Advertisers continue to spend a fraction of their online ad expenditure on video ads, even when millions of people watch online videos every day, but the business model for online video is starting to emerge. Editors are still seeking the most effective formats for online advertising.  

According to MediaShift, online video ads are "ready to bloom" thanks to:

-audience and ad inventory exploding on sites like Hulu or CNN Online
-standard advertising guidelines created by the Internet Advertising Bureau (IAB) that would unify advertisers
-Google allowing longer independent films on YouTube to increase professional quality of content and allowing video producers to sell their ads
-small and medium businesses (SMBs) began using video ads, thanks to online Yellow Pages, Google's AdSense and video production start-ups like PixelFish and TurnHere

Short one-minute videos, similar to TV ads and infomercials, may sometimes be more effective for small businesses that don't have the resources to produce their own video ads. Video production companies like TurnHere provide documentary type video profiles created by independent producers.  

PixelFish, a popular video production company, has had 20 % average revenue increase every month in 2008, according to John McIntyre, CEO.

Video ad formats: pre-roll or not?

Video ads are interesting for newspapers, according to Eric Janssen, online director of Memphis newspaper Commercial Appeal. His newspaper has used various advertising formats but he said "advertorial formats work better from a selling perspective."

Bur advertisers "cringe" at the thought of investing 10 % in online video ads, even though they spend "thousands of dollars into TV without any real way to measure the effectiveness."

Short clips tend to work better with "non-interruptive" interactive overlays while longer clips tend to work better with pre-rolls.

Steve Safran, senior vice president of media consultancy group AR & D's Media 2.0 division, said that "pre-roll is dying." He mentioned that "overlays are an improvement" since they target viewers based on what they watch. "The way to sell video is by the demographic, one viewer at a time," he said.

As internet revenue for newspapers grows and their Web-based audience increases, it seems strange that advertisers don't follow, especially during the current newspaper ad revenue crisis.

Source: MediaShift

See also:

Ad-blocking software may threaten $40-billion-a-year online ad industry
US: The troubled economics of online advertising