Power Video

Cisco’s Online Video Prediction: Boom or Bust?

Pretty much everyone expects online video viewing to continue to grow, but it’s been hard to find anyone willing to quantify just how much. So thank you Cisco Systems, which is projecting a sixfold increase in Internet traffic between 2007 and 2012, largely thanks to the growing popularity of online video sites. The networking-equipment maker disclosed its predictions in a study called the Cisco Visual Networking Index. The company says that Internet video will account for 50 percent of total data transfers by 2012, compared with only 5 percent in 2005.

Not everyone is buying it. Douglas McIntyre at 24/7 Wall St. calls Cisco’s findings “bogus,” noting that the company cites the popularity of YouTube as one of the leading factors. “… YouTube and its video-sharing peers are not growing as fast as they once were. Watching user-created content of babies throwing food across the room and Ronald Reagan singing ‘America The Beautiful’ has lost some of its charm.”

True enough, but it’s also true that as more people become accustomed to watching video online, the more they’ll demand high-quality content. And if the demand is there, the big media companies will have to follow. While McIntyre correctly notes that major media companies are having a hard time figuring out how to make money in online video, that doesn’t mean that will always be the case. Furthermore, that view discounts advancements from companies like Netflix and Apple that are coming up with innovative ways to stream high-quality video directly to TV sets. Indeed, the Cisco report states that “Internet video-to-TV will grow rapidly to 10 percent of the total [consumer Internet traffic] in 2012.”

Also, McIntyre conveniently leaves out an important factor. That is, the expansion of high-speed Internet service in developing markets. The Cisco report notes that Internet traffic is growing rapidly in Latin America, Western Europe, and the Asia-Pacific region.

Of course we don’t know how Cisco’s prediction will pan out. But dismissing it out of hand by looking at short-term trends is rather short-sighted.

Clarity Coming to Ad Formats?

The Interactive Advertising Bureau is scheduled to publish new guidelines for online video ads Monday, May 5. For the past month, the IAB has been accepting suggestions from industry members on its proposed guidelines (PDF format). The guidelines cover best practices for the most common current in-stream ads, including linear ads and companion ads.

It’s great that someone is taking the lead. Too many marketers have kept their distance from online video in part because of the lack of standards. Along with the Online Video Advertising ROI Council’s efforts to determine video advertising’s effectiveness, the IAB’s efforts should make it easier in the long run for marketers to justify launching online video campaigns. As eMarketer’s David Hallerman points out, “Video ads command higher prices than static display advertising.” And if standards make advertisers more comfortable with the format, they’ll be more comfortable with paying higher CPMs.

Critics will say that standards will stifle creativity. That may be true, but unbridled experimentation with ad formats has confused marketers and consumers alike. Sure, things get less exciting when you start talking about “standards” and “guidelines,” but that’s what happens when an industry enters its next phase. And this is clearly a sign that the online video industry has matured.

Recruiters to Score with Video

While people have debated the pros and cons of video resumes, recruiters are finding out that online video can be a big boost to their efforts. Click Z reports on a study from Borrell Associates that finds online video ad spending will reach $10 billion in 2012, up from $522 million last year—much of that driven by major local ad categories, including recruitment.

Like any other ad, video from recruiters could be used to pinpoint the right candidate, which also involves eliminating the wrong candidate. Think about watching a video tour of the department for which you’re applying for—you’d know right away whether it seemed like the place for you. This is particularly true for younger job seekers, who value culture and environment as much as they do salary and benefits. And video testimonials from current employees can be a great asset, as well.

As is often the case, the simplest applications are the most effective.

Learning to Love the Recession

Sure, recessions are generally unpleasant. But all that corporate belt-tightening may actually be good for online video advertising. At least according to the folks at BtoB. The magazine’s 2008 Interactive Marketing Guide—completed with data research assistance from eMarketer—finds that the gloomy economic horizon will accelerate the shift away from traditional media to digital media as marketers demand granular, measurable data.

Money paragraph: “Online video is an especially interesting category, in part because the cost of entry is so much lower than traditional broadcast efforts, a fact that has and will spur adoption by companies that never had a video strategy in the past. U.S. online video advertising spending this year will increase 74.2% from 2007.”

Not that we’re hoping for the economy to dig itself into a deeper hole—even we know about the law of diminishing returns. Besides, this shouldn’t be a short-term proposition. Yes, more companies will use the opportunity to explore this new medium. But they’re likely to stay here if they get the results they demand.

It’s worth reading the entire guide. You’ll find some helpful tidbits about online video ads, including “5 Simple Rules for Producing Effective Online Video.”

Video Classifieds: Where Are They?

Mike Cassidy at Video Insider wonders why online classifieds—and eBay in particular—haven’t jumped on the video bandwagon. “Much like virtual tours have allowed home buyers to be much more effective when searching for a property on real estate Web sites, the same could potentially be true for consumers of miscellaneous goods and services.”

It’s a good point, especially given the nature of classified ads. Unlike traditional advertising, you don’t have to be a professional videographer to get your point across in a video classified (just as you don’t need to be a professional copywriter to craft a competent classified ad). And we’d like to add that it’s critical that the video uploading tools be as intuitive as possible, and that the player blends in well with the look and feel of the site that’s hosting it. That way, you’ve created value for both the consumer and the listing site.

In Search of Online Video Profits

Mike Cassidy has posed a challenge on Online Video Insider: “If you were given $1 million for an online video business, how would you spend it?” Cassidy comes up with four business models—video search, video portal, ad serving, and ad solution—that are prime for someone—anyone—to develop the killer solution.

We’ve been discussing the same issues here. Like Cassidy, we’re interested in what you have to say.

Let the Games Begin

Google unveiled its AdSense for video program last week, enabling publishers to include text- or video-overlay ads into video clips on the Google Content Network. You can read about here, here, here, and here. Aside from filling Google’s ample coffers with even more cash, the program further opens up the debate regarding online video advertising formats.

Google’s news comes on the heels of VideoEgg’s pay-for-engagement scheme that does away with CPM in favor of a model in which advertisers pay only when a user engages with an ad. Now marketers can fight about how they want to pay for online video ads.

Both initiatives are attempts to allow marketers to find (and pay for) viewers who are engaged in their ads. But neither of them measure how deep that engagement is. So along comes Microsoft today with the announcement of its Engagement Mapping standard for measuring interaction with online ads. The method takes into account “all the various online touchpoints and interactions a consumer experiences before an eventual sale.” That includes the impact the frequency, size, and format (such as video) of an ad have on the consumer’s path to action.

Oh yes, the action in the online video advertising space is getting fast and furious. And it’s only going to get more confusing before some clarity emerges. Which horse do you want to bet on?

Video Ads: It’s in the (Universal) Search

Search Engine Watch has a good post on optimizing video for search, explaining that this is a great time for small businesses in particular to get moving on universal search and SEO for their video ads. The piece mentions a company called eLocalListing, which helps local online video move beyond Internet Yellow Pages listings and onto search engine results pages. The timing is particularly good considering that Google is testing video ads on its search results pages. The opportunities keep growing.

Future Ads: Microsoft in Context

There’s a lot of talk about what the future of online video advertising will be. All anyone seems to know for sure is that it shouldn’t work like the traditional advertising models that have been in use for, oh, more than half a century. Yesterday, Microsoft provided a glimpse at what the future could look like.

The company demonstrated several next-generation ad technologies, including contextual video ads, which uses speech recognition to dynamically serve ads based on content spoken in a video. Another technology, Intelligent Bug Ads (now that’s a creepy name), locates “nonintrusive frames in a video in which to place ads,” according to the Microsoft press release. That is, it places a small clickable overlay where it’s least likely to annoy the viewer.

The idea, of course, is to make online video ads more relevant to the content, as opposed to the stuff you’re assaulted with during the Super Bowl. Expect to see more action in this area from all corners of the industry.

Let’s Make Money, But How?

Paul Allen (no, not that Paul Allen) performed some live-blogging from the AlwaysOn OnMedia NYC conference. The subject of the panel he covered: Monetizing Online Video. It’s an interesting read. Not surprising that the ad-supported model is in favor (over paid and subscription models). It’ll be interesting to see if John Edwards (no, not that John Edwards—this one is the CEO of Move Networks) is right when he predicts progress in creating standardized ad formats.

The industry had better figure it out fast, because according to comScore, more and more people are watching online video, and they’re watching more of it.