VideoVoo: Online Video Marketing

With all the tectonic movements in the competitive landscape of advertising agencies, huge acquisitions took place between April 13 and May 18 in 2007. The incomplete calendar excerpt from the Minefield of Mergers and Acquisitions in interactive advertising is as follows:

1. pure ad serving DoubleClick: Google for $3.1bn (April 13, 2007)
2. Right Media: Yahoo for $680m, (April 30, 2007)
3. 24/7 Real Media: WPP Group for $649m, (May 17, 2007)
4. agency plus ad server aQuantive [i.e. Atlas, DRIVEpm, and Avenue A | Razorfish]: Microsoft for panicky $6bn (May 18, 2007)
5. oh, plus ScreenTonic, a Europe-based mobile-advertising company: Microsoft for undisclosed sum. (May 3, 2007)
6. another plus, “Feedburner is in the closing stages of being acquired by Google for around $100 million” not released yet on the FeedBurner blog, confirmed rumor comes through TechCrunch (May 23, 2007)

In light of the above changes in the realm of digital advertising, we can fairly assume that 2007 will further increase the share of display related ads (Display ads in 2005: 20%, in 2006: 22% - maybe 2007: 25%?) presumably led by targeted displays now available from one shop mega-platforms, as well as the spread of cheap stock display ads available for small retailers. Display-related advertising totaled $5.4 billion, compared to $4.3 billion in 2005; display-related advertising includes Display ads (22%), Rich Media (7%) and Sponsorship (3%), the latter two of which have both slightly decreased from 2005 (with 1% and 2% respectively).

However, display related ads, especially video is bound to show more dynamic growth in 2007. First and foremost, huge data silos have been born with the acquisitions enlisted above, and with such data, if filtered well, marketers will be more willing to spend their budgets on more valuable customers in hope of, and in proof of higher ROI. Then, there is a potentially growing number of quality niche video shows attempting to offer news reporting in an engaging, even viral way, like the Maker Fair videos, Mobuzz TV, Wallstrip, etc. and they also have the audience for well targeted video ads. Next, YouTube (consistently eating up Google Video brand) has got more and more channels, again reaching zillions of small communities, and now a new surface for video previews on Google Universal Search results pages. In addition, Google - now equipped with DoubleClick - will push more determinedly forward with image ads on the AdSense network, and also with the click-to-play video ads (announced a year ago on 22 May 2006! saying “But, you may say, video is only for big branding oriented advertisers. We beg to differ.”). Likewise, Joost is not sitting around doing nothing, but enriching its TV channels, testing its video ad formats etc.. And we could go on and on.

Already, UK shows a considerable growth (9%) in display ads. But UK is in the lead concerning internet advertising, so we cannot generalize the 9% result. In fact, this year, the market may not grow spectacularly: “the market for online display advertising - including interactive video ads that run in a fixed place on a page - could reach $5.5 billion,” estimates David Hallerman, a senior analyst at eMarketer - and this amount is like last year’s IAB data… (different measurements?).

“Advertisers and marketers are still struggling to exploit the full power of the Internet, and the relation of online to other media. Real progress may come incrementally,” states eMarketer Senior Analyst Karin von Abrams, adding that “spending on Internet display ads continue to outstrip the modest overall rise in UK media spend. Search-related advertising is growing even more quickly.” As Peter Petrusky, Director, PricewaterhouseCoopers LLP points out “The results for 2006 show the Internet continues to offer marketers the widest spectrum of advertising formats, from search-based text ads to dynamic rich-media and broadband video ads. Online publishers will continue to experience growth as marketing budget allocations to all interactive forms continue to increase.”

And the data of that wide spectrum will be more and more aggregated pushing up the prices for premium sites and services, as well as precious networks of quality niche web pages reaching deep in the long tail.