USA Video Trends video advertising summit

USA // Atlanta Boston Chicago Dallas Los Angeles New York San Francisco

Digital Video OverviewWhat Every Marketer Should Know

December 2008


Agenda

• Address the New Model

• Define the Options

• Understand the Audience

• Review the Video Content

• Results

• Implications & Best Practices


The New(er) Model: On-Demand


New Reality

Consumers have more control

We must move from exposure to ENGAGEMENT


Milestones: Game Changing Events in Online Video

5

5/05

Initial launch ofYahoo! Video

Relaunches in 2006 as a video-sharing site,

a la YouTube

iTunes 4.8 offers video

Users buzz about a thefuture possibility of a video-enabled iPod

Nielsen addsVOD to their ratings

6/05

The Slingbox allows you to watch your home TV

on any Internet-enabled device.

10/05 3/06 4/06 6/06

Apple sells TV showsfor $1.99 (ABC/Disney)

1,000,000 videos soldin first 12 days

YouTube limits video clips to 10 mins in order to combat

piracy. Users respond bybreaking episodic content

into segmented clips.

First ever non-traditionalplatform Emmy awarded

to Live 8 on AOL.

"This throws the shackles off of the definition of what

TV has been." –Tom O’Neil,author of book “The Emmys”

TiVo offers Internet videoservice, featuring content

from the NYT, NBA, and iVillage.

Web videocontent

migrates to TV


The Old Way of TV Distribution

CONTENT DISTRIBUTION DEVICE

2004 a. New Programsb. Syndication

a. Networks & Affiliatesb. Cable Networks & MSO

Fewer choices for contentScheduled

LinearDistributor-Centric

TV w/ DVR or VCR


The New Way… IP Delivered, On-Demand

2008

a. New Programsb. Syndicationc. Game Industryd. Movie Industrye. Music Industryf. General Publishersg. Consumer-generated

a. Online – iTunesb. Online – Aggregatorc. Online – ISP’sd. Mobilee. Networked distributionf. Wireless data systemg. Direct to consumer

CONTENT DISTRIBUTION DEVICE

a. TV w/ DVR b. Networked TV c. Computerd. Cell Phonee. PSPf. iPod

Unlimited content choiceMultiple distributors

On demandConsumer-Centric


The State of Television Today:

– While the average US household has 96.4 TV channel choices, the average viewer watches only 15.4*

– Ad clutter has increased

– Ratings have dropped

– Fewer than 10% of consumers say that television ads influence their purchase decisions** Source: *Nielsen Media Research, 2006

**Forrester Research, 2006

Jim Stengel, CMO, P&G:

“In 1965, 80% of 18-49 year-olds in the US could be reached with three 60-second TV spots. In 2002, it required 117 prime-time commercials to do the same.”


Multi-Platform Messaging

• The TV360 model surrounds consumers with your brand in two highly complementary environments

Television Provides:

Unparalleled reach

Broad scale

Deep inventory

One-way, multi-touch consumer relationship

Large screen, high-quality messaging

Viewer loyalty & engagement

Digital Video Adds:

Lean-forward environment

Direct link to brand, continuing consumer conversation

Uncluttered, yet limited inventory

One-to-one consumer relationship

Video + interactivity & custom creative elements

Real-time campaign performance, opportunity to track & optimize

Additional engagement—users virally sharing great content with friends

+


The US Ranking


Spend Projections


Defining the Digital Video Options


What is Digital Video?

• IP-delivered video content– Through the internet– Potentially compatible with a range of devices– On-demand– Degrees of interactivity

• Majority of online video made up of– In-stream Video– In-banner video


What is In-Stream Video?

• An online streaming video experience similar to linear TV models that can offer

• Pre-roll creative runs prior to user requested content

– Also available in mid-roll and post roll format

• Coupled with a companion ad unit (standard or rich media banner) that adds interactive functionality

• Commercial cannot be fast forwarded

• Sold on impressions, not GRPs

• Commercials run one per pod

15 OR 30 SECOND SPOT


What is In-Banner Video?

• Full motion video advertisement• Ad plays unobtrusively until clicked on/sound

enabled• Can use existing creative• Expandable viewing window• DR capabilities/clickable for more

information/retail locations/calls to action• Interstitial ads: Commercial video appears

in same browser window between web page loads


A Handy Reference


Advertising Examples


Advertising Examples


A Hyper-fragmented Video Landscape

19

Sources: ComScore 11/30/07 Press Release, Willvideoforfood.com

28% of the views come from YouTube

Only 50% of streams come from top 10 sites


In-Stream Video: Pros/Cons

Cons

• It’s still just a commercial

• Limited targeting (compared to other online tactics)

• Inventory is limited

• Costly CPMS

• 3rd party ad serving not always supported

• Video Ad length effectiveness not well understood

• Reporting discrepancies

• Online buying not similar to TV buying

• Many different video ad products available

• Different video player technologies

• Attribution of metrics and viewers

Pros

• Extends TV reach and ability to penetrate at-work audience

• Reaches captive audience awaiting desired content

• Like TV, delivers impact with sight, sound and motion

• Clutter free environment

• Allows for higher composition media buy (where available)

• Allows for interactivity via companion units

• Delivers measurable results


Marketing Opportunities

Industry Examples


Marketing Opportunities: Tiered Levels of Involvement

22

Like most other forms of advertising marketers can participate at varyinglevels within online video marketing

Low Involvement• “Traditional” advertising within Video Sites (i.e. banners, logo placement)• In-Video Overlays (small ad banner that pops up on bottom of video player while content plays)

Medium Involvement• Exclusive internet produced spots to be included in ad campaign or seeded within video sites• Includes pre-roll placement• Relevant or irreverent (viral) content is encouraged

High Involvement• Content creation– create content that lives in specific branded channels within top video destinations or within corporate website


Low Involvement

23

Adobe sponsored a featured channel produced by Metacafe, showcasing original video that honors the craft of filmmaking.Sponsorship includes call out on features section on homepage, logo sponsorship with in Director’s Cut Channel, co branded media throughout the site.

Adobe’s sponsors Metacafe’s Director’s Cut


Medium Involvement

24

Purchased pre-roll video inventory before quality video content on top sites which scored high among the target audiences and were contextually relevant

Furthered the broadband video experience by expanding PCH’s brand messages to an interactive companion banner that provided the user with valuable product information, games, coupons, etc.

Pfizer Consumer Healthcare


High Involvement

25

• A custom microsite was built for Schick Quattro for Women by Match.com in conjunction with Schick’s creative agency and Carat

•Match.com hired an actress and to play the role of ‘Juliette’ – a Dating Guide and filmed her giving tips (scripted in advance with Schick’s approval)

•The role of ‘Juliette’ in the Girls Guide to Dating microsite was to make navigating the site fun and to provide a human element throughout the microsite

•‘Juliette’ was present across the website and gave users Dating Advice, First Date Tips, and Tips on Relationships

•In addition to this, other videos were present such as: humorous dating scenarios with Juliette interjecting and providing advice

•In its first month, this site received 3.8MM hits

visit www.girlsguidetodating.com

Schick: Girl’s Guide to Dating


TV360(TV + Online)


TV360 | Benefits

• Incremental ReachAdding Online to a TV program delivers a whole

new set of highly engaged consumers

• Segmenting the FunnelTelevision’s broad reach fills the marketing funnel and Online’s targeting and interactivity push consumers through to purchase

• Enhanced ResultsAdding Online increases brand metrics lift by 15-45%

+


TV 360 | Example

Broadcast + .com + Streams + Syndication + PartnersVideo


Internet Dominates the Purchase Process


Understanding the AudienceWho’s watching this stuff anyway?


Broadband Users: Home(millions)

BB Access at Critical Mass


The Broadband Effect

• Time spent online increases dramatically for broadband users• Broadband users are much more likely to bank online, and to research

financial products and services online

Source: Knowledge Networks, Inc., MediaScan Fall 2002

10.7hours

BroadbandBroadbandDial-upDial-up

7.5hours

Time Spent Online

12.4hours

W25-54

7.6hours

W18-49

15.8hours

9.1hours

15.7hours

M25-54

8.1hours

M18-49


The Raw Numbers

33

Source: eMarketer, August 2007 “Online Video: Making Content Pay”

• 62% (114 MM) of Online Users are viewing online video

Over 40% watch online videos, at least, on a weekly basis

Currently, Men slightly outnumber Women, 71% to 64%

Viewers 28-34 are the most “active” online video viewers

Online video viewing has reached its tipping point

Expected to increase 86.6% (183MM) by 2011

24% watch several times a week

Young affluent men are the most frequent online video viewers

Popular activities include creating and posting content

$410 MM spent on US online video advertising in 2006 Reached 47% (88 MM) online video viewers


Internet Video Continues To Grow

Internet Users and Percent Who Stream

Source: comScore Video Metrix, April 2007, U.S. Audience


In-Stream Video Audience is Diverse too

Source: Arbitron/Edison Media research Internet and Multimedia 2005: the on-Demand Media Consumer


Viewing Frequency


Internet Video “Primetime” Is Actually Early Fringe

Average Number of Streamers – By Weekday Hour and Audience

Source: comScore Video Metrix, April 2007, U.S. Audience


Why They Watch


Consumer Tolerance

39

Overall consumers accept that advertising is a fair way for publishers to supplement costs and offer free content


Benchmarking: Consumers View 63%+ of a Video Ad Message

40

Source: DoubleClick Rich Media and Video (Klipmart) campaign benchmarks, 30 and 15 second ads only, June-Sept. 2006

Video View Time by Vertical for 30 sec & 15 sec videos

Vid

eo V

iew

Tim

e (

seco

nd

s)

18.5

21.419.1

9.8 10.3

Entertainment Consumer Overall

Video View Time 30 sec Video View Time 15 sec

Consumers watch on average 19 sec of a 30 sec video, and 10 sec of a 15 sec video


The “Engaged Viewer”






Reviewing the ContentWhat are they watching?


What Type of Video Content is Accessible?

Since early 2005, broadband video inventory has exploded Inventory available on leading news, health, lifestyle, and entertainment sites


Four Types of Content

• Repurposed Content

• Original Content

• Syndicated Content

• User-Generated Content


What is Everyone Watching?News, Weather and “Entertainment” • 45% view news at least weekly• Movie trailers drive a high share of female viewers: 47% vs. 35% of men*• Men prefer amateur videos over women, 44% to 30%*; However women

frequently watch “user-created” from trusted communities (e.g., baby home videos)

47

Source: Online Publishers Association, “Online Video Advertising, Content and Consumer Behavior: June 2007;

*eMarketer “Women Online: Taking a new look”, March 2007


What and Where


Key Video Destinations – What about TV Networks?

49

TV Network websites are indeed gaining momentum

• Individually it’s hard for them to compete in terms of share of visits, however as a cluster they make a significant dent

• When scaled by gender, TV networks actually are taking the lead for the #1 destination for women, just ahead YouTube 47.8% vs. 47.7%

• NBC leads the broadcast networks at 37% share of visits, followed by ABC with 30% share*

News sites such as CNN.com are also significant

• 35% total share vs. YouTube with 42% and TV networks with 41%**

* Hitwise, April 2007 , **Harris Poll Jan 2007


Delivering Results


Benchmarking: In-stream CTRs Higher than In-Banner Units

51

Source: DoubleClick Rich Media and Video (Klipmart) campaign benchmarks, on-page plus in-stream ads, June-Sept. 2006

Click-through Rate by Format

Clic

k-t

hro

ug

h R

ate

*

* Note: It is DoubleClick’s supposition that the high click-rates on the floater format is due in significant part to consumers attempting to close the units and missing the close box.

1.40%

0.74%

0.47%0.40%

floater in-stream expandable standard


Causing Action


Benefits to Marketers


Qualitative Effects


Performance by Format


Performance by Frequency


Enhanced Results

• The TV360 model delivers impact beyond what either medium can deliver alone

4.7% 5.0%

11.0%

8.5%

10.7%11.4%

11.8% 11.7%

14.1%

16.8% 16.6%

13.3%

Aided Brand Awareness Ad Awareness Brand Favorability Purchase Intent

Source: NBCU Dynamic Logic Cross Media studies (average of 9 brands)

Lift vs. Control

16.8

Aided Brand Awareness Ad Awareness Brand Favorability Purchase Intent

Online Only TV Only TV 360


Implications & Best Practices


A Shift in Planning

• Advertisers need to plan for shifts in on-demand media habits– Young adults and affluent Americans are most engaged by on-demand media

devices and behaviors– Consumers’ desire to control their media use continues to spread

• Traditional media outlets need to incorporate the on-demand media lifestyle into their programming decisions

• Internet advertising needs to expand beyond banners, search and pop-ups

Source: Arbitron/Edison Media research Internet and Multimedia 2005: the on-Demand Media Consumer


A Shift in Video Creative

• Marketers need to consider the potentially disruptive nature of video placements and tune content to web constraints– Optimize the quality and composition of their creative for web delivery– Be conscious of Codec compression and video file size implications on streaming

speeds and picture output quality– Images and scenes need to be simple and uncluttered to best be interpreted within

small screen spaces– Elaborate lighting effects and excessive panning, zooming, and camera movement

should be minimized to avoid pixelation or blurring– Editing transitions, such as long cross fades and dissolves, should be avoided– Overly complex audio, such as ambient noise and peaking above normal audio

levels, may be difficult to decipher through PC speakers– Text should be placed in space surrounding video so that viewers can clearly read

taglines and calls to action

Source: Online Video Advertising, Jupiter Research, 2005


A Shift in Metrics

• Planning– Reach and composition into psychographic audience, not just demo

• Example: “Adults who have researched purchasing new compact cars in the past six months”, instead of “M25-34”

– Ability to deliver engaging user experience, not GRPs

• Delivery– Impressions counted upon user initiation of the stream, time spent watching ad, and

interaction rates with companion ad units, instead of program ratings


Best Practices | Creative Variety

• Brand Recall– Number of creative executions had no significant effect on recall

• Brand Attributes– 3+ creatives had a positive impact on brand attributes vs. 1-2 creatives; 3+

creatives seen as less repetitive & annoying and more entertaining• Among those viewing 1 creative, :30s were more likely to be seen as repetitive

and annoying vs. :15s

– The threshold for repetitiveness and entertainment is 3+, while annoyance begins to decline at 2+ creatives

% of Respondents who Agree 1 Creative

2 Creative

3+ Creative

Was Repetitive 74% 76% 65%

Was Annoying 45% 43% 40%

Was Entertaining 26% 27% 31%


Best Practices | Interactivity

• Brand Recall– Among ads with branded canvases, those with complex

interactivity (e.g. playing games) generated significantly higher recall than ads with simple interactivity (e.g. choosing your ad)

• Brand Attributes – Ads with branded canvases (vs. those without) were more likely to

be seen as entertaining and less likely to be seen as repetitive • Respondents viewing ads with branded canvases were also

more likely to rate their experience on the NBC.com video player excellent/very good

– Respondents exposed to ads with more complex interactivity were more likely to agree that the ads:

• Caught their attention• Made them want to know about the brand• Were better than advertising in other full episode players


Best Practices | Ad Content

• Think Advertainment, not Advertisement– Viewers are more open to enjoying the advertisements. Give them what they

want by creating ads that are entertaining as the video clips with which they are paired. Make the advertising a part of this engagement by telling compelling stories rather than repeating TV spots.

• Shoot more video• Be more creative

• Active mindset equals greater action– People who watch long form video content are more engaged with every aspect

of the experience, including the advertising. This implies that viewers that sit down to watch a one minute clip come to the screen with different mindsets. Consider having multiple creative units depending on the mindset of the watcher.

• Use all the units on the page as a team– Advertising can be annoying, but it doesn’t have to be. Viewers respond to ad

formats that don’t intrude unfairly. The preference for banner ads supports this, but banner ads can be supported by a comprehensive ad experience that ties display ads, sponsorships, and in-video ads together in a coherent package.

• Be mindful of advertising length!


Questions? Comments? Sarcastic Remarks?

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