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In VOD We Trust

It may have got off to a slow start but by 2020, online video is expected to account for as much as 35% of all video consumption but advertisers need to tread carefully, writes Ellen Kelliher.

The current conversation in the marketing and advertising world could lead you to believe that although digital platforms have hit a speed bump, they are still kingpin when it comes to where people spend their leisure time. Nothing could be further from the truth.

If we focus specifically on the medium of video, 90% of brands’ advertising budgets are still committed to linear TV. There is no denying that the overall growth in video consumption is increasing, and although linear TV viewing and advertising investment is strong and stable, the growth is driven by online platforms rather than by traditional broadcasters.

A clear example of this was demonstrated last year by TAM Ireland which, in conjunction with Nielsen, released a piece of research the first of its kind in this market. According to this ‘moment in time’ study, 20% of video consumption for Adults 15+ is through online video, with the other 80% taken up by traditional TV; live and recorded. If we look at younger audiences, such as A15-34, the move to online video comes into sharper focus, with 44% of video consumption by this age group through online platforms.

Brands need to continue investing creative and media resource in linear TV, but the time has come to consider how online video platforms require a different approach.

What Does this Mean for Advertisers?

Advertisers need to ensure their strategy is tailored to the platform from which consumers are viewing their content. Whether it’s short-form YouTube content, or long-form broadcaster video, consumed on mobile or desktop, advertisers need to ensure they approach each platform separately to provide the smoothest experience for the user on the player. Key to this is the length of the video ad that is served to the user. Locally, we believe over 50% of video ads are regurgitating the TV ad online, which is beginning to have a negative impact on both video in general, but more importantly on the brands’ advertising.

The Facts

Over the last six months in Core, we analysed over 300m online video impressions in Ireland and found some alarming statistics:

• 75% of ads are skipped when the consumer is given the option;
• Completion rates for ads longer than 30 seconds is 14%;
• Completion rates for ads longer than 20 seconds is 42%.

In parallel, our research team also surveyed 1,000 people and organised eight focus groups to obtain people’s perceptions of the online video market. Once again, the outcome was not positive:

• 60% are concerned there is too much video on demand advertising;
• 68% are concerned video on demand advertising will continue to increase;
• 35% get frustrated with video on demand advertising, as they want to watch their programme;
• 75% will try to skip the ad;
• 80% will skip the VOD advert in less than 20 seconds.

In summary, users are getting more frustrated than ever with online video as advertising budgets increasingly move to these platforms. And potentially we are now at crisis point, as bad practices are starting to have an impact on both video players and the brands themselves.

We Are At a Crossroads

Even though consumers are getting more frustrated, the possibility of moving their behaviour to a paid or subscription model, such as Netflix, is less likely in the short-term.

From our research, the average price they are willing to pay for paid video content online is €8.10 per month. This would exclude them from most online platforms. Amazon Prime’s hybrid model is a viable alternative, but we believe a fully ad-funded model, as with RTE’s Player or Facebook, is still the future of the industry.

So, What’s Next for Advertisers?

With this in mind, the advertising industry must work to improve the online video experience. There is no doubt that viewers will continue to migrate to online platforms, so now is the time for a different approach.

To avoid intrusive behaviour in the online video market, we are proposing that advertisers follow these standard guidelines when creating their video strategy:

• Tailor your content to the platform for best user-experience.

The following lengths are recommended based on our data analysis:
• 10 seconds for short-form (less than 15 mins);
• 20 seconds for long-form (15 mins +);
• Include branding or call to action at the start of the ad – remember, 75% of people skip ads on YouTube.

And Finally…

By 2020, it is predicted that more than 35% of video consumption will occur online. Small, but significant changes are already occurring across key demographics which advertisers are still not embracing. If 50% of ad copy online is still based on linear TV, the potential of damaging the perception of your brand to consumers is higher than ever. If this isn’t actioned soon, consumers will be pushed to paid channels reducing the opportunity to advertise across one of the most powerful media channels.

Ellen Kelliher is group head of AV at Core Media

First published in Irish Marketing Journal (IMJ July/August 2018)© to order back issues please call 016611660

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