DIGITAL MEDIA

Video is the new killer application of the internet. The turning point came a year ago when YouTube began streaming morethan 100 million video streams eachday, demonstrating that consumers had both the bandwidth and willingness to digest short video clips through their personal computers.

But now advertisers are taking advantage of that faster bandwidth to create compelling campaigns that are more engaging than a static web experience. Online video is also further challenging the traditional advertising industry, providing alternative distribution channels to free-to-air and cable television.

First the web fragmented audiences by drawing their attention away from television. Now it looks set to fragment advertising budgets too.

The trend leaders are in the US, where marketing research group eMarketer predicts that by 2011, 86.6% of the internet population will be consuming online video, up from 62.8 % in 2006. That equates to a rise in actual viewers from 114 million to 183 million. While slower broadband speeds mean that Australia lags behind that level of penetration, the pattern will inevitably be replicated.

It’s a trend that advertisers cannot ignore. By 2011 eMarketer predicts that $US1 in every $US10 spent on online advertising will be spent on video. The total US spend on video advertising in the US in 2006 was estimated at $US410 million, an increase of 82.2 % over the previous year. That figure is expected to hit $US4.3 billion by 2010.

There is evidence that video advertising is also more effective than other online forms. A survey published by ad serving company DoubleClick found that users tend to click the ’play’ button on online video advertisements roughly twice as often as they will click an online ad image, with a click-through rate of 0.32%. They will most commonly play videos for 30-seconds.

Jamie Silver, co-founder of the digital marketing consultancy Clear Blue Day, says work done by his company on video advertising for the Big Brother website in 2006 showed click-through rates of between 2% and 4% – a rate that he believes can be maintained across future campaigns. When combined with the internet’s capabilities to segment and target consumers, he believes online video will pave the way for advertisers who have not yet transferred significant spending to the internet.

“FMCG companies are never going to be running search campaigns or banners,” Silver says.

“Video advertising is actually going to help a lot of those brands make the transition to online because that’s the medium that they best know and the one that’s most appropriate for them.”

Australian publishers, including News Limited, Ninemsn, Yahoo!7 and Fairfax have all been working to increase the amount of video used on their sites, both through replaying content that has already been broadcast on free-to-air television and creating entirely new content – some of it generated by consumers. There are economic reasons for increasing the mix.

According to Kevin Anderson, the head of blogging at the UK newspaper The Guardian, who last month visited Melbourne to speak at the X Media Labs conference, video plays a big part in the publisher’s online strategy.

“We actually find video and audio to be easier to sell to advertisers,” Anderson says. “They’re willing to pay and I think that if you look at the increase in online video ad spend, it’s massive.”

The commercial director at ninemsn, Jason Scott, says video is a natural evolution for online – just as people adapted to radio with pictures, in the case of TV. To date, he says advertisers have predominantly been placing existing TVCs online, extending their reach both geographically and in the times that people are likely to see them. Of course, the fact that compared to the cost of putting a TVC onto mainstream television, online video advertising is cheap also helps.

The future is more likely to see creative agencies producing TV-type advertising that is purpose-built for internet distribution.

While some creatives might breathe a sigh of relief that they can fall back on the skills honed making TVCs, the rules are not the same.

Apart from basic lessons such as increasing the size of any text in the advertisement to counteract the smaller screen, Scott says an advertiser must take into the account the interactivity of the medium, and the ability to instruct the audience on what to do next.

“You will see pull-through but we are just seeing the start of what these guys will do here,” Scott says. “Most publishers are excited about online video because you can speak to three different segments of the market without alienating any of them.”

According to Ian Gardiner, the managing director at online video services company Viocorp, online video creates a more immersive experience for visitors, a fact that numerous sporting organisations in particular have become aware of.

Viocorp for instance has been engaged by rugby league team the South Sydney Rabbitohs to create South Sydney Football Club TV on its website, featuring video clips relating to activity at the club.

“The reason to put it up was to get their fans more engaged with what they were doing and to give the fans more of what they want,” Gardiner says. “We’re still having to educate though and we still see a lot of our role for the next 18 months to do a lot of education.”

Indeed, there are still many questions to be worked out when it comes to applying that to an advertising model. Robbie Hills, MD of search specialist 24/7 Real Media, says consistency and agreement within the industry on formats and models will be needed before online video advertising booms in Australia, but then so too is greater creativity. “Cutting down a 30-second TVC into a 10 sec pre-roll does not a good user experience make,” Hills says.

“Agencies and advertisers need to embrace original concepts in order to engage with the user, otherwise users are going to click on something else, or get pissed off and not stay around to look at the content they requested to look at in the first place.”

The video advertising bug has so far only bitten a small number of online advertisers in Australia.

According to Neil Ackland, the sales and marketing director at Sound Alliance (operators of the Inthemix dance music website), advertisers remain more interested in the quality of the audience rather than the delivery method of the advertising message.

“There's not huge amounts of interest specifically in running video ads as pre or post-rolls in video content,” Ackland says. “We have run several campaigns, usually for movies, where the trailer runs inside a 300x250 ad unit.

“These are relatively successful for advertisers, but our community users tend to react negatively to them as they impact on the consumer experience.

“We will implement video ads as and when the demand is there. Our model will remain focused on dedicated sponsors for the time being.”

However, one company in Australia that has embraced online video is Toyota, which has been working in conjunction with Sydney-based interactive agency HotHouse.

The company has featured live web streams of vehicle unveilings from Australian motor shows, and ventured into lifestyle-related content, such as broadcasting ski updates from Thredbo every few days as part of its Summit Club sponsorship.

The company has also posted out-takes and behind-the-scenes footage from its Toyota AFL Legendary Moments television commercials.

According to Toyota’s interactive manager, Hayley Browne, it is not good enough to simply upload commercials to the website.

“Consumers expect more now,” Browne says.

“People surf the net while they watch TV looking for more information than the TVC itself provided.

“They want to engage with the brand and also to get involved and have their own say.”

The rewards are tangible. The webcast of the global unveiling of the Toyota Aurian from the Melbourne International Motorshow generated more than 11,000 views on launch day and a total of almost 30,000 views overall.

Toyota may be at the leading edge of a movement for brands to bring more video online. According to the director of strategy and creative at the web agency Hyro, Megan Hales, her company is discussing video with most of its major clients. She says the energy drink company Red Bull has been particularly active, using the online channel to repurpose video content that might have otherwise received limited exposure.

In one instance Hyro was able to repurpose documentary footage taken of Red Bull‘s Tai Fu challenge (which drew surfers from all around the world to Japan to surf one of the world’s biggest breaks, which only occurs during the typhoon season), creating a website with average consumer dwell times of more than 15-minutes.

“Often a lot of the broadcast assets that they create through their sporting sponsorship are things that get broadcast on free-to-air, so it was a first for them in this market to look at online,” Hales says.

“It was a fantastic 360-degree campaign, using online as the predominant channel for delivering the video assets they had created.

“With the breadth of content they produce through their sponsorship activity, they can start broadcasting it and delivering to a much broader audience because of the cost effectiveness of digital channels. Ithink it’s the natural progression of online channels turning into broad-cast channels.”

Hales says Hyro has now worked with a range of clients on online video initiatives, including for EA Games’ Sims 2 Pets computer game. This promotion asked consumers to video their own pets and send in the footage, in the hope that their animal would be included in the game’s subsequent expansion pack.

Hales says advertisers need to consider the social qualities of online video content if it is to attain maximum exposure through viral effects.

“There has to be enough social currency in it for anyone to refer it,” Hales says. “The big idea has to be better and better, because brands are also competing with consumers. But if you get it right, it is a phenomenal platform to get your brand out there. The key is making it as portable as possible so you can put it in the hands of consumers and they can move it around on your behalf.”

The technology behind video advertising is also evolving quickly, providing more options to advertisers for both placing advertisements and tracking consumer response.

Clear Light Digital’s Silver says the company has come a long way from inserting clickable advertising into live streams from the Big Brother house in 2006. It has begun experimenting with placing hot spots into video ads, enabling consumers to click on different parts of the ad and be taken to the correct part of the advertiser’s website.

“We’re also experimenting with putting hot-spots directly into the content so you can have product placement,” Silver says.

“Say it’s a can of Coke – you can actually click on that in the content and go through to a site.

“So I think we will see a lot more of them merging what’s advertising and what’s content.”

Clear Light Digital has also partnered with the Israeli company HIRO Mediato use its technology to dynamically alter advertisements each time they are played.

But adding video to a company’s website does not need to be complexor expensive.

YouTube has lowered the expectations of consumers in terms of image and production quality, allowing online videographers to apply a less-professional finish than would be allowed on TV.

Hence online video is enabling companies that could never have afforded a decent run of TVCs toconsider spreading their word through online video.

Online video services company BizTube edits hosts and streams videos for websites and email campaigns and claims it is able to create a 90-second video with music and voiceover for between $1200 and $1500.

“Once we tell them the price, all of a sudden they are interested in talking,” says BizTube director David van Leeuwen.

“We’ve had to keep simplifying our message to get people to realise that it is out there for the common man.”

Van Leeuwen says the service is ideal for creating snapshots of a company’s offering, allowing them to show customers things that would be much more difficult to explain with text alone.

“You’ve got three to seven seconds to get people’s attention online, and you need video for that,” he says.

“It’s not about trying to replicate a corporate branding message.

“This is about getting impact in three to seven seconds, and then dumping it in three months and starting again.”

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