Advertising, Marketing & PR and Technology

Online video advertising becoming effective tool for brands

It may merge with TV advertising in next 10 years.

June 7, 2013
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Television advertising is starting to see some serious competition from online video advertising in terms of effectiveness.

Market research company eMarketer reported a recent survey of U.S. advertising agency executives found that 75 percent think online video ads are equally or more effective than traditional TV advertising.

“I think, overall, online video is a very effective channel,” said Matt Neilson, director of media at Hanon McKendry. “I think for certain clients it works better, and for other ones TV still is the way to go based upon their specific objectives.”

Online video advertising offers several benefits that today’s marketers are particularly looking to achieve with their advertising dollars.

“The targeting of consumers online overall, I’d say, is a benefit to its counterpart in the traditional TV space,” Neilson said. “You can get more specific with a certain demographic, whether it’s age or gender or even household income. … With broadcast television in the traditional sense, you can certainly try and target, let’s say, women age 35-54, but you are also going to get a lot of other people with those buys.

“With online video there is the ability to get much more specific. If you tell one of the vendor partners you want to work with, like Hulu or Yahoo, or YouTube even, ‘I just want to reach men age 25-34,’ there is the ability for a lot of the vendors out there to specifically target just that audience that you want to reach.”

In addition to much narrower targeting opportunities, advertisers can focus on behavioral targeting to reach consumers.

“If you just want to reach people who have looked at certain content online, like sports content, you can reach just those people with what is called ‘behavioral targeting,’” Neilson said. “So there are ways to layer on not just who the people are demographically, but also what content they’ve looked at in the past and then continue to reach those people later.

“With TV you can pretty much only reach them at that specific time and place where you know they are watching that show.”

Commercials are easier to avoid than ever, both on traditional TV and online. Still, Neilson thinks online video watchers are a little more accepting of a 15-second commercial than TV watchers who might have to watch a couple of minutes of commercials from four or five advertisers.

But with the growing popularity of the second screen — an iPad, iPhone, or other device that a watcher can turn to as a distraction from commercial breaks — advertisers continue to be challenged in all entertainment channels for how to get people to pay attention to their commercials.

An advantage online advertising does have, in general, over traditional TV advertising is the opportunity for engagement and calls to action.

Still, despite the long list of benefits, Neilson said he doesn’t see TV advertising falling out of favor with marketers and advertisers.

“TV is still the No. 1 place out there that consumers consume content, especially for large advertisers and national advertisers — even local advertisers, in a lot of cases,” he said. “TV reaches close to 100 percent of households and every demographic out there, whether young or old. Everyone watches TV, still, in large numbers, so if you want to get your message out there, it’s a great place to do that.”

He expects that in the coming years television technology is going to change to become much more like smartphones and iPads in functionality and usage, and there won’t be a separation between TV advertising and online advertising.

“Your TV, your iPad, your computer and your phone are all going to continue to merge into one experience,” he said. “In 10 years I don’t think we are going to be looking at these things as really separate. I think it’s going to be more like TV advertising and what we are calling online video advertising are almost going to be the same experience. Let’s say you are watching TV in your living room. … People will be able to interact with the ads they are watching on TV and go right to some sort of website and take action right in their living room. I would think of it as taking your iPad that’s on your lap and putting it on your wall and being able to interact with it that way.”

He said that those televisions already exist and are being tested in markets, but they are not widespread at this point.

Another growing capability is for ad targeting on television to be as narrowly focused as online targeting.

“Let’s say you have two different TV spots that are running right now. On the most basic level, you can really only run one spot to reach Grand Rapids, but down the road and in some test markets, there is going to be the ability to deliver maybe one spot to your household and a different spot to my household, because we’ve identified that your data indicates that your spot we should serve is different.”

An example is automotive advertisements. Auto companies like Ford will be able to target particular models to particular homes, based on data such as household income and behavioral habits, so that one home will receive one ad while a neighboring home will see a different ad.

Neilson said today’s advertising plans should absolutely consider online video advertising, though he cautions it might not be the best choice for everyone depending on their objectives, budget and how they intend to measure outcomes.

 “The overall thing in any medium is not to put all your eggs in one basket, because you are going to have the biggest impact with your audience when you are reaching them with many channels.” 

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