Media agencies routinely recommend that advertisers invest up to 15 percent of their TV budgets in online video content. Simon Cross, Client and Product Development Director at Ebiquity, gives the inside track on everything advertisers should know about online video, and urges them to ask probing and challenging questions of their media agencies when and if they suggest using it.
The world is changing how it accesses video content, with more and more consumers taking control of when, where, and how they obtain films, TV programs, and user-generated content (UGC). Drivers of this revolution in viewing include:
– Rapid spread of cheap broadband and 4G cellular connections
– Proliferation of always-on devices to which consumers can download and stream content, from laptops to smart TVs, tablets to smartphones Explosive popularity of UGC on platforms including YouTube, Facebook, and Vimeo
– Development and adoption of new distribution channels, from Netflix to Amazon Prime
We have truly entered the age of online video.
All major linear TV broadcasters have created online video services (which we’ve abbreviated to B-VOD, or Broadcaster Video On Demand for the purposes of this article), often also known as catch-up TV. Commercial stations offer advertisers the chance to reach viewers who choose to stream and download content on their platforms by advertising in B-VOD content. Social video sharing platforms (e.g., YouTube and Vimeo) are also offering advertising in video content, as are publishers (e.g., Sky and The Guardian), and we refer to this as social and publisher video (or S&P-VOD).
Our clients tell us that agencies typically recommend that at least 5 percent (and often 10 percent or more) of their TV budgets should be invested in online video. Our own data shows that 8.6 percent of UK TV budgets went to all types of video advertising in 2014. Broadcasters, platform owners, and media agencies say that advertising using B-VOD delivers incremental coverage (or reach) – to supplement linear TV audiences – and that this is, more often than not, the best reason to use it. In addition, it is said that B-VOD is particularly effective in providing targeted access to hard-to-reach, digitally savvy audiences, notably younger men.
“Our clients tell us that agencies typically recommend that at least 5 percent (and often 10 percent or more) of their TV budgets should be invested in online video.”
Latest figures from the UK’s Thinkbox Truth about Youth study suggest that 3 percent of all viewing in the UK is currently in the form of B-VOD. This figure is rising rapidly – albeit from a low starting point – particularly among harder-to-reach, younger consumers, where 7 percent of 16–24s’ viewing is
B-VOD. Broadcasters currently provide very little audience data about B-VOD to enable advertisers to assess ROI. S&P-VOD platforms do provide some viewing and impression numbers, but there are major gaps in the data about where and to whom ads are delivered and how viewable and viewed they really are.
In an increasingly fractured and fragmented, consumer-controlled market, advertisers naturally want effective and efficient ways to reach their audiences with commercial messages. As online video takes increasing audience and market share, advertising spend will inevitably follow consumer behavior.
However, we believe that there is currently little compelling evidence that advertising using B-VOD adds significant incremental reach above linear TV advertising campaigns.
Recent figures from the Internet Advertising Bureau (IAB) show that incremental reach of online video on linear TV campaigns is typically less than 0.5 percent. Moreover, our data shows that TV ratings delivered by online video are significantly more expensive than linear TV: typically between three and eight times the cost.
How linear TV and B-VOD build coverage
Linear TV’s cover build is typically described by a curve of diminishing returns. But the top – or flat – part of the curve only occurs when a significant proportion of the population has already seen the ad. So, if your linear TV budget hasn’t got you to that part of the curve, then the budget you planned for online video would be better spent on more linear TV. The online video activity, being a multiple of linear TV’s price per TV rating, couldn’t possibly buy as many cover points as incremental linear TV would.
The recent IAB report shows that between 80 and 90 percent of the online video audience bought typically generates frequency rather than incremental coverage, at a multiple of the price of linear TV. The best case cited was for an FMCG beverage alcohol brand, targeting 16–34s, where coverage added by B-VOD to linear TV was just 1.33%. But linear TV coverage in that instance finished at a point on the curve where it was still building relatively quickly.
When we refer back to the data we have about time spent on TV versus online video by the same demographics and age-breaks, we find that older cohorts spend least time on online video and most time on linear TV. So for brands targeting age-defined audiences of 45+, there is little need currently for advertisers to consider online video at all in cover-build terms. Moreover, brand owners need to be aware that media agencies typically make significantly more revenue from inducing their clients to buy online video – as digital inventory – than they do from linear TV.
“Brand owners need to be aware that media agencies typically make significantly more revenue from inducing their clients to buy online video.”
So the notion that online video is invaluable for building coverage when the audience is defined in socio-demographic or age- break terms is, at best, spurious. Where online video has the potential to target in a genuinely exciting way is in behavioral terms, as ‘standard’ digital display can. This is where the audience isn’t defined by age or class, but their behavior online (viewing, purchasing, etc.), and third- party data is enriching the buy. But even when the brand is buying that way, it is too often in the dark about vital placement information.
What marketers should do
We believe that there is no justification for a blanket allocation of a fixed percentage of TV budgets to online video, particularly for mass- market products with an established presence on linear TV. The apparent accountability and data promised by digital media advertising has not yet been delivered for online video – particularly B-VOD.
As a condition of spending money in online video, advertisers should demand increased transparency from both their media agencies and broadcasters (see sidebar) so that they have the same degree of accountability and depth of data that they are provided with for linear TV. Much of it could and should be provided routinely. It just isn’t.
Moreover, both broadcasters and media agencies should follow the lead – taken by S&P-VOD platforms including YouTube and independent players such as Tubemogul – and provide advertisers with more complete data about where, when, and to whom ads are delivered via B-VOD. This would allow advertisers to make properly informed decisions about how much of their total advertising budget they should divert into online video as a whole.
TEN QUESTIONS EVERY ADVERTISER SHOULD ASK THEIR MEDIA AGENCY ABOUT ONLINE VIDEO
- Fundamentally, is online video right for my brand/ category/target audience?
- What does the ‘online video’ (or VOD) line on my media budget represent and what’s the detail of the plan you’re recommending to us for online video?
- What’s the split between social and publisher online video (e.g., YouTube) and broadcaster online video (e.g., ITV Player, catch-up TV)?
- Where will my online video ads actually appear, in terms of TV channels, programs, and sites?
- What audience are we really delivering with online video?
- How does the online video plan you’re recommending deliver incremental reach?
- Does my online video plan mirror or complement my linear TV plan?
- Can we monitor whether our ads are good quality placements and seen by real people?
- Is my online video creative designed to mirror TV or tell a different story? Is it intended to deliver (additional) reach, or virality and engagement?
- What are the completion rates for our ads served on online video? What proportion of them are seen through to the end? What proportion are skipped as soon as they can be?