Some advertisers have been holding off becoming video advertisers, and many have been limiting their spending for a variety of reasons. In the Digital Advertising Trends 2012 report from Break Media and Advertising Perceptions Inc., the companies offer some insight into why some advertisers haven't yet made the transition to video advertisers.
You Can't Always Get What you Want in Pricing
Perhaps one of the major limiting factors for video ad spending is how it's priced. The report shows that what the advertisers want doesn't always line up with what is being offered. Cost per acquisition was the most desirable pricing method for advertisers (21) while cost per day or roadblocks were least desirable with just 8% of advertisers interested. However, most often, cost per thousand is still in use in the industry and is offered 69% of the time.
Meanwhile, cost per view is picking up speed as it was offered some 40% of the time says the report, growing twofold over the course of the year. Cost per click still outpaced it though at 53%.
The weird thing is that cost per view is 1% less interesting to video advertisers than cost per thousand. What's the difference? I think that in CPM no matter how much of a video ad is shown, it gets charged to the advertiser. Meanwhile CPV is generally based on a percentage of completion of a video ad (depending on which video ad network) before being charged to the advertiser as a view.
(Click this one below to see it better.)
Transparency is Hard to See
Another thing that we commonly hear in regards is how difficult it is to track things like return on investment, impact, standardized metrics and transparency in placement (i.e. finding where the ad is displayed).
There have been some major strides in all of that this year and I think that a lot of this will be a major factor next year in continued expansion of online video advertising. This year though, the study shows that advertisers are more savvy about online video advertising. Why do I say that? Because the difficulty of measuring ROI stood shoulder to shoulder with a lack of transparency in ad placements as 40% said both were major hindrances. That's why some of the video ad networks have been working on more precise placements down to the site and content level. We already know that placing ads with complementary content is on the rise and in order to do that, you've got to know what site your ads are going to and what content its being shown against.
Lack of standardized metrics was also a major factor with 38% mentioning it. This is something I personally have talked about on numerous occasions as well because even the major research and tracking companies all have various definitions of things like a view, stream, session, etc. If you can't properly compare how well your campaign is doing from one ad network to another, then how are you expected to know how the ads are performing with the audience you're seeking to reach? Now, the majority of online video ads are still being measured for success based on display ad metrics like Click-through rate. But that is expanding as 38% said they do it with actual product sales, 35% said visits to the brand website is included, 30% said brand awareness on recall.
Each and every campaign, I think, is slightly different and that's why there's such a diverse array of ways to gauge success including, video completion rate, reached target audience, engagement (social interaction, sharing, etc), viewing time, number of views and intent to purchase.
Not all of us are hawking our wares on the Interwebs and so some of those obviously don't apply, but I think some of them should apply to everyone including brand site visits, brand recall, social engagement, etc.
Proper Placement and Companions
There have also been several studies talking about increased effectiveness of online video ad when couple with other forms. Most popular in this particular study was to pair video ads with non-video display (companion ads, etc) and lo and behold 48% say they mix it up with some TV which makes perfect sense considering they're the same medium, just on a different screen. However, many ads are deployed in stand alone campaigns. The ad agencies might want to point them to some of the recent reports about multi-format ad campaigns performing far better.
The Nitty Gritty of Methodology
Study findings are derived from an online survey completed by 320 persons working for advertising agencies and the companies that hire them (i.e. marketers) in the United States and Canada. Respondents were solicited from the Advertiser Perceptions Inc. proprietary database of media decision makers and offered a cash incentive for survey completion. All respondents are involved in the decision-making process for choosing what types of online media will be included in advertising campaigns. They work for companies spending a minimum of $1 million annually on online advertising. Survey results have a margin of error = ± 7%.
Seven percent is a pretty wide margin of error. With 320 respondents and say 99% confidence level it would mean 6,000 to 10,000 companies in their database to draw these numbers. Of course, it's a proprietary database so we can't be sure. Still, 7% is a big margin of error if you ask me, the biggest I've seen in a study I wrote about this year I think.