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12 predictions for online video advertising in 2012

6 min read

Digital Technology

This post was written by Alphabird Chief Revenue Officer Alex Rowland and Director of Sales Nic de Castro.

As we near the end of 2011, it’s only natural to make predictions in anticipation of the new year and what might be in store in the world of online video. During the past year, we saw unprecedented growth in advertisers creating content-driven video in ways that elegantly put their brands to the top of their audience’s mind in a nontraditional advertising format. We think 2011 was a mere glimpse of what online video advertising will become during the next few years.

These 12 trends are our predictions for what lies in store for online video for content producers and consumers, as well as for brands and publishers.

  1. The merger of Web and TV talent: We see YouTube producers taking on even greater impact and influence. While the emergence of Internet fame on television will come in fits and starts — remember “$#* My Dad Says”? — TV stars will be looking to use their name and reputation to move across the digital transom and gain more significance in social video, while YouTube and Twitter celebrities start to make more waves on TV.
  2. User-selected ads: Look for more choices in video advertising emerging across ad networks and direct-sold pre-roll inventory. While efforts around user-selected advertising have largely been relegated to Hulu Ad Selector, as inventory becomes commoditized and brands focus on user initiation as a metric of engagement, this type of advertising is going to grow.
  3. Branded-content production: This is a trend that has been going on for some time, but we will continue to see more marketers get into original-content production. Where once only automotive and large consumer-packaged goods providers dared play, we will see education, finance, credit, insurance, telecom and several others creating branded integration that not only makes the industry more robust but also introduces challenges and standards for successful campaigns.
  4. Pre-roll and broadcast interstitial inventories merge: For agencies, the distinction between online video content and television content will become less pronounced. With Nielsen’s announcement of measurement service Extended Screen, which creates a single C3 rating across TV and online channels, expect budgets to start flowing much more freely towards pre-roll. Unfortunately, it also means ad loads are going to increase dramatically — the other requirement of the merged measurement standard.
  5. Dramatically increased ad load: With video-ad viewership growing faster than video viewership — 128% versus 97% year-over-year, according to FreeWheel — and budgets increasing at a similar rate from a larger base, we’ll see an increased ad load on sites such as Hulu, CBS, NBC and other television-centric online properties. However, even YouTube will begin to see significantly increased ad loads as it shifts focus more toward prosumer content channels (see below).
  6. Publishers are going to finally focus on video: Even today, most traditional online publishers are still focused on expanding display inventory over video inventory. As pre-roll demand grows and sales commission for direct-sold video inventory increases in lockstep, expect to see much more video on publisher sites, even if it starts in display.
  7. Pre-roll prices will continue to stratify but will level out: For media buyers, pre-roll pricing will continue to see downward pressure on the network side, as networks fight harder to gain access to premium avails. Large publishers are going to increasingly look to acquire inventory through direct sales, cutting off some critical audiences. However, prices have generally found their stasis point as network transparency has increased. Upward pricing pressure for premium direct-sold inventory will be mitigated by a dramatic increase in video availability, as publishers become more effective at building a video audience — even given the explosion of demand on the agency side.
  8. YouTube pre-roll explosion: There will be a dramatic increase in pre-roll ad load on YouTube. Gone are the days in which YouTube was viewed as a risky environment for brands. Advertisers are going to continue to flee to high-quality, well-lit environments, and YouTube fits the bill. Google goes to great lengths to ensure authentic user engagement. It is building relationships with premium channels, and it has the brand relationships to move mountains of budget quickly; Premium content is a relative term; the audience is what’s important.
  9. Crowdsourced video production is set to grow: Crowdsourced production of video, in terms of creation and dissemination as well as consumption and sharing, will be a big deal in 2012. As brands look for better engagement for their videos, they will increasingly rely on influencers to sell their story. With social platforms, ham-handed efforts at viral marketing can backfire quickly. Expect brands to bring authenticity to the table by loosening control over the creative process.
  10. CPV pricing grows in importance: Cost-per-view campaigns will expand beyond viral videos to include several unique types of video assets, product reviews and even — taking a page from Research In Motion founder Mike Lazaridis’ recent playbook — CEO mea culpas; really, any sort of video content that’s designed to build public awareness. There is no reason engagement-based pricing models should be limited to a specific niche. Expect YouTube to continue to lead the way, with the Interactive Advertising Bureau certifying those efforts with CPV standards by year-end.
  11. Demo-targeting comes to CPV campaigns: Demo targeting is going to get only more standardized in click- and engagement-based campaign buys, as brands move beyond vanity view counts on YouTube. Expect marketers to insist more on accurate demo targeting through analytical research and best-practice delivery methods. Brands know which demos their buyers fall into; they want to have a high degree of confidence that this is the actual demo being hit.
  12. Mobile video advertising still disappoints: Even given the growth in smart devices that are fully video enabled, video-advertising growth of the mobile Web will continue to disappoint. HTML5 as a standard for Web video still has some growing to do, and until carriers’ networks are sufficiently upgraded to provide a reliable high-capacity connection to most metropolitan areas, the experience of watching streamed video on your smartphone will continue to be rivaled only by rabbit-ear reception.

We expect 2012 to be a year in which video continues on its trajectory. Display and search will continue to rule the roost, and budgets are finally reaching parity for individual campaigns. Video is on its way to the top of the heap — it’s only a matter of time.