With the advent of companies offering video advertising, how do you determine one company from the next? If you are a Direct Response (DR) advertiser they seem to be all the same. They have high CPM’s (cost per thousand impressions) and low, unjustifiable click-through rates, not to mention back-end metrics.
The leaders in the space seem to be VideoEgg, Scanscout and of course YouTube. The problem is that most have high minimum monthly spends, and even higher CPM’s. On the low end you are looking at anywhere from $4.00 -$12.00 CPM’s. A few months ago some of these sites started offering CPC (cost per click) pricing, which generally ranges from $1.00 – $2.00, but can trend lower depending on spend. The problem with the CPC model is that the position of the overlay is too close to the portion of the video panel where users try and skip ahead or go back. Not all mouse-tracking speeds are created equal!
The example above can be found on Videoegg’s site. I picked the Ford advertisement, as clearly they are spending money on advertising in a wise fashion (I’m joking). I have no doubt that their AOR is focused on branding and not acquisitions, such as getting users to fill out a form for more information about a Ford vehicle so they can actually make a sale! But who am I kidding, Ford doesn’t have to worry about sales, they are doing great.
All sarcasm aside, video advertising on the internet has great potential. Like many new emerging mediums in our space it needs to be refined. The organizations that are offering the pre-roll display ads, in-video text overlays or post-roll coupon ads are without question making money. Much of the money is pouring in from agencies desperate to show they are in-tune with “online marketing” and brand advertisers, particularly the movie studios with their huge budgets and frequent roadblock buys. Video advertising for these organizations is a no-brainer, but it is not sustainable in its current fashion.
Truth be told, video advertising is in a stage of hyper-growth, but needs maturing before it can be put in the category of justifiable spend. I strongly believe in the potential of video advertising online. For example, look at Advertising.com and their recent announcement of CPC and soon to be CPA (cost per action) advertising as leading the charge to the future of sustainable and quantifiable online video advertising.
After all, we all know CPM rates are ridiculously low on video sites for traditional banner advertising because the inventory doesn’t convert, why else would ad-networks be all over this space! Online video advertising holds a lot of potential, but for it to turn into a sustainable model (which it will) rates need to come down to realistic levels. The next step towards a sustainable model will be CPA rates in online video advertising. The race is on to see what organization delivers first!
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