Research backs up revenue potential of video advertising
Advertising Initiative Newsletter Blog | 29 March 2022
Hello again from London, UK.
In this newsletter, I want to talk about video advertising. What is the current state of the market? What types of video ads should we be thinking about when compiling a strategy? What are some of the leading news media companies doing in the space that we can learn from? I have some unique insights, exclusively for INMA members.
Also, while the war in the Ukraine rages on, I have some news from inside the advertising industry as to what it is doing to help industry colleagues caught up in the horror. A small but significant and positive step maybe.
Firstly, video advertising. Many media companies globally are taking the first steps into a video offering and what is seen to be a future revenue stream. Video advertising though can be complex and confusing. For many, it’s about two different forms, namely “instream” and “outstream” (I will explain more on this in a moment). But it also includes terminologies such as linear vs. non-linear, desktop vs. mobile, autoplay, companion ads, etc.
As I say, it can be confusing. So, let’s cut through all this and talk some plain English to help us all understand the space. And we can learn from a recent INMA Advertising Committee meeting, which was dedicated to this subject and what the committee members, from leading global media companies, state are the opportunities and pitfalls, as well as their own experiences.
How important are video ads as part of a digital offering?
The impact of online video is really interesting. I know of no other content format that has seen so much success in recent years.
Video is very much the immediate “go-to” medium for education, information, and entertainment for users globally. That is why media owners and marketers began using video for chiefly branding purposes. Video has even helped many brands in their decision-making.
Indeed, recent industry surveys have shown that 59% of decision-makers in the business world generally prefer video to written content. Similarly, a big 90% claim video has helped them decide on purchasing a product.
These figures show how effective video has become for developing an advertising strategy in today’s burgeoning digital world. And it doesn’t stop there. There are some more amazing inferences from Wyzowl in its annual State of Video Marketing survey, 2021 (see link below for full story under “Further Reading”):
Video remains a key priority for marketers with usage and spend both, overall, increasing in 2021 and plans to increase again in 2022.
People are watching more video online than ever before: The amount of online video they watch has almost doubled since 2018.
Marketers feel more positive about the return on investment offered by video than ever, as it continues to strongly influence traffic, leads, sales, and audience understanding.
Consumers continue to use video as an integral part of their journey with brands and are excited to see even more video content in the year ahead.
Out of all the types of videos available, so-called “instream” and “outstream” video ads have thus far proved to be the most effective at growing business. Consequently, advertisers are likely to continue investing in online video, and the data supports that.
The video ad market saw, for example, U.S. advertisers spending 39% of digital video ad budgets on native formats in 2020 (source: IAB). And as marketers continue to search for more creative ways to increase their ad revenue, video advertising tech is bound to keep developing, too.
At present, users consume most video content on their smartphones, but not all mobile video is the same. That is why we need to bring in specific factors to boost video ad performance.
The best way for media companies to monetise their video advertising is to use instream and outstream video ads. But in deciding which of these two is best, there are very specific differences between the two, which you need to understand.
What is instream video?
Instream ads are video ads that are played within a video. They can be at the beginning, middle, or at the end of a video (hence the terms pre-roll, mid-roll, and post-roll). They are non-linear, meaning that they can be played over the video.
Normally, these videos last between six seconds to a minute, and users are given the option to skip the ad after five seconds. Instream is still the most reliable and most used for placing video ads within relevant video contexts. The reason they are so powerful is that they get into the heart of the user’s video content. But, of course, you will still have to put in place an appropriate targeting strategy to make them convert.
What is outstream video?
Outstream videos are video ads that are played within the content of a Web page. These ads might suddenly “pop up” inside an app or automatically play, say, in a blog post when the user scrolls over them. (They will play for as long as the user has the video player in-frame). If the user continues to scroll, the ad will automatically stop.
So, what’s the difference between instream and outstream video?
It’s all about “placement.” Placement is the main difference between instream and outstream video ads. Instream ads will be placed within a video player on a Web site, typically the videos page and usually inside videos that are relevant to the product/subject matter. For example, we might place an instream video ad for a printing supplier on a page about the power of print.
Outstream ads, however, are not placed in videos. They are standalone/embedded, similar to a native ad into say a blog post or an article. These ads are also placed within content that is hugely relevant. For example, we might embed a printing supplier into a blog post about how print is still relevant in today’s digital world.
Outstream video ads are linear, meaning they occur as standalone ads within content.
Instream ads, though, don’t have to be linear. They can be used as “companion ads” that will pop up during the video but, importantly, do not interrupt it. Many instream ads like this can take up half the screen complete with a sidebar.
The pros and cons of instream vs outstream
There are a few downsides to instream ads, which should be kept in mind when building your strategy. Instream can be limiting. For example, instream only allows you to run ads on video channels you already have placed content onto. That can be a potential issue if your target audience isn’t using those channels … or you haven’t yet built an audience.
Outstream video ads, on the other hand, appear in non-video environments like editorial content, social feeds, etc. Outstream has a big advantage since it can deliver video ads practically anywhere. So, there are no real limits to where you can have ad placements, which you do have with instream. It is therefore a lot easier to reach relevant audiences based on surrounding content if using outstream ads.
Outstream ads also pause when the user scrolls past them and start again when the user scrolls back, so you don’t need to worry about wasted impressions.
Finally, the main thing you need to be concerned about is sorting your ad tech stack so it doesn’t disrupt or adversely affect the user experience.
What is best for your media company?
Instream and outstream video ads are creative and innovative video ad formats that will no doubt help build a decent revenue stream for media companies of all sizes. The reality is that you probably need both instream and outstream for maximum reach, impact, and ultimately revenue. However it’s really important to understand how they both work and the limits/potentials of each.
- What video marketers should know in 2022 (Wyzowl Research).
- The complete guide to online digital video advertising
- 3 reasons why video ads are the future of advertising.
Video advertising lessons from the field
As lead on the INMA Advertising Committee, I recently chaired a meeting on the subject of video advertising. Here are the key points that emerged from the committee members (who represent some of the world’s major media companies):
Which video strategy are you pursuing and what can you share about your experiences so far?
Latha Rao Cheney, senior vice president of sales, MediaNews Group, USA: Outstream. But beginning to work on instream, too. Certain verticals have done better than others. Healthcare, Education, 360 virtual tours. Why Instream? Convenience, feedback from editorial, number of ad units allowed on the page, viewability, page-load speeds. But primarily it’s about the user experience. Much is based on client analytics and what they require from us. We have focussed firstly on what we believe to be the low-hanging fruit.
Scott Tyner, vice president of revenue development and strategy at McClatchy, USA: There is a big demand there from advertisers. For us, it’s all about the user experience from the consumer point of view. However, finding enough inventory is the issue. There is not enough volume out there currently to sustain a strong enough advertising play against the available inventory. We’ve had vertical strategies around sports, travel, etc., where we’ve used live-streaming platforms, Facebook et al, more from a sponsorship angle, where we’ve been able to sell it differently. But it takes a lot of resources to build an audience base to make it scalable.
Partha Sinha, president, Times of India Group, India: We are a media company who have owned assets such as their own news TV company and streaming platforms. That makes things far easier. We are able to combine and bundle the whole thing … newspaper, Web site, streaming services, etc. We can be flexible regarding that bundling in terms of what’s included including video. We are structured a little differently due to our presence in other media. Clients are asking us for video. Virtual walk-throughs are becoming very popular. AR and AI, too. Very often we bundle all this with our print ads. Brand safety is a real subject. We always tell our customers that we operate a curated, trusted, brand safe video environment. At times we can charge a premium for that.
Pete Doucette, chief revenue officer, Philadelphia Inquirer, USA: Not a physical strategy at present. Too early for us. But we build video content around virtual events, and we are trying to figure out what a content model looks like presently. We have focused on outstream as we could get things up and running fairly quickly, and the user experience is good. We are using third parties where we could simply grab something off the shelf (and get going). So far, the CPMs are good, too, but scale is the issue for now.
Tracy Day, managing firector/sd products and innovation, The Globe and Mail, Canada: Not enough inventory at present. We do have our alliance partners globally: a number of key Web sites where we sell the Canadian inventory like The Guardian, Wall Street Journal, etc. This was set up about seven years ago to expand our network. We also work with the likes of Disney, ESPN, Hearst. We get video from them, but even with that, there is so much demand it sells out quickly. I know there are third-party softwares companies out there that, for example, take a news story and make videos out of photos, but that can sometimes not look great. But we are aware.”
And what about the future? What developments in video are you seeing or anticipating?
Tyner of McClatchy: “There is some interesting AI tech out there where we can use content consumption to start understanding reading behaviours. And then we can start to create video (for logged-on users) using AI, incorporating voice over tech. Things like that will continue to advance, with less reliance on newsroom reporters or the publishing side to produce content. Presently it all still feels quite clunky and obvious it’s been generated by a bot, but this will change. Also, we should look at the likes of TikTok and what they are doing with user-generated video content. There are some interesting developments there. Brand safety will be the issue though going forward to consider … content that doesn’t create legal issues. Finally, I would ask, could this be an opportunity for including video in our e-papers? Pre-, post- or mid-roll video. Is it food for thought? Dynamic opportunities should be available. It would give a much better user experience on e-papers. I guess it’s at least partly about what resources you want to put on to this area.
Rao Cheney of MediaNews Group: We also see a surge in programmatic video. There is a big opportunity to grow this.
Ad industry, others helping Ukranian colleagues
Also, this week, as the war continues to cause death and destruction in Ukraine, my attention was caught by some very worthy initiatives from within the advertising industry aimed at fellow advertising colleagues in the Ukraine who have suffered in relation to their jobs and job security.
Publicis, for example, says the group is in daily contact with every one of the 300+ colleagues based in Ukraine. They are providing security, accommodation, financial support, and helping them with visas and paperwork. Colleagues from neighbouring countries have been assisting as many cross borders into other countries, providing guidance, transport, and accommodation.
Havas Media Group has helped 41 of its employees relocate to neighbour countries, mainly Poland, Germany, and Latvia, and are committed to bringing as many to the UK as possible, funding their visa and relocation costs.
WPP is working with Ukrainian leaders to provide financial and well-being support and job opportunities to its Ukrainian employees who have expressed a wish to live and work in other countries.
Omnicom has helped 68 employees and their families reach safety through its supporting network in Ukraine’s neighbouring countries, namely Poland, Slovakia, Hungary, Romania, Czech Republic, Lithuania, Bulgaria, Latvia, and Estonia. Despite the adverse situation, they highlight that many employees have opted to remain in Kyiv and the focus has been on sending them supplies.
IPG says several of its agencies in Eastern Europe have opened their doors to anyone fleeing the crisis so they have a place to work.
The Advertising Association is helping boost The Polish National Association (SAR) by creating a job platform called AdAid.eu in conjunction with the Ukrainian National Association. The platform connects Ukrainian advertising professionals with employers from other EU countries. The main aim of the AA is to provide a central source of guidance to the ad industry about how it can help and gather the widest range of support that the industry is providing, including the latest fundraising efforts with brands, agencies, and media owners collaborating to raise funds for people in Ukraine.
The School of Marketing in the UK offers many training opportunities and apprenticeships that will allow Ukrainians to “up-skill” whilst claiming refugee status. That would mean any Ukrainians hoping to work in advertising and marketing don’t have to wait three years before they are eligible for funding, as with normal immigration rules, allowing them to start a job in advertising and up-skill within a few weeks of arriving to the UK.
The Hire for Ukraine site has more than 600 recruiters on the system and covers a range of industries, including and beyond advertising and marketing. It has seen over 1,000 people sign up looking for new roles. In the grand scheme of what is happening in Ukraine, this may be seen by some (cynics) as a drop in the ocean. But, every little bit helps. And this is a heartwarming tale on how the advertising industry is using its influence and responsibility to aid fellow ad professionals by offering a lifeline to its colleagues struck so harshly by this terrible war zone. Big applause.
Google and its employees are donating US$15 million in money and in-kind support to Ukraine. It will also donate US$5 million in advertising credits to “humanitarian and intergovernmental organisations” it considers trustworthy. Google also notes that YouTube channels from RT (formerly known as Russia Today) and Sputnik are now blocked across Europe. Russia’s state-funded media have had their monetisation options across all Google platforms frozen, and RT is banned from advertising entirely.
About this newsletter
Today’s newsletter is written by Mark Challinor, based in London and lead for the INMA Advertising Initiative. Mark will share research, case studies, and thought leadership on the topic of global news media advertising. Sign up for the newsletter here.
This newsletter is a public face of the Advertising Initiative by INMA, outlined here.
E-mail Mark at Inma.firstname.lastname@example.org with thoughts, suggestions, and questions or follow him on Twitter (@challinor).