Online Video Ad Rates Drop By 12 Percent
By Anna Johnson on April 29th, 2009Video ad network, BrightRoll, has completed research showing that in the first quarter of 2009, ad rates – as measured in cost-per-thousand impressions (cpms) – were 12 percent lower than in the first quarter of last year.
The 12 percent drop continues a downward trend in online video ad costs. Rates dropped by 25 percent in the fourth quarter of 2008.
Online video rates are now in the vicinity of $20 cpm – still much higher than the $7-9 cpm average that advertisers pay for commercials on U.S. television. (According to TechCrunch, they customarily pay $15 cpm for primetime and up to $50 cpm for niche cable channels).
While the drop in online video cpms reflects inventory outweighing demand, TechCrunch notes that price is not the only deterrent to advertisers considering online video advertising.
Of the 150 advertising executives surveyed by BrightRoll, many were also concerned about poor targeting capabilities (31 percent), the limited reach of online video (18 percent), and ad format limitations (12 percent) among other factors.
BrightRoll’s research also found that the vast majority of the ad executives favored pre-roll video ads – i.e. ads that run prior to the main video content – over other forms of video advertising. During the first quarter of 2009 advertisers devoted 81 percent of their online video campaign budgets to pre-roll ads compared with 63 percent a year ago.
Apparently, advertisers regard pre-roll ads to be more effective in generating a response, but 87 percent of those surveyed hadn’t actually run any tests to prove this.
TechCrunch makes the point that these ad execs and their clients are probably defaulting to their approach to broadcast advertising.
That’s backward thinking. Not only is it wrong-headed to even hold the 30 second television spot up as ‘the’ standard, but it’s even more wrong-headed to think of it as the standard for the Internet!
Nevertheless, with online video evolving and increasing in popularity, it’s likely that more and more advertisers will reconcile their old paradigms with the new medium in order to come up with forms of online advertising that meet their needs.
