Media: All about ... Online pre-roll advertising

YouTube's testing of pre-roll could be a win-win experience.

In recent weeks, ITV has been basking in a Susan Boyle-shaped glow, taking credit for the hype and publicity the frumpy singer has generated since her appearance on Britain's Got Talent.

However, it's well-documented that the broadcaster missed a trick in fully monetising her popularity online. Though the video clip of her singing attracted more than 150 million clicks, many through the Google-owned YouTube, there was no advertising around the clip.

That's a situation that is set to change following YouTube's announcement last week that it is to test, for the first time in the UK, pre-roll ads around content on its site provided by "professional" content providers including Channel 4, BBC Worldwide, National Geographic and ITN.

A win-win situation, perhaps, with both YouTube and the content providers potentially attracting greater amounts of revenue. That said, there are concerns around the introduction of pre-roll advertising, especially relating to the user experience.

It has become an area of great concern for advertisers, so much so that the trade body the Internet Advertising Bureau moved late last month to publish a new set of guidelines in an attempt to introduce standard formats and creative best practice into pre-roll and other forms of online video advertising.

There are also signs from media owners and major agency groups that they are working on enhancing existing pre-roll and other online video advertising formats. The Publicis media group VivaKi, for instance, has joined forces with leading content providers to work on new formats. And companies, which include the advertising format company InSkin Media, are developing ways to make pre-roll more interactive and integrated with content.

1. Pre-roll and other online video ad formats are potentially big business. However, they are yet to generate major revenues for content providers and site owners. Rich media and video formats account for just 0.4 per cent of total UK online spend of £3.3 billion, according to the recent IAB/PricewaterhouseCoopers/World Advertising Research Center report.

2. YouTube will hope that the potential for pre-roll advertising around content on its site will boost this figure significantly - something that Google urgently needs to do if it is to justify the $1.65 billion it paid to buy the business. In the UK, Warner Brothers, Match.com, Activision, Renault and Nissan will be the first advertisers to run pre-roll ads around content on YouTube. The test is being carefully controlled by YouTube and the participating content providers with the length of the pre-roll ads set at between 15 and 30 seconds. Channel 4 was the first content provider to participate in the trial, with an ad for the Warner Brothers film The Hangover running from last week.

3. Advertisers and their media agencies have been cautious about embracing pre-roll advertising due to concerns that it interferes with the user experience and that the format provides a relatively expensive cost per thousand. However, media owners are addressing this by arguing that video formats provide emotional engagement levels higher than those of other media and are now putting the emphasis on best practice when using the format. For instance, in recommending that advertisers create content that is not merely a repurposed TV ad in order to increase impact.

4. Agency groups, however, are focusing their efforts on developing online video for-mats that offer an alternative to pre-roll. VivaKi is developing a venture called The Pool which involves collaboration with online video content suppliers to develop other formats. The UK version of this project is still in its early stages, but, in the US, it has involved collaboration between VivaKi and the likes of CBS, AOL and Microsoft.

5. Specialists are springing up to capitalise on the growing popularity of online video content and to make pre-roll more sophisticated. One of these is InSkin Media, which has developed an interactive pre-roll format called i-roll, which allows users to pause the video they are watching and click on a wrap around frame, or "skin", to watch an interactive ad and other content. Sony Pictures is currently using the format through its agency Manning Gottlieb OMD to promote its film Terminator Salvation.

WHAT IT MEANS FOR ...

ADVERTISERS

- Online media owners and content providers claim that pre-roll formats around video content provide high levels of engagement and a chance for brands to associate themselves with unique content, especially with short-form clips on the likes of YouTube.

- However, there are concerns that pre-roll formats disrupt the user experience. This is refuted by those who are testing the format in the YouTube trial. Errol Baran, the head of future and digital media advertising at Channel 4, says: "We're always attempting to balance the revenue position with the user experience. Users are getting more and more used to clicking on video and as long as the ads aren't too frequent, they don't disrupt this engagement."

- Baran points to a recent Vodafone campaign on its own video-on-demand site as evidence that the pre-roll format is effective as well as emotionally engaging: it achieved a 6 per cent click-through rate.

CONTENT PROVIDERS

- Content owners such as Channel 4 and BBC Worldwide make extra revenue from pre-roll formats around content on their own sites. The YouTube tie-up provides the potential of extracting a revenue stream from short clips of their content on the site.

- This helps the content providers to monetise their content and, in theory at least, will lead to higher standards of content on the likes of YouTube.

- On the downside, critics argue that pre-roll can damage the user experience and is detrimental to media owners attempting to build online audiences.

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