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Making Money: Pre-Roll, Post-Roll and the Ads In Between


By Deborah Nason

Online video is a growing presence on newspapers sites – that much is clear. What’s less clear for newspaper companies is how to leverage this new medium to increase revenue.

Recent growth statistics show that organizations are indeed on the path to developing successful revenue models. According to a 2008 Borrell Associates local online revenue survey, which studied more than 3,000 local Web operations, video is the fastest growing segment of local online advertising. The video advertising category generated $363 million in 2007 for local sites, and local online advertisers are expected to spend $1.2 billion in 2008 (nearly a four-fold increase). The potential for growth in this category for newspaper Web sites is considerable, as video ads currently only comprise four percent of all online advertising, according to eMarketer.

The Borrell survey also found newspaper-owned Web sites are early adopters, with a 26 percent share of all local online video advertising – more than any other local competitor. Approximately half of newspapers that responded to the Borrell Associates survey are selling video-related advertising.

“Online newspapers have a favorable demographic profile,” says Greg Sterling, an Internet analyst who follows traditional media responses to online opportunities and competition for Sterling Market Intelligence. “They provide a locally targeted audience; therefore, lots of advertisers are interested, especially brand marketers for promoting awareness.” 


The Borrell survey also found newspaper-owned Web sites are early adopters, with a 26 percent share of all local online video advertising – more than any other local competitor.




Video-related advertising can be very effective when used properly, according to the Online Publishers Association’s 2007 report, “Frames of Reference: Online Video Advertising, Content and Consumer Behavior.” OPA surveyed more than 1,400 online video viewers to video content and advertising and analyzed factors such as awareness and brand consideration. More than half (56 percent) of survey respondents said they “prefer” that online video advertising be related to the video content.

In addition, OPA reported, “Of the 80 percent of viewers who have watched a video ad online, 52 percent have taken some sort of action: visiting a Web site (31 percent), searching for more info (22 percent), going into a store (15 percent), or actually making a purchase (12 percent).

Challenges
But achieving appropriate scale with video ads can be a challenge, says David Hallerman, senior analyst at eMarketer. “The question is: How can advertisers hit enough audience to make it worthwhile to advertise online?”

Recent growth in advertising networks that reach across multiple sites addresses the challenge, says Hallerman. Some ad networks, such as newspaper ad network quadrantONE and Yahoo’s AMP!, have the capability to sell video advertising across sites. In addition, several ad networks are dedicated to selling ads into video applications across sites, such as BrightRoll, BrightCove and Video Egg. Hallerman says these ad networks allow advertisements to reach a large audience with a single buy.

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Another challenge is how to sell video advertising. “[Newspapers are] giving a lot away on the Internet,” says Kelly McBride, Poynter Institute faculty member. “Most video sales are part of a package [bundled with print ads]; therefore, some think we’re underselling the Internet. And our sales forces are not trained to sell to the Internet.”

But things are changing as newspaper companies hire more advertising representatives specially trained in Web sales. “Pursuing non-traditional advertisers is becoming the route to growth. The number of locally-based online-only salespeople grew 26 percent in 2006. Budgeted figures for 2007 anticipate an additional 35 percent increase in hiring this year,” according to a Borrell Associates report, “What Local Media Web Sites Earn: 2007 Survey.”

Early indications suggest a healthy demand from local advertisers for video classifieds and video business directories.


Setting up online video advertising basically follows the same principle as any other form of interactive ad, says Lieb. The extra step is working with a technical vendor to actually set up the ads.




Stakeholders
From the vendors to the newspaper Web site, there are there are many players in the online video advertising landscape. Rebecca Lieb, editorial consultant for interactive marketing portal ClickZ, provides an overview of the major stakeholders:

  • Vendors are the companies that build the applications to deliver ads; examples include companies such as iWonder, Maven Networks, and Eyeblaster.
  • Ad networks serve the ads, bridging the gap between advertisers and newspapers; examples are Doubleclick (owned by Google) and Advertising.com (owned by AOL); “The newspaper’s ad department can put up ads or an ad network can do it,” explains Lieb.
  • Advertising agency personnel play various roles in online video advertising:
    • Creating and adapting the ad content for the Web
    • Planning advertising strategy and execution
    • Media placement and purchasing
  • Advertisers are migrating to the Web, “particularly if they have a strong story to tell,” says Lieb.
  • Newspaper players involved with video ads include:
    • Ad sales departments
    • In-house Web developers
    • In-house traffic departments

Setting up online video advertising basically follows the same principle as any other form of interactive ad, says Lieb. The extra step is working with a technical vendor to actually set up the ads.


Revenue Options
Out of the inventive chaos that is online video advertising, two major revenue options are emerging: in-stream advertising and long-form videos. Revenue from video syndication, a smaller revenue option, has also entered the scene.

Instream Advertising
The Interactive Advertising Bureau defines in-stream advertising, in its 2008 report “A Digital Advertising Overview, as advertising that is “generally played or viewed from a video player like a client browser, often accompanied by companion ad products tied to core video products (text, banners, rich media, video player skins).”

In-stream advertising may take two forms: linear video ads and non-linear video ads.

Linear Ads
Linear ads include pre-roll, post-roll and mid-roll ads that are common on newspaper Web sites. The 2008 NAA Online Video Survey found pre-roll (ads that run before a video plays) are the most popular video ad format among newspapers that are selling video advertising.

Pre-roll examples: Example 1, Example 2

Linear Ads
IAB defines a linear video ad as one that is “presented before, in the middle of, or after the video content is consumed by the user, in very much the same way a TV commercial can play before, during or after the chosen program. One of the key characteristics of a linear video ad is that the user watches the ad instead of the content as the ad takes over the full view of the video.”

Although linear video ads such as pre-roll are common, their effectiveness is open to debate.

Advertising network DoubleClick’s 2007 study, “Video Ad Benchmarks: Average Campaign Performance Metrics,” noted several positives about in-stream ads, saying:

  • A healthy portion of exposed audiences interact with video ads. On average, 8 percent of video ads generate a user interaction.
  • Video click rates are far higher than image format ads. Users click on video ads about five times as often as they do on image ads.

Best practices for linear video ads
The Online Publishers Association suggests the following best practices for video advertising in its early 2007 “Frames of Reference” report:

To Drive Breakthrough (awareness): Use pre-roll, use companion ads, and 15- and 30-second ads both work well.

To Change People’s Opinion (likability): Use 30-second ads, and note that re-purposed ads and original ads are equally effective.

To Persuade People (consideration): Use 30-second ads, and use adjacency ads “that is itself likable and relevant to leverage the halo effect.”

Proceed with Caution
Conversely, a January 2008 BurstMedia newsletter (“Online Insights”) reported that although 54 percent of consumers remember seeing in-stream ads in online video, most stop watching video content if an ad appears. Worse, “half (49.7 percent) of respondents say the presence of in-stream advertising in online video content makes them less likely to view other video content they may encounter online.”

Although pre-roll ads can work well – especially when they are paired with a display ad outside the video player, OPA reported – newspaper executives have reported to NAA that many viewers will abandon a video if the ad preceding the main content is too long, “Though, it's tolerated when in front of professionally created content of known quality,” according to ClickZ Network’s Ian Schafer. Some newspapers, such as the Miami Herald, are limiting the length of pre-roll ads to just 15 seconds.

Lieb says another challenge of pre-roll ads is frequency, as people get tired of seeing the same ads repeatedly.

Sterling noted, “There’s a whole debate about pre-roll efficacy. People don’t want to see [video ad] content unless it’s relevant to them in behavioral, locational, or other ways.”

Post-roll ads, those that run after the main video content, are much less common on newspaper video, according to NAA’s survey. Less than 10 percent of newspapers that responded to the survey reported selling post-roll advertising.

Before Google bought YouTube in 2006 and introduced overlay ads in 2007, Google Video opted against pre-roll advertising. Instead, some Google Videos featured branding above the video and 15-second post-roll ads, according to ClickZ.

Post-roll ads do not have to be especially brief, but they need to be compelling, as many people stop viewing videos before or as soon as the main content ends. Post-roll ads are generally sold at cheaper rates than pre-roll, mid-roll or overlay ads, which may be a reflection of post-roll ads tendency to provide fewer results, advertising executives say.

For linear ads, IAB recommends, “The ratio of ad-to-content length should stay below 25% (i.e. for every 4 minutes of content consumed no more than 1 minute of ad material). It is recommended that frequency capping practices be employed.”

Non-Linear Ads
Non-linear video ads are “parallel to the video content so the users see the ad while viewing the video content.”

Overlay: Example

Video skin/adjacency: Example

Non-Linear Ads
A non-linear video ad “runs parallel to the video content so the users see the ad while viewing the video content. Non-linear video ads can be delivered as text, graphical ads or as video overlays,” according to the IAB. Some newspapers are playing with skins as well, which are customizable video players that have room for advertising next to the play button, for example.

Non-linear ads are getting a boost from Google. Select videos on YouTube have overlay ads through the InVideo ad program, and Google introduced AdSense for Video in February 2008. AdSense for Video “[offers] advertisers a choice between video or text ads that will be overlaid on a small portion of the video viewer,” for a short period while the video plays, The New York Times reported. Clicking on the ad automatically pauses the main video content, which resumes when the ad closes.

(See the IAB Online Video Advertising Guidelines.)

Less than 10 percent of newspapers that responded to NAA’s online video survey reported accepting overlay ads. ClickZ’s Schafer in a 2007 article encouraged Web publishers to test this advertising format, and to be creative when doing so. “Note that this will require unique creative geared toward inciting a user response rather than relying on a passive view to make an impact,” Shafer wrote. That can mean using limited amounts of animation and phrases that spur action such as “Click here for an exclusive peek at…”

IAB recommends that overlay ads appear for five to 15 seconds during the video and cover up no more than one-fifth of the video.

Other options include video skins, or customized video players that have space for ads next to the video control panel, and in-text video ads. In-text video ads appear and start playing when a newspaper site visitor hovers over a linked word in the text of an article.

The NAA Online Video Survey found banner ads, adjacencies, and sponsorships connected to or displayed with video also are popular on newspaper Web sites.

Long-Form Video Ads
A number of newspaper companies are offering advertiser or local business video profiles as longer-form alternatives to pre-rolls or overlays.

“Long-form spots generally run one to two minutes and are similar to infomercials about an advertiser’s product or service. It is this portion of video advertising that will grow the most and is most accessible for local online salespeople,” according to the American Press Institute’s 2008 report, “Making the Leap Beyond ‘Newspaper Companies.’”

The report also says, “The longer-form “infomercial” format garners higher CPMs than 10- to 15-second pre-roll commercials, which are not the biggest drivers of online video advertising.”

“Advertisers like the [long-form video] format because they control the content,” says Gordon Borrell, CEO of Borrell Associates.

PQ Media’s Leo Kivijarv, vice president of research, agreed. “Consumer product goods companies were frustrated with pure-play and blogs because they couldn’t control what type of content their ads were placed next to.”

Placing advertiser profiles next to or inside relevant content – and selling them with relevant placement guarantees – may be the key to making these advertisements work. For example, some newspapers have found success selling remodeling business profiles into special online home improvement sections, according to the American Press Institute’s “Newspaper Next 2.0: Making the Leap Beyond ‘Newspaper Companies’.”

“Retail home improvement stores will use video to provide ‘how-to’ support. Many of these videos are provided by product manufacturers. Restaurants, hotels and other tourist-oriented businesses are prospects as well….Local high school and Little League sports, with video provided by citizens, attracts enthusiastic audiences and local sponsors in many markets,” according to API’s study.

API predicts another growth area will be in health care with videos to explain medical procedures. “A TV station in Texas is getting $50,000 per year for the online portion of 90-second health care vignettes that are aired on the evening news and archived on their site,” according to API’s report.“ Earlier this year, MediaNews Group launched a series of health-oriented sites with TauMed.

Elective surgery advertisers have embraced video ads, says Borrell, especially in the areas of Botox, hair replacement, and liposuction.

“These [long-form videos] are selling like hotcakes for online yellow pages,” says Borrell. Popular categories for these videos include health, home improvement, legal services, senior living, and automotive services. How-to videos are also attractive for advertisers whose products or services relate to the video content.

Video Classified Ads
Video classifieds advertisements, created by the newspaper or the advertiser, are growing quickly, bolstered by the major classified categories of employment real estate and automotive.

The Norwich (Conn.) Bulletin launched employment video ads about eight weeks ago, and advertiser response has been impressive, says advertising director Paul Provost. “The first three weeks, we sold 144, and it has been sustained growth since then. We were so successful, we were used as a national model.” A large widget linking to the videos appears on the paper’s home page.

The Dallas Morning News launched real estate video tours on the newspaper’s Web site in late 2007, selling more than 80 videos in a month. The newspaper won an NAA Digital Edge Award for the program. In the newspaper’s awards entry essay, Interactive Creative Director Karen Davis wrote, “Advertisers loved it and commented it was a great driver to get people out to the properties.”

Classified Video Ad Examples

Syndication and Other Models
A relatively new video-related income source is syndication revenue. The Associated Press announced the launch of a new feature for members of its Online Video Network, “enabling uploaded video to be shared with the rest of the network….Members will get a percentage of ad revenue if their video is played on another player in addition to a share of revenue if they add other members' videos to their players.”

In addition, the AP allows newspapers to sell local ads against the newspaper’s original videos that are in the AP’s video player. The AP and the newspaper share revenue.

Newspaper Web sites, as early video adopters with demographically desirable audiences, are well positioned to exploit video advertising. But they need to be open to new ways of thinking about advertising. “People are adopting television models, such as pre-roll ads and interstitials. However, nothing has been definitively worked out,” says media analyst Sterling.

In order to keep up with the fast-changing landscape of video advertising, newspaper Web sites should look to television, online yellow pages, and other online categories for examples of innovation.

The pent-up demand is huge, says Borrell. “A video commercial is the most cherished type of advertising among local businesses who couldn’t afford it before now. There’s a big potential for newspapers to get whole new segments of advertisers.”

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First Published:
May 7, 2008