Video Sites Sticking With Pre-Roll Ads

Nov 25, 2007  •  Post A Comment

The much-maligned 30-second pre-roll ad isn’t going away any time soon.
The advertising format that has bolstered the explosive growth of online video advertising in the past two years still will drive the business over the next year or so, even as new formats emerge.
Pre-rolls are commercials, typically repurposed from TV, that run before online programming. Consumers aren’t keen on pre-rolls and many find them intrusive, but advertisers like to use them to deliver their branding messages. So despite the push by online giants such as Google and AOL to introduce overlay ads that live on top of video, the pre-roll spot will stick around as other formats come into vogue, according to media buyers and online ad experts.
“The main course on the video marketing menu right now is pre-roll. As consumer tastes and content-delivery options evolve, we expect marketer options to move beyond just pre-roll,” said T.S. Kelly, senior VP and director of research and insights for Media Contacts, a division of Havas. “It’s about consumer relevancy and performance. If pre-roll proves effective long-term, then we will continue to invest in it. Otherwise, we will look for other options.”
Such options could include the overlays Google-owned YouTube now runs on some of its partner content. An overlay is a type of banner ad that kicks in about 10 to 15 seconds into a video and simply sits on top of a portion of the video for a few seconds while the clip continues to play.
AOL Video also introduced an online video format last week called video ticker ads. The ads, similar to overlays, were developed with online video advertising technology firm PointRoll. AOL is billing the new format as an alternative to pre-rolls. The ads will run across AOL’s premium video content, the company said. The video ticker ads appear at the bottom of the video player about 10 seconds into a video stream. When a user clicks on the ticker, the ad expands and the video pauses. If the user doesn’t interact, the ad disappears after 15 seconds.
Early feedback on overlays is positive. After introducing them last summer, YouTube found fewer than 10% of users close the overlay ads. That compares favorably with pre-roll ads, which see abandonment rates as high as 70%, YouTube said.
Marketplace data on consumer reaction to pre-rolls is mixed.
A study from new-media research firm eMarketer found 71% of online video viewers would rather get their video for free in exchange for watching ads. However, that figure doesn’t address consumers’ tolerance for pre-rolls themselves. That data point primarily suggests consumers don’t want to pay for content if they don’t have to.
The same eMarketer report found that in a Wired magazine study, about 63% of YouTube users said they would tolerate banner ads on the site, but only 14% would tolerate short pre-roll ads before the video. Those figures are more indicative of how pre-rolls fare in short online content.
In defense of the pre-roll is a June study from the Online Publishers Association. That study found 30-second pre-roll ads online can leave a more positive impression on viewers than 15-second ones. If consumers already had a prior affinity for the brand and also enjoyed the online ad, their brand consideration rose significantly after watching the 30-second pre-roll ad. Even if they didn’t like the brand beforehand, their brand consideration still rose after watching the online spot, the study said.
Those are among the reasons the pre-roll likely will remain an important part of the online advertisers’ toolkit. In fact, pre-roll ads and overlays will co-exist for some time, said Will Richmond, president of video research firm Broadband Directions.
“They offer advertisers a different type of capability,” Mr. Richmond said. “The pre-roll is more about a branding type of play, akin to what we have seen in the TV advertising world, whereas an overlay is more akin to what we have seen in the Internet world.”
Advertisers are interested in both because each serves a marketing purpose, Mr. Richmond said. “The key to pre-rolls is they need to be used judiciously. If a publisher overuses either, there will be a consumer backlash,” he said. “You can’t have constant overlays popping up on the video window, just as you can’t have a 30-second pre-roll in front of a one-minute piece of content without doing any frequency capping. Publishers who do both judiciously will see interest from advertisers.”
Fifteen-second pre-roll ads along with companion banner ads are the dominant online ad formats that Internet TV firm Brightcove uses across its service, which reaches 120 million unique users each month across 7,000 Web sites, including those of more than 40 television networks.
“That’s the preferred model of the premium brands we work with,” said Jeremy Allaire, CEO of Brightcove. “From an end-user perspective, we have seen no negative attrition associated with pre-rolls. Sites that were running video without advertising and then turned on pre-rolls showed no attrition or abandonment, which suggests that from an end-user perspective they are still acceptable, though other data does show that subjectively people find them annoying.”
Interest in overlay ads is on the rise, but advertisers will use them to augment pre-rolls, Mr. Allaire said. “Some of our premium brands [Sony BMG, People.com] have rolled them out and plan to increase their use,” he said. He believes that while advertisers will use overlays more in the year ahead, growth will be hampered by an overall lack of standards.
But that’s not stopping Google and AOL from pressing forward. Smaller firms are betting on overlays, too. “Pre-roll isn’t a good solution,” said Matt Sanchez, CEO of online video ad network VideoEgg, which has shifted to overlay ads over the past year and has run 300 campaigns for 150 brands in the past year using overlays. “Studies are showing that overlays are more effective than pre-rolls.”
Pre-rolls also “depress” Web traffic, he said.
Most short-form videos are watched to completion by only about 30% of viewers anyway, Mr. Sanchez said. When pre-rolls are added, many consumers abandon the video entirely, further depressing traffic levels.
Even so, companies that have built their business on pre-rolls insist that reports of the death of the format have been greatly exaggerated. Broadband Enterprises is an online ad network that serves ads on more than 2,000 Web sites, including Lycos, Comcast.net and CBS.com, said Matt Wasserlauf, the company’s CEO. About 80 percent of the ads Broadband Enterprises serves are pre-rolls and revenue is growing 60% year-over-year, he said.
“My experience with the Fortune 500 advertiser is if they have the opportunity to tell their story in video versus a banner, because that is essentially what an overlay is, they are going to do it with video,” Mr. Wasserlauf said.
The problem with pre-rolls is most are repurposed TV commercials. But a handful of advertisers have begun developing original creative for broadband, tailored for a younger Internet audience. Mr. Wasserlauf said he expects more major advertisers will craft broadband-centric spots in the year ahead.

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