It’s well now established by numerous studies that online video is increasingly popular with consumers. Burst Media is the latest to show that online video viewing is on the rise.
Although the evidence is somewhat mixed, it’s also starting to become clear that that consumers are ambivalent about or even hostile to efforts to monetize video with in-stream advertising. According to Burst:
Advertising placement in online video is not met with overwhelming consumer approval. In fact, three quarters (78.4%) of respondents say in-stream advertisements in online video are intrusive – and one-half (50.4%) say advertisements in video content disrupts their web surfing experience. Women are more likely than men to say advertisements in video content disrupt their web surfing experience, 53.1% versus 48.1%.
Among respondents, one-half (50.7%) stop watching an online video once they encounter an in-stream advertisement. Two out of five (43.2%) respondents stay to watch the ad and remaining video content. Respondents 18-24 years are the most tolerant of advertisements included in online video. Among this segment over one-half (57.6%) will watch an advertisement in an online video and continue to watch the content.
Ominously, 15.3% of respondents immediately leave the website once they encounter an in-stream advertisement. Additionally, half (49.7%) of respondents say the presence of in-stream advertising in online video content makes them less likely to view other video content they may encounter online.
Interestingly, Burst also said that the segment with the greatest ad tolerance (respondents 18-24) was also one of the segments with the lowest ad recall:
[T]he lowest level of recall are the youngest (18-24 years) and the oldest (65 years and older) respondents.
When people are looking for specific types of content, response rates to video advertising can be effective. The Kelsey Group and several others have found good response rates to video ads. As I said, however, the evidence is generally mixed. Indeed, in a fairly strange and anomalous finding, the OPA sang the praises of the 30 second online ad as driving the best recall. That may well be true for some viewers but it will also drive abandonment among many, as the Burst data suggest.
Stepping back, these data are interesting to me because they illustrate clearly how TV faces the same issues that newspapers and print yellow pages do. As audiences move online or otherwise fragment, content is being made available on the Internet. I’m not saying anything terribly new when I point out content can’t be monetized in the same way (or at pricing levels) as in the traditional medium. So potential revenues lost in the traditional medium cannot be duplicated or replaced 1:1 in the online version of the medium.
It’s a fascinating and difficult problem for traditional media and content producers.
Screenwerk 
January 24, 2008 at 3:30 pm
News flash! Users don’t like ads!
I’m in the process of reading Seth Godin’s Permission Marketing and what he says is so true here. They’re interrupting us to show us ads we don’t want to watch – there are better ways to market..
January 24, 2008 at 5:21 pm
Video ads will become mainstream among the small business, if the “ads” provides some informative values to any viewers.
Here is a local directory site (putlocal.com – http://www.putlocal.com) that I came across which incorporate this ‘micro-mercial” concept – a local viewers would consider this as informative and provide small business owners another channel for their local advertising needs.
January 24, 2008 at 5:53 pm
Yes, these sorts of ads are potentially quite different because they are presented in the context of a “directional” lookup/search. In other words, someone is looking for that category of business and a video offers more information. That’s quite different from the interruption, tv-style ads that Burst is talking about.
February 9, 2008 at 2:55 pm
[…] continue to grow as a feature of the consumer experience and as an advertising vehicle. The right ad model has yet to be found for video, except in the local context, where the content and the ad are one and the […]