In-Stream Advertising: Killing or Saving Online Video?

By Ian Schafer, The ClickZ Network, Jan 25, 2008

No one can deny the strong revenue potential for online video.
However, there are many schools of thought on how that revenue
potential can be realized. Publishers and advertisers alike hope that
realization happens soon.

Most consumers probably feel differently.

A new study from Burst Media says that consumers are turned off by
in-stream ads, such as pre-roll. While advertisers and publishers
don't want to hear this, the study raises many issues that might make
you question the study's validity, second-guess its naysayers, and
even determine whether or not you should take action to address its
findings.

Ad vs. Brand Recall

The study of 2,600 respondents found that more than half (53.6
percent) of all respondents actually remembered that they'd seen ads.
But do they remember what the ads were for? Ads, especially those in
the form of a traditional TV spot, are hard to avoid, but easy to
ignore.

You'll remember it when an ad interrupts an online experience, such as
watching an online video. The number of people who remembered seeing
ads doesn't surprise me.

Of those people who remembered seeing ads, how many recall what the
ads were for? That would be a key piece of learning to take away from
this study, but alas, that statistic is nowhere to be found.

Video, Interrupted

A total of 78 percent of respondents said in-stream ads were intrusive
and 50 percent said those ads disrupted their viewing experience.

Well, yes. Ads interrupt. That's their job. No news here.

Ads and the Effect on the Viewing Experience

One in two respondents said they stopped watching a video once they
encountered an in-stream ad. And, 43 percent stuck around to watch the
content.

But here's something interesting. Those ages 18 to 24 were actually
the most tolerant of in-stream ads: 57 percent watched content past an
ad. This demographic represents the generation of on-demand, P2P,
I-want-it-now, media consumption.

To me, this actually holds promise for the online video business, and
gives me a glass half-full feeling about online video's ad-supported
future. While many bloggers and pundits zeroed in on the 15 percent of
the people who abandoned Web sites after seeing an in-stream ad, we
should instead focus on those who stuck around.

If the 18- to 24-year-old age group stats haven't surprised you,
here's another one: 38.5 percent pay more attention to in-stream video
ads than they do to standard ads.

So, while the study has provided plenty of fodder for critics of the
online video industry, it gives us quite a bit to be optimistic about.
If 18- to 24-year-olds are our future, then online video advertising's
future actually looks pretty bright.

Til then, it'd just be nice to have more studies that are more
thorough to learn more from.