Engagement: Closing the chasm between TV and Online video November 2011 ”Common wisdom” in the industry is that

TV is losing ground to online video. Findings in the State of the Video Industry Survey conducted by Adap.tv and Digiday counter this perception. In fact, most brands and agencies told us that online video advertising is a complement to television advertising, or something else entirely – not a replacement for the mass medium. Both do share one common denominator, however: both are being measured on engagement. Nearly 600 agency and brand advertisers, publishers and online video technology providers weighed in on how online video may be filling a gap for TV advertisers. Here are a few key points that rose to the top:  Television – especially cable – ad budgets are relatively safe for now. The majority of ad buyers – 56 percent of brand respondents – said they view online video as a compliment to, rather than a replacement for, their television advertising. Engagement is top of mind for advertisers. o Brand engagement is the leading online video campaign objective. o Sharing video via social networks is considered one of the most important ROI metrics for buyers. o Interactive pre-rolls remain a top ad format for delivering ROI. o iPads are a key growth area. Online video ad buyers dive well beyond “reach” to achieve results. Targeting is a top criterion for video advertising buyers when deciding which sites to patronize. Better targeting is also cited as the top potential influence for advertisers to invest more of their budgets in online video. Because advertisers are more inclined to work directly with publishers than are agencies, this is an important capability for publishers to emphasize, where they can offer it. Demographic data reigns. Advertisers are both conversant and comfortable with the use of third-party data to target their interactive video campaigns. Some 75 percent of responding advertisers achieve their

 Rates for interactive video are increasing – 92 percent of video content publishers say their net video CPM’s were higher than last year’s by an average of 19 percent. ad budgets are poised to take a substantial leap in 2012.targeting objectives using third party data. Agencies who’ve bought online video advertising project a 25 percent increase. Innovation in video advertising appears to be moving as rapidly to mobile media as it is to online. the projected budget increase is 47 percent. Eighty-four percent of advertisers and agencies polled who .   Executive Summary For initiated online video ad buyers. For brand advertisers that have bought online video ads this year. Inversely. only 36 percent of publishers do. Only 32 percent of publishers say that more than 30 percent of their available video ad inventory is unsold in a given month. Perhaps as interesting as the increase among the “converted” are the intentions of the uninitiated. Fill rates are on the rise.

43 percent of agency respondents said “Display” – substantially more than the 25 percent who tagged this category for cannibalization last year. online video advertising will take the biggest bite from Print budgets. Just 6 percent will represent incremental spending. Asked from which budgets they were “most likely” to shift spending to online video. the vast majority don’t see it as a replacement for TV. and a third see it as an entirely different medium. For brands. . followed by Broadcast TV and then Display. 39 percent – a four percent increase from last year – said “Broadcast TV” budgets would be tapped to fund the online video increases. despite the fact that 29 percent of brand advertisers think their Broadcast TV budgets will be asked to give at the online video altar. But. Meanwhile. More than half of our brand advertising respondents – 56 percent – said online video is in fact a direct compliment to TV.hadn’t yet purchased online video ads said they plan to include digital video in a campaign in Q4 2011 or 2012. What has emerged is the picture of a committed cohort of online video buyers who are prepared to migrate substantial spending from online display advertising to digital video in the coming year. More than 14 percent of respondents said their spending would be incremental and not draw funds from any other category.

interactive and social. With TV you have sight. It tells a story. “Let’s all stop talking about online video replacing TV.” . This could be a strong indicator of why we’re witnessing such a dramatic shift in budget funds to make way for this medium. VP of Sales for Adap. sound and motion. It evokes emotion.tv commented. online is measurable. Digital video combines the best of TV and the best of online. Meanwhile.Jason Shulman. This data is significant and supports what our industry has felt for a long time: video is the ideal marriage between TV and online.

“What’s helping to close the gap between TV and online video?” When we took a deep dive into the data. formats. Brand engagement was the clear winner here. objectives. advertisers are embracing online video as an ideal complement to their TV buys. Which begs the question. ahead of both click per view and click through. We asked advertisers and agencies. Engagement was the stand-out differentiator when it came to the primary objectives for buying online video advertising. And “Sharing via Social” came out of nowhere to land in the third most important metric of success. in fact. . a four-fold increase over last year’s responses. as was previously thought. The following is a look at some of the key indicators. But brand lift is a close second. the common denominator was clear and consistent . “What are the most important metrics for measuring your online video campaigns?” and their answers were entirely in synch. increased budgets at the expense of TV have become less prominent. targeting and emerging devices.What the data demonstrates thus far is that ad spending continues to rise and shows no sign of slowing down. Increased video ad budgets are not coming predominantly at the expense of TV budgets. “Completion rate” remains “king” in determining the efficacy of an online video campaign.engagement. with 68 percent of respondents putting it at the top of their list. with 70 percent of agencies saying they use brand studies to determine this. At the same time. It is top of mind in several key areas including metrics.

for agencies. brand buyers want what they’ve always wanted: actual proof people watched. while. Interactivity generally is viewed as delivering the highest ROI among video ad units by brand advertisers and agencies. back to what advertisers value. . But.In hindsight. trailed the list of metrics ad buyers use to measure online video ad results. it seems likely that those publishers first or most-able to harness the capacity for consumer-driven video sharing – and to measure its effects – will be among those best poised to profit from pent-up digital video advertising demand. we found it significant.” Pre-roll remains a staple for online video for both buyers and sellers. TRP and CCP – we added to “speak the language” of TV buyers. Expanding inventory options therefore would represent an easy “win” for online publishers. that the three metrics – GRP. given all the media buzz surrounding an “online GRP” measurement. Unfortunately. Rather. Eighty percent of video publisher respondents said more than half their digital video revenue derives from pre-roll. less than half of ad-supported video publishers (49 percent) offer the most popular interactive ad units among advertisers and agencies: rich media overlay and interactive pre-roll. None of these responses was rated “most important” by advertiser respondents. Advertisers put “rich media overlays” at the top of their performance list. it’s “content integration.

In order of practice. where they can offer it. Because advertisers are more inclined to work directly with publishers than are agencies. but this seems a missed opportunity. geography and with re-targeting. Our survey revealed that only 36 percent of publishers who support their efforts with digital video advertising use third-party data to target video campaigns. content category. this is an important capability for publishers to emphasize. Among our survey respondents. and the ability to target online video ads is a major differentiator for both brand advertisers and agencies that use the medium. .Certainly targeting leads to engagement. with agencies employing these targeting methods by double digit percentages more often than advertisers alone. and for the publishers they select to host their video ad campaigns. You might therefore expect that successful video publishers made similar use of such data. both advertisers and agencies target by demographic. behavior. three-quarters of advertisers (75 percent) who fielded online video campaigns this year achieved their targeting objectives using third party data.

Indeed. our survey revealed that “Targeting Capabilities” is the number one criterion advertisers and agencies have when deciding which sites to work with. it’s worth what you pay for it. Price drops to a mid-tier consideration. .” Advertisers favor audience reach. perhaps because if the video ad finds the right audience target. then composition. Agencies then parse by “Measurability” and “Audience Composition.

up 18% from last year. Out of all of the emerging devices we inquired about. The fields were limited. Publishers also saw the bigest increase in adoption for the iPad giving them a prime position to win at monetizing emerging devices.Last year we inquired about emerging devices to determine whether it was in fact. a truly “emerging” sector for online video. Adding to the indicators of engagement. . video ad spending on the iPad showed the most significant increase. Not fairing as well this year for advertisers was connected TV which remained flat year over year. so this year we broadened the question and asked both advertisers and publishers about specific brands of devices. the growth in iPad adoption could very well be attributed to the idea that it’s the most popular device because it delivers the ideal mix of TV and video exceptionally well.

online video ad buyers already view targeting. are they selling more video and earning higher returns? Publishers are experiencing success. This is up 14 percent from last year. Some 60 percent of video publishers who sell advertising report a 50 percent or better sell through rating through June of this year. Essentially. we took a look at the publishers in an effort to understand how the closing of the chasm between TV and online video buying was playing out for them. On the opposite side of the industry spectrum. when only 46 percent of publishers had this type of success in the same time period. . reach and desirable audience composition to be differentiators for online video advertising.In short. Making the medium engaging and measurable is what will cause more ad buyers to open their wallets in 2012.

. Asked to select the average gross CPM for various kinds of online video. Half of respondents put the value of user-generated content at between zero and $5 average gross CPM. it’s broadcast-quality video that continues to command premium prices. more than half of advertisers (55 percent) said broadcast video commands a rate of $21-$30.Regardless of platform.” professionally produced online content. while 46 percent of advertisers were equally likely to pay $11-$15 or $16-$20 for “mid-tier.

” . The largest group of respondents – 35 percent – said less than one-third of their inventory is wasted in a given month. but for 12 percent it’s greater than 91 percent. the percent of their total online ad revenue that derives from video. the majority (61 percent). Asked how their current net video CPMs compared with 2010.However for all publishers. But only a quarter of respondents are operating at more-or-less “full capacity. Among ad-supported video publishers. net video CPMs are up. said less than half. where noted. averaged just 4 percent. Decreases. 92 percent of publishers said they increased by an average of 19 percent.

video content providers and buyers who don’t tap the medium’s capacity for social sharing and audience targeting. Interactivity will drive innovation and spending in online video in the coming year. Put another way.Key Takeaways  The interactive industry needs to stop talking in terms of “when the TV dollars will move to the Web” and explore more inventive ways to make interactivity a component of every television ad campaign. and isn’t perceived as that much of a technological leap beyond online video by prospective video ad buyers. will miss the next wave of digital video ad adoption. Advertisers and agencies don’t consider interactive media as a replacement for either TV or cable.    What does the future hold for online video advertising in 2012? . Mobile video is top of mind for experienced online video advertisers. but it may come not just from interactive pre-roll. Premium video content providers looking to hang onto or expand their revenue gains in this medium need to explore sharing extensions of their own video and that of their advertisers for maximum reach and engagement. but via social sharing. Publishers looking to expand their hold on the medium should be looking at both the IOS and Android for expansion. and the tracking of such interaction by consumers.

with advertising network. instead of publisher page contextual targeting  Better measurement via Nielsen and other research orgs which will help bring more ad dollars from TV  Brand-relevant metrics Engagement doesn't get close enough to the brand marketer's overall goal of driving awareness. DSP and SSP technology and service providers weighing in at 17 percent. . etc. tailored to their market vantage point – except where we sought to explicitly compare their expectations for and investment in this particular medium. and continuing to close CPM gap to TV  A shift to mobile video  Ad network consolidation  Advertiser selection of content. purchase intent. Each cohort was offered slightly different questions about the shape and perceived direction of the video advertising market in which they participate. Nearly 600 agency and brand advertisers.it is the new cable TV  Increases in spending  Better targeting and more integration within buys  More cross-platform buying  Consistency of formats. For the current survey.tv and Digiday partnered for the second year in a row to take a deep dive into the perceptions and practices shaping the Internet’s digital video advertising market. Digiday’s surveys poll emerging media practitioners that have demonstrated an interest or expertise in the emerging medium that is the topic of exploration. agency execs led participation at 47 percent of respondents with brand advertisers combining to bring the buy-side input to just over 60 percent. which was conducted in September 2011.  Buying through RTB environments or automated trading  Connected TV interaction  DSPs and SSPs becoming increasingly important flexibility to deliver in banner video greater emphasis on engagement (over click and completion)  Hoping for better standardization of standards and technologies  Increased budgets and more available inventory Methodology Adap. publishers and online video technology providers weighed in for this survey.2012 predictions among all respondents included some of the following:  It will grow tremendously as the costs continue to replace expensive TV advertising production  More opportunities and increase[d] budget  More social networking  A significant increase in online video ad spend. ease of measuring. The 111 participating video content publishers represented 23 percent of respondents.

Adap.adap.tv and DIGIDAY will continue to survey digital advertising and publishing practitioners in this fast-moving marketplace twice annually. please email Melinda Gipson at Melinda@digiday.com. For more information about this report. please contact marketing@adap. CA 94403 www.tv 1 Waters Park Drive.tv. Suite 250 San Mateo. Adap. If you’d like to be included in our next outreach.tv .