Trouble in Videoland?

I’ve promoted the notion that video advertising for SMBs is a high value product that can replace some of the ad revenues lost to yellow pages as some advertisers reduce their traditional print spend. Demand for video advertising has been confirmed by a number of the providers such as TurnHere. In addition Mixpo shared data that showed good response rates and high levels of consumer engagement with online video.

Previously the Kelsey Group produced research that showed high levels of consumer response to online video (n=501). Kelsey also recently exposed data predicting that 26% of small businesses will adopt video advertising (broadly defined) in “the next 12 months.” (These findings were released in August before the market crash.)

In a study with AllBusiness.com in 2007 (follow up conducted this year, but not yet released), Opus Research (home of my Local Mobile Search program) found the following about the intended adoption of online video among SMBs:

Source: Opus Research/Allbusiness.com, August, 2007 (n=580 small businesses)

Asking about future intentions is a bit like asking about whether people intend to lose weight or give up smoking — there’s good will but it’s the behavior that counts.

So video is popular and widely perceived to be an effective marketing vehicle. But here comes some cold water . . .

iPerceptions, a customer analytics firm, collected data feedback from 14,000 visitors to a range of high-traffic media sites in August to measure consumer response to different kinds of online ad units and types. The study found that consumers are most likely to click on text ads (25% of respondents). Display ads follow: 20% of respondents were likely to click on right banners and 12% were likely to click on top banners.

The surprise of the study was that video ads were not very popular among most consumers: only 11% of consumers said they were likely to click on video ads. The consumers who seem to be engaged by video ads people under 25.

Specifically on video, the study found:

  • 11% of consumers are likely to click on video ads (vs. 25% on text ads)
  • Consumers under 25 are more likely to click on a video ad than other age groups
  • Nearly 40% of those likely to click on ads in general make less than $50K a year, while 15% make more than $150K.
  • The income gap is greatest among those who click on video ads, where 49% make less than $50K, and just 13% make more than $150K

This presents a somewhat unattractive picture, for advertisers, of the video-ad clicker-responder. Certainly I wouldn’t take this one study as evidence that video is ineffective. But it does raise concern and merits further investigation.

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11 Responses to “Trouble in Videoland?”

  1. murray roblin Says:

    I don’t have access to the data presented here, but I would ask what type of video ads are they measuring. We’ve noticed significant performance variations between types of video ads, e.g., instream, innerstream, … Video advertising is nascent and ad standards are very slowly evolving – finding the proper presentation and balance between irritating and tantalizing a consumer is still a work in progress.

  2. Greg Sterling Says:

    Don’t know much about the type of ads. Would love to hear more about your results.

  3. paul Says:

    13% of those under 25 make more than 150k. Right.

  4. mark Says:

    That is very interesting and I would agree with Murray that it would be important to know what type of video ad was measured. Other studies like the Forrester/Veoh study provide a very different view. http://www.reelseo.com/new-study-engaged-online-video-viewers-pay-attention-to-ads/

    Very interesting post. Thanks for sharing.

  5. Greg Sterling Says:

    Maybe the way I wrote it is misleading; the 13% who click on video ads, according to the study (and make 150K) are not under 25.

  6. Simon Says:

    Maybe this data refers to video ads that are more DR or big brand in nature. SMBs find more value in creating videos in a one-to-one video / mini-doc format over simply DR style spots or slide-shows with phone numbers/links on them. The importance of these subtle differences of ad creative shouldn’t be overlooked. Ultra lo-cost automated slide-show videos lacking creative thought for the end SMB are little more than a backlinking tool which is proven to yield poor lead lift. Video that is created with the intention of forming a one-to-one relationship between the customer and SMB is the difference between getting traffic and making the phone ring. Video created for the antsy web viewer needs to be personal to be effective. Ads created for the TV viewer and placed in linear and non-linear video ad buys don’t really work for most SMBs today. I imagine the data in this article points to the this. SMB Online video advertising is increasingly becoming a science that requires deep understanding of user segments/ behavior.

  7. Greg Sterling Says:

    I agree. We don’t know much about the ads themselves or the context in which they were presented — they’re probably not local ads in a local context. I bring it up merely to point out that there has been a flood of good news around video and this was contrary evidence pointing to more complexity in the market.

  8. Carey Says:

    On the consumer side, a lot of the hesitation in clicking is likely the unknown of what they will get or the perception it will be low value (low quality, little more than a slide show montage with pictures, or maybe too long) to the consumer. TV commercials are broadcast to us, and most consumers given the choice to play a commercial will probably opt out of it. We’ve definitely not yet cracked the code on a proper video format for local businesses that can be distributed to an ad network and generate demand and action in a consistent way.

    However, if I click on a text ad or banner which initially engages me, and video is there to support my movement through the purchase process, as additional content or highlighting my potential experience with the business, customer testimonials or other business information, it has show itself to be useful.

    We are definitely still in the early stages of video, as most of the products out there today are focused on an emotional or ego sale to the advertiser vs. providing strong evidence of value to the business. It is a fun challenge to undertake.

  9. Greg Sterling Says:

    Agree that there are many variables and lots of complexity.

  10. Links for 2008-10-23 [del.icio.us] | OMWE Magazine Says:

    […] Trouble in Videoland? « Screenwerk […]

  11. Every SMB Should Have Video « Screenwerk Says:

    […] the Kelsey Group has made bullish predictions about SMB online video ad spending — although as we’ll see later that revenues are a […]

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