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The Guardian - UK
The Guardian - UK
Kate Bulkley

Online advertisers get hooked on video

There is a memorable scene in Lawrence Of Arabia where Peter O'Toole stares into the distance through a quivering mirage and sees the tiny figure of Omar Sharif coming slowly but inevitably towards him. Online video advertising is a bit like that – small right now but growing exponentially and promising far - reaching effects on the advertising landscape.

From YouTube to BBC iPlayer, from MSN video to national newspaper websites, video content is the new driving force on the web. There are any examples of the growth: at the last count, iPlayer was receiving over 2m requests daily for its radio and TV programmes. The BBC's motoring show, Top Gear, routinely notches up more than 1m online requests per episode, which means more than 10% of the show's overall audience is watching it online even if they are also watching it on a traditional TV.

Of course, Top Gear is a popular show. The BBC is quick to add that, by its calculations, only 0.2% of the total British population is watching TV online exclusively, and normal TV viewing is not falling off. This is true but online is set for growth.

Broadcasters are serving up increasing amounts of their content online, while YouTube, still the biggest provider with over 1bn online views a day, is moving away from user-generated videos to professionally-made content, signing deals recently with both Channel 4 and Five in the UK. Meanwhile, TV aggregation sites such as Blinkbox and the recently launched Seesaw are eager to take a page out of hulu.com, the hugely popular online TV site in the US, which, according to ComScore, has more than 850m video views a day. "This year is going to see a big seachange in the way video online is taken up by consumers," says John Keeling, platform controller at Seesaw. The latter launched its online TV site with 3,000 hours of UK TV content earlier this month.

The potential to make money from online video was underlined last spring when Susan Boyle's rendition of I Dreamed a Dream on Britain's Got Talent became an overnight internet sensation, boosting itv.com's video views by 500% less than 12 hours after the TV show aired. By year's end the Susan Boyle clip was the most watched on YouTube with over 120m views. The clip served as a wakeup call to ITV and producer TalkBack Thames, which had to put an advertising agreement with YouTube and so missed out on the initial rush of online viewing.

This huge appetite for online video is attracting advertisers and brands and changing the relationship between brands and media publishers. As more devices get connected to the internet, from games consoles like Xbox and smart phones like the iPhone to the set-top boxes of pay TV operators, the distinction between online and traditional TV viewing is starting to blur.

Jay Fulcher, chief executive of Ooyala, an online video distribution and analytics company, says: "This is the year that everyone from publishers to advertisers realises they need a strategy for online video."

Growth strategy

The numbers are still tiny for advertising in this field but, according to MediaCom, the £12mn booked for online video ads for the first half of 2009 is set for big growth. "We predict that advertising investment in online video will grow by 50% this year," says Rhys McLachlan, head of broadcast futures at MediaCom.

"Our analysis suggests that 2% of all TV viewing is now online. And if you add user-generated content on YouTube, you can triple that figure. This is early 2010 and online video is already equivalent to MTV's weekly share of viewing in the UK."

There are, naturally, certain hurdles to overcome when making online video advertising attractive to media owners and planners at agencies. The big one is accountability. "I find it staggering that the most accountable media channel ever invented – the internet – is struggling to find a single currency against which we can trade," says McLachlan. "The net is, by its nature, organic, so it is hard to standardise things, but this has to be addressed to ensure continued growth and investment."

In fact, a lot of work is being done here by the UK Online Measurement company (Ukom) with other interested groups, including Nielsen. And technology companies are lining up with advanced analytic tools to give publishers and advertisers better insight into what users are doing and what kind of ads they will tolerate online.

Drawing on web analytics, as pioneered by Google, in monetising search results, companies like Ooyala and Videoplaza are adopting better ways to measure online video. "Publishers we're working with are better able to understand where the online ads should be placed on their sites, but it's still early days for optimising the ads to the consumer," says Ooyala's Fulcher.

More creative ad formats that build and expand on the traditional pre-roll video ad, which comes before a piece of online video can be viewed, are helping advertisers make their ads more compelling, while publishers are getting more creative in how they work with advertisers and sponsors on their sites.

Newspapers, in particular, are seeing online video as a huge opportunity to create a deeper relationship with readers and to make sure younger people, who may not buy a newspaper, can still become loyal to newspaper brands.

"We've seen a doubling in video stream downloads in the last year - to over 3 million a month," says Emily Bell, director of digital content at the Guardian, which is currently experimenting with live streaming of its podcasts and finding greater user engagement as a result. "Our video unit produces dozens of clips and short films a week which really support our journalism and extend the Guardian brand effectively onto other platforms such as YouTube. We use video for food and fashion, politics and the arts, as well as for serious coverage of difficult areas such as Afghanistan and Gaza."

The Telegraph Media Group's chief information officer, Paul Cheesbrough, is equally upbeat: "It's not about only having users spend more time on the site but also getting them to come back. If we can achieve that, the monetisation of the online traffic and audience becomes easier."

During the Iraq inquiry last month telegraph. co.uk created a microsite with the streamed live testimony of former prime minister Tony Blair. The site had a "credibility meter" and live chat, and some 250,000 votes from users were recorded during the live stream. "We just used traditional display advertising on the Blair pages because for traditional news that is about as far as you can go. But you could equally do this with a commercially-led piece of content, like a concert or a football match, with e-commerce opportunities or submitting details to get a package in the post about a car or any number of things. These are the kind of things advertisers will be interested in."

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