Media Forum: Are online video ads failing?

Deloitte research shows their impact lags behind TV.

Like a young prizefighter new to the game, the online advertising industry is looking for that first knockout punch, according to new research from the auditor Deloitte.

In research released by the company last week, respondents were asked to name three types of advertising they thought had the greatest impact on them personally.

Online video was mentioned by only 3 per cent, behind banner ads (4 per cent) and cinema (5 per cent), but ahead of iPhone/iPad/iPod touch ads within apps (1 per cent). That old slugger, TV advertising, was judged to have the greatest impact by 56 per cent of people, followed by newspapers (30 per cent). Online video was even knocked to the canvas by the 26 per cent who replied "none of them".

The compilers of the report suggested that online video advertising struggles to build a brand connection with consumers. James Bates, the Deloitte media partner, says: "Online advertising's poor showing relative to TV may surprise, given that the former has been portrayed as TV's nemesis. What TV does best - display and brand building - is what online struggles with."

But will this relatively poor showing encourage the industry to beat the count, or throw in the towel? If industry predictions are anything to go by, the fight is still on.

Bruce Daisley, the sales leader at YouTube, clearly has some interest in the report's findings and says he is sceptical about what they tell us: "The best way to assess online video is by whether it works. Anything in advertising works best when it captures people's attention and engages their emotions and I'd argue that's exactly what online video does extremely well.

"For instance, recently we've been working with GfK to measure how online video drives sales - and that's given us dozens of case studies that show the return of online video is better than both print and TV, so it contradicts this research."

He adds that YouTube's new "promoted videos" format is also working for advertisers: "We've found that as soon as an advertiser does have viewers actively choosing to watch their content, the impact on sales is phenomenal and that's set to continue. I think advertisers are really starting to get it - sectors such as the car industry are radically moving into online video because they're seeing that online video is achieving serious results with their customers."

However, there may be creative issues in developing the use of online video. Paul Banham, the digital creative director at JWT, says: "Online video is still a relatively new media format and thus I believe to be far from fully evolved. In fact, almost all online ad formats are in a constant state of evolution and the rules vary considerably from one site to the next in terms of what advertisers can or can't do."

He adds: "If you take the humble banner as an example, you may remember that over the past decade, the format has stayed roughly the same, but what creatives or advertisers could do with it has changed on a yearly basis. The advent of broadband tripled the standard file size allowance and made it possible (if you were willing to pay) to actually load and stream video for the first time. And today, the banner is still going strong but through what we call user-initiated rich media." Alan Brydon, the head of trading at MPG Media Contacts, agrees with Banham that advertisers' use of online video will grow more sophisticated: "I think that the low figure for online video versus TV has more to do with the lifestage of the medium than it has to do with any reflection on genuine effectiveness. Online video isn't even in its infancy, really. To my mind, it really isn't so much of a surprise that a medium that is so much in its infancy doesn't perform as well as the established medium of TV."

Brydon concludes that online video is punching its weight in cost terms: "Obviously, impact is important, but in the real world of client budgets, and deploying client budgets, the cost-effectiveness of that media is also important, because otherwise we'd never use any medium that is defined as relatively small. With some platforms, at the right price, they are worthwhile."

Tom Dunn, the digital strategy director at Maxus, endorses that but argues the industry has a job to do in pushing online formats: "People in the real world are irritatingly ambivalent about differentiating between an ad that's on TV, the same ad that's shown as a pre-roll and one that's been uploaded to YouTube. And that's before you consider online video that can't simply be categorised as an ad because it can be user-generated, viral or branded content."

NO - Bruce Daisley, sales leader, YouTube

"Pre-rolls tend to be short-break ads before personally chosen content, so I would argue that this is about as high attention as an advertiser can buy."

YouTube has also been achieving amazing results with a new format called 'Promoted videos', where an advertiser can bid a few pence each time their video is viewed."

MAYBE - Paul Banham, digital creative director, JWT

"Online video ads aren't failing. What's failing is that there isn't yet a simple standard by which we've all agreed to place and view them. Pre-rolls might go the way of the overlay - at the moment they are (on some sites) far too intrusive."

NO - Alan Brydon, head of trading, MPG Media Contacts

"We, and I bet every agency in town, have a series of client case studies to prove that it's not failing. It is no surprise that a new media property like online video is not having as much impact on a given thousand people as something like TV."

NO - Tom Dunn, digital strategy director, Maxus

"The industry is making huge strides in terms of developing formats, technology, media placements and buying models. It's up to the planners, buyers and creatives to make the most of these opportunities, and promote them to the wider world."

- Got a view? E-mail us at campaign@haymarket.com.

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