McKinsey Q: Advertiser Demand for Video Inventory Outstrips Supply
According to the latest McKinsey Quarterly (reg req),
“Short-term mismatches between supply and demand appear greatest for the video ads that interrupt or precede online content, such as news clips. The inability of consumers to skip these ads and their use of sound and motion—proven tools for driving brand awareness among consumers—make online video highly attractive to marketers. According to many of the video suppliers we interviewed, very little unsold advertising capacity remains today. Assuming that marketers don’t increase the number of ads they place in each video stream, the maximum supply of video ads is currently about $600 million a year—far less than future demand, which we expect to reach $1.4 billion to $3.2 billion in 2007.”
“Video ads that interrupt or precede online content”? Does the supply shortage go away — and the market opportunity zip past $600MM — if You Tube starts selling pre-rolls? That’s an area I want to watch. Will the ad model for online videos follow the traditional online news model (pre-rolls and in-stream spots like you see in Diggnation or CNET videos), or the ads-only-at-the-end model currently used by Rocketboom, Ze Frank and Revver?
How about video ads inserted on blogs? We are running a number of them (mainly trailers for upcoming movies) on our blog network (with audio as an option to be activated by the user). They seem to be popular and work well.
There’s a great market for those as well. But feedback I’ve received from agency friends is that marketers will pay a greater premium for video ad within video content. Since the consumer is in “video-watching mode” already, the theory goes, that consumer will be more receptive to the advertiser’s video message.
Sure, plus the publisher can get away with dealng with the TV media agencies instead of the internet media agencies and get paid with TV-like fees instead of internet-like-CPM-rates.
Now, which is more effective really? I bet that reducing the annoyance-factor will be a key factor, and displaying the ads at the end as rocketbottom and others do or in a non interruptive way like on blogs might be a good way to do it.
I think your point about what happens when YouTube steps in is excellent. I read this post earlier and everytime I’ve seen discussion of the topic since I’ve thought of that point because it raises so many good questions.
Nice design, good graphical content. I think I’ll come back later again;)