There IS a problem with pre-roll advertising.
Online video advertising is still a fresh frontier in the overall monetization of Web 2.0. It may be too early to say what the online video standard format will be, but many companies are banking on overlay ads being the dominant video advertising format for 2008.
More research released this week, this time from Burst Media, solidifies previous study results which demonstrate that consumers of online video content do NOT like in-stream video ads, in particular pre-roll video ad formats. According to the research, more than 78.4% of respondents indicated that they felt in-stream advertisements are intrusive and disruptive. A poll released in mid 2007 from Harris Interactive showed that almost 3/4 of Youtube users indicated they would not be happy with pre-roll advertisements if launched on the Youtube platform.
Furthermore, when reading the numerous predictions for online video in 2008, it is evident that there will be a continued focus on refining and developing effective online video monetization methods. In a post released by NewTeeVee, 4 experts were asked for their predictions regarding which online video ad format will be dominant in 2008. The overall consensus with the group was that contextual overlays will be the dominant model for 2008.
With major search engines like blinkx, Google, and others launching overlay ad formats in 2007, we know that overlays will continue to generate significant revenue. Research show projections for online video advertising spending nearly doubling in 2008 from 775 million in revenue for 2007 to more than 1.3 billion in revenue projected for 2008. Furthermore, this growth continues with an expected $4.3 billion in online video advertising revenues for 2011.
Are contextual overlays are the new online video advertising standard?
While we know that users dislike in-stream ads, it is interesting to view this from the standpoint of the advertiser who's valuable ad spend is currently most often sold on a CPM basis. Certainly there is a direct effect on the content publisher as users may abandon platforms that continue to focus on advertising models that users dislike. However, when the advertiser is paying on a cost per impression basis, the effect on the advertiser is not enough at this point for advertisers to abandon in-stream video advertising. For now, in-stream ads will continue to generate a sufficient share of online video advertising. In fact, according to research from Research and Markets, pre-roll is forecast to make up 26.7% of gross video ad spend in 2007 (not including pre roll or interstitial units sold against long form content), and 28.5% in 2008 according to research
The real answer will be determined in due time. However, we know that this really boils down to answering the question of which advertising formats are most effective for which advertisers, with what audiences, in what format. Whether or not video advertising formats such as contextual overlays, in-stream advertising, behaviorally targeted, or others win in the long run can only be determined through continued development and analysis of detailed and accurate video analytics.
This and many related topics will be covered from top to bottom at the First Annual Video Search Summit 2008.
The current list of speakers includes industry experts and leaders from blinkx.com, EveryZing, ClipBlast!, Truveo, Dabble, Pixy, SearchForVideo, Veoh, and a host of others.