Web Video Still Feeling Its Way

NEW YORK The explosion of Internet video online is creating myriad new opportunities for marketers, yet much work remains to be done before the true value can be realized, according to a panel of agency and media executives at the Ad:Tech conference here.

Sarah Fay, president of Aegis Group’s Isobar U.S. network, said the consumption of online video is part of “major shifts” in consumer Web behavior toward social networking and sharing. While providing an exciting outlet for brands to connect on a deeper level with their customers, the shifts create the challenges of how to foster and value interactions.

“It is a new game,” she said. “We’re trying to figure out the new rules.

As an example, Fay pointed to a MySpace campaign created by Isobar agency Carat Fusion for Adidas. It attracted 55,000 consumers to “friend” Adidas—a small but not insignificant number, in Fay’s view. “We felt it was a successful program because it created 55,000 advocates,” she said. For that reason, Isobar agencies pay attention not just to how many people their video campaigns reach, but the time spent.

Web video is going through growing pains, according to media executives. Jonathan Klein, president of CNN/U.S., said the site has sold out its video inventory through the end of the year, but is doing an uneven job of getting visitors to watch video, serving about 50 million streams per month. It has bright spots, like Reliable Sources drawing twice as many online viewers as TV. “We’re not streaming enough,” Klein said.

The lack of advertiser-ready inventory remains a problem, Fay said, putting agencies in the position where they need to spread their buys to many sites and look to in-banner placements instead. Sky-high costs for online video will not last, predicted YouTube chief marketing officer Suzie Reider. “What’s going to happen when the flood of video inventory comes on the market?” she said, predicting the pendulum to swing to an inventory glut.

Still, for now, YouTube is wedded to user-initiated ad formats, which leaves advertisers in the position of being unsure how many people their messages will reach. This will raise the bar on creative, Fay said.

“It’s a higher bar these days,” she said.