advertising around amateur content online at all.

Non-video advertising, such as banners and pop-ups, is generally unpopular with people engaged with this content unless it's related to the video. Furthermore, the intrusive nature of advertising can make some viewers impatient.

This UK research chimes with quantitative research by Dynamic Logic in the US last year, which compared 30-second ads watched live on TV, during a programme recorded on a PVR or viewed online, and found that online viewers spend more time watching advertising in commercial breaks than live or recorded TV viewers. Nearly half (46%) of online viewers pay attention during ad breaks, in comparison to under a third of live TV viewers (30%). Dynamic Logic found that online viewers are more engaged than those on other platforms and this leads to increased levels of brand awareness, favourability and consideration. However, they're also more likely to tire of seeing ads in this environment.

This is really about the viewing 'mode', say Gibbons and Halfin. "While people are in entertainment or task-driven mode, they're easily annoyed by advertising they consider to be intrusive," say the authors. "It stands between them and their fun."

The study will be published on 27 March and available free at ignoreatyourperil.tv.

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