What’s the Deal with Video Advertising?

The typical Internet user experience with video advertising includes: abrupt interruptions of video streams by an irrelevant ad, or distracting sounds from brand ads playing alongside webpages. I think I can speak on behalf of most people when I say that video advertisements running on web sites are pretty annoying.

Nevertheless, brands spent almost $3 billion on online video advertising in 2012, and are on pace to triple that spending within five years. One brand believing in the hype is Kikkoman, the Japanese company known for its soy sauce. Kikkoman will be releasing a half-hour-long documentary online on December 23rd, telling the story of its 400-year-old brand history. Complete with an Academy Award nominated director. Why suddenly is there an interest in online videos when there are such negative connotations associated with them? Is Kikkoman wasting a very large amount of money trying to tell a story no one cares about?

This increase in online video ad spend is attributed to the trend of multiple screens becoming more prevalent in households. Multiple tablets, e-readers and smartphones can be found in each household, and many more people are using these devices to consume media and most importantly, to watch videos. Annoying or not: the most common forms of video advertising including video pre-roll, post-roll, overlay, and companion ads are very successful in reaching target audiences. According to ComScore, video ads in August this year delivered through these approaches and others reached over 50% of the total United States population an average of 61 times to each person. The ad agency Videology created an infographic that showed that over 67% of online video ad spending in the third quarter of 2012 was directed to entertainment and movie sites. This number will likely multiply as the number of users who watch content through multiple screens increases.

All of this spending and these positive statistics don’t tell the whole story. Users like myself do not enjoy the current experience with online video advertising, and are keener to ignore it, as I mentioned earlier. Brands are missing the fundamental point: people are simply more willing to watch videos online because of their devices, but do not want their lives to be interrupted by advertising they are not interested in.

Kikkoman’s documentary will not be played on websites alongside videos, or interrupt content—the documentary itself is the ad (albeit a long one!). What the brand is proving is that it understands these trends with devices and is creating an ad with the potential to go viral across all screens, including television. Kikkoman is trailblazing in what could be a new age of online video advertising, and brands should turn to Kikkoman’s example of understanding the market trends and delivering advertising online users would actually want to see. Only then will the spending on online video ads be justified and deliver results.

-Shaman Kothari

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