‘We Can’t Rewind’

If my trivia skills are as good as I’d like to think they are (and if my memory is half as good as I’d like it to be), The Buggles’ “Video Killed the Radio Star” was the first video ever played on MTV. I remember watching that goofy guy in the big glasses and the archaic camera effects over and over again with sheer glee. I was too young to realize it, but a very different era was dawning, and this exciting new outlet was about to define an entire generation.

Fast forward a couple of generations, and MTV is still going strong—though recently I had some difficulty finding an actual music video (I did, however, catch plenty of Laguna Beach episodes). While its format has undergone significant change, the medium MTV so emphatically pioneered is now influencing and evolving today’s generation. The Buggles got it right when they predicted video’s impact on the medium du jour (radio), but did they foresee that video would eventually morph and continue its killing spree online?

It’s done so with swiftness and efficiency. Never has an implementation been so universally embraced by online advertisers across so many different vertical industries with such measurably outstanding results. Video gross ad billings were estimated at $320 million in 2005—up 75 percent from 2004—and are forecast to increase by 41 percent in 2006 to $455 million, according to PointRoll and AccuStream iMedia Research. (PointRoll alone served 5.5 billion video ads in 2005.) Clearly, video is set to kill the traditional ad unit!

PointRoll, along with AccuStream, recently published the The Streaming Video Advertising Reference Guide, which offers agencies and advertisers the guidance needed to effectively utilize innovative, interactive video ads to maximize their campaigns’ success. It further illustrates the fact that now, more than ever before, is the right time to embrace online video advertising. Why? The guide points to a wealth of available content, the maturation of streaming video technologies and the increased adoption of broadband connectivity by consumers who have created an ideal landscape for advertisers looking to implement online video.

Content, Content Everywhere!

There is virtually no end to the cache of available content to incorporate in online ads. Seemingly every advertiser has a commercial, promotional spot, interview, trailer, clip or other video snippet associated with an aspect of their offline advertising campaigns. Repurposing this existing content and utilizing it online can dramatically affect the overall success of a campaign. Adding a mere 15-second video clip to a rich-media execution can see metrics, such as brand awareness, creep exponentially higher, as that’s an added 15-seconds of brand exposure experienced by the consumer. In addition, retention and recognition are also driven upward as video offers a more compelling and engaging vehicle for conveying your brand’s message.

Streaming Video’s All Grown Up: Flash

Utilizing or creating content is only the first step in enriching an online ad experience. The second, and historically more challenging, step is incorporating content online in a way that is both easy to do and manageable to view. Flash technologies have evolved to better alleviate this challenge, and as a result are rapidly becoming the industry’s preferred streaming video delivery format. According to PointRoll’s research, in 2005, about 14 percent of all streaming video servers in deployment supported Flash, and 17 percent of all video streams served were in the format. Moreover, and somewhat surprisingly, about 40 percent of the $320 million spent on streaming video advertising in 2005 was delivered in Flash.

Also speeding this adoption is the improved playback quality now offered (particularly within Flash 8) when video is being streamed versus having the user proactively download an ad unit. The appropriate mix of optimization, implementation and technology now allows high-quality video to be viewed online with little or no wait time and without negatively disrupting a user’s Internet experience.

The Conduit Just Got Bigger: Broadband

A key contributor to the accelerated consumption of streaming video advertisements is the steadily increasing adoption of broadband connectivity at the residential level. According to Nielsen/NetRatings, broadband penetration rose 9 percent between 2004 and 2005—from 64 million broadband users to 86 million broadband users. This has given publishers additional incentive to make more streaming video content available and has opened up a new messaging environment for advertisers seeking to reach this expanded audience.

Broadband enables the delivery of the highest quality video possible, maintains the integrity of the creative and ensures the best chance for an ad’s successful performance. However, the absence of broadband does not eliminate users from getting the intended video. Technology allows us to instantly identify a user’s browser, the speed of their connection and the Flash player they’re using, and calibrate an ad to ensure the best quality of video is delivered. In online video advertising, almost no one is left out.

To once again quote those oh-so-prolific Buggles, “We can’t rewind, we’ve gone too far (oh-ah-oh)…” There’s no turning back from the current progression of online video advertising. As the industry continues to forge ahead, we’ll begin to see several interesting market and technology developments such as “channelized” video content, increased adoption of Flash as the industry’s standard format, and larger media buys that will rival those of cable networks. These developments and more will ultimately result in increased benefits for advertisers, publishers and, of course, users.

Tune in next week for Part Two of this series, which will expand on PointRoll’s predictions for the future of online video advertising.

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