Video ads poised for takeoff

One of the noteworthy digital marketing stories of last year – the growth of video advertising – is picking up momentum.

Expect many more headlines about this trend in 2014.

I posted about the topic last summer. Half a year later I’m even more confident the market will quickly expand.

I anticipate significant growth and innovation in the video ad space this year, both on the advertiser side (from the number of buyers to an increased willingness to test creative specifically tailored to the medium) and on the publisher side (e.g., the types of formats made available).

Factors driving video ad growth include:

Expanding audience

There is increased consumption of the digital media that supports video ads, especially via mobile phones.

Increasing number of ad vehicles

For example, Facebook introduced video ads last month. Expect Facebook, Twitter and other ad sellers to tweak their existing video ad formats and to add new ones.

A front page story in today’s Wall Street Journal discussed the WatchESPN app, which ESPN owner Disney sees “as a way to cash in on growing demand for online video.”

Media agency recommendations

Agency planners are more frequently recommending video ads as a component of comprehensive advertising campaigns.

Increasing comfort level of ad buyers

As ad buyers themselves watch more online videos it’s natural they’ll become knowledgeable about, and interested in, video ad formats.

Meanwhile, Google took a step to comfort some more traditional-minded marketers when it recently announced it’d allow advertisers to test the use of Nielsen measurement tags on YouTube ads. (Nielsen reportedly expects this to become permanent in 2014.)

These tags will provide third-party metrics similar to Nielsen’s television audience ratings and should lead some hesitant marketers to initiate YouTube video ad campaigns.

More inventory made available on ad exchanges

Publishers are increasing the amount of video ad inventory available on a growing number of so-called programmatic platforms/exchanges, which makes it easier to plan, execute and optimize large-scale ad buys.

Predictions

1.  Many of the marketers who step into the arena for the first time in 2014 will quickly increase their expenditures on video ads.

They will be impressed by the flexibility and measurability of video advertising. For example, the ability:

  • Target specific DMAs (defined geographic areas) at low cost; e.g., to expand into additional markets, including international ones, that are beyond the reach of their TV ad campaign budgets
  • Test creative executions head-to-head while monitoring metrics such as completed plays, clicks to website and online conversions

2.   More marketers will run tests to see how their target markets respond to broadcast plus online video ads

My former Universal Studios colleague and now co-founder of a digital marketing & analytics agency, Frank Vertolli, recently published an article that references such a test his agency ran on behalf of a travel industry client.

3.  Customized creative executions

We will see more examples of video ads that take advantage of the medium’s unique opportunities to engage target audiences.

One of best video ads I’ve ever seen in the wild (i.e., while going about my business) targeted me based on a previous YouTube.com video view.

I was on a weather site when I saw a video thumbnail image featuring the stars of the Comedy Central show, Key and Peele. The comedians’ faces caught my attention because I’d recently watched a few of their show clips on Comedy Central’s YouTube channel.

I clicked the “Play” button. The video opened with voiceover saying, “We know you like watching Key and Peele on YouTube, but you’ll love watching the whole show even more on Comedy Central.” After a snippet of comedy the spot ended with the comedians pitching benefits of watching on TV.

The ad was a fantastic example of a creative execution specifically made for a given situation.

Here’s one of the ads from the series:

For many advertisers the easiest way to get video ads online is to reuse television spots. However, in time we’ll see more advertisers embracing the fuller potential of video ads by creating content geared to the medium.

All the trends and opportunities mentioned above reinforce one another, which strengthens my belief that 2014 will be a year of impressive growth in the video ad market.

The Muppets Take Social Media

Muppets angry old men (photo by Sifter)

As you may have seen, a fantastic television commercial for the upcoming Muppets Most Wanted movie aired during last weekend’s broadcast of the 2014 Golden Globes Awards ceremony.

The commercial had a built-in connection to the underlying awards show since Tina Fey both plays a character in the movie and was a co-host of the ceremony. (A solid marketing hook but not a surprising tactic.)

The commercial’s relevance to the show was increased by its storyline: feigned outrage about the movie’s lack of award nominations. (A more original hook.)

But what I really love is how the commercial spoofs both social media comment threads and, if I’m not reading too much into it, the way companies incorporate social media elements (Twitter icons, hashtags, real-life comments, etc.) into broadcast ads. And best of all, it achieves this using the Muppets’ brand of irreverent yet disarmingly cute humor.

What do you think?

Mark it up, price it down

Sale standeeMark it up and price it down.

That retail practice is alive and well. Thriving actually, according to an article in today’s Wall Street Journal (The Dirty Secret of Black Friday ‘Discounts’) that’s a great read for anyone planning to do some shopping Thanksgiving weekend.

It’s an interesting article about common retail pricing strategies, including how most deals are actually “a carefully engineered illusion.”

It also goes a long way in explaining why the Banana Republic near my house has a “Save 30%” or “Save 40% today!” standee by the front door seemingly every weekend.

This data really jumped out at me:

“The number of deals offered by 31 major department store and apparel retailers increased 63% between 2009 to 2012, and the average discount jumped to 36% from 25%, according to Savings.com, a website that tracks online coupons.

Over the same period, the gross margins of the same retailers—the difference between what they paid for goods and the price at which they sold them—were flat at 27.9%, according to FactSet. The holidays barely made a dent, with margins dipping to 27.8% in the fourth quarter of 2012 from 28% in the third quarter of that year.”

Not to take all the fun out of holiday shopping, but the article highlights the relevance of trying to determine true bargains (e.g., loss leader discounts) from illusory deals.

Shoppers are already wary of paying full retail prices. After reading this article, you may find yourself even more so.

Speaking of retail practices and holiday shopping, I’d like to share a book recommendation: Paco Underhill’s Why We Buy: The Science of Shopping.  It’s one of my favorites. If you or someone on your gift list enjoys marketing and/or business books, it’s a well-written and interesting look at shopping that’s based on his research as a retail consultant.

Do you have any favorite marketing books to recommend? It’d be great to hear. Please share in the comments or via the contact form. (Or just send it to me as a holiday gift. Haha, just kidding).

Halloween. It’s back…

It’s mid-September but Halloween is front of mind at Universal Studios Hollywood because this Friday is opening night of Halloween Horror Nights 2013.

Halloween Horror Nights (HHN) is our annual nighttime event featuring entertainment geared toward horror-lovers and Halloween aficionados. We say the event is for ages 13 plus; it’s definitely not for children or the faint of heart.

For many of us at Universal Studios Hollywood the event has become a year-round endeavor. This is especially true for the core group of people leading the entertainment plans as well as for my team working on social media.

Facebook and Twitter have become amazing platforms for keeping fans engaged throughout the year — which means we have momentum heading into the start of the broad advertising campaign in September.

Universal Studios Hollywood held HHN in the late 1990’s but put the event on hiatus from 2001 – 2005. (Universal Orlando had it running throughout those years). My involvement in the event began with its return to Hollywood in ’06.

The timing of the ’06 return — coupled with the fact that digital has consistently been a primary communications vehicle since then — makes the history of HHN social media programs something of a mirror reflection of the history of mainstream U.S. social media.

Following is a summary of Universal Studios Hollywood’s HHN social media evolution.

2006, the re-launch year

MySpace was king.

As you may recall, Facebook was only opened to the general public in late Sept 2006. Up until that point it was restricted to students and select others. Its user base wasn’t yet large enough to be relevant to HHN marketing.

YouTube was more mainstream, having opened to the public in 2005. We dabbled with YouTube in Fall 2006, but MySpace was much more popular at the time and that’s where we paid the most attention.

The event was themed around a fictional character named The Director — a twisted, violent, blacklisted filmmaker who was out for revenge on the Universal Studios backlot. We created a MySpace page for the character, filled with videos, photos and other content that set up his back story and told of his appetite for blood.

The page was very 2006. Luckily, it was 2006. The page was a hit.

2007 – 2008

YouTube became the focal point of HHN social media engagement, while MySpace faded out.

2009

While we continued (and still continue) to create videos for YouTube, 2009 marked the start of official HHN Facebook and Twitter accounts.

From the get-go we gave Twitter and Facebook their own voices and perspectives. Twitter is used to provide more of an “inside baseball” view of the event (which has been executed well largely thanks to the passion and commitment of the event’s creative director) while Facebook provides more general event news and related entertainment (e.g., via the posting of original horror-related images/memes).

On a personal level, the launch of these social programs led to what should probably be the only time my name is ever mentioned on Bloody-Disgusting.com

2010 – 2012

This period was marked by steady growth of the event’s Facebook and Twitter audiences, experimenting with YouTube video advertising, and the addition of social commenting on the Halloween Horror Nights website.

HHN Instagram launched in 2012.

2013

New for this year is the start of HHN’s Instagram videos (the capability was launched in June).

Onwards

Wow, a lot has happened in seven years. Who knows what’s in store over the coming years… for sure there’ll be ever more ways to share the HHN scares.

I must end with a very well deserved thank you to my teammates/co-workers who’ve contributed so much effort and creativity to all the above-mentioned programs.

(Disclosure and disclaimer:  As noted in my bio and is obvious from the post, I’m an employee of Universal Studios Hollywood and am personally involved with the programs discussed above. All comments reflect publicly available information. Opinions reflected on this blog are personal and do not represent the opinions of the company).

$hift to Digital

100 Billion

A few weeks ago I read a data point that struck me as noteworthy for anyone interested in the growth of digital marketing and the trajectory of the advertising industry.

That data point, highlighted in a WSJ article, is that “Procter & Gamble Co. is now spending more than a third of its U.S. marketing budget on digital media…”

The article continued:

P&G chief executive A.G. Lafley said the consumer products giant’s digital spending on things like online ads and social media ranges from 25% to 35% of its marketing budget and is currently near the top of that range in the U.S., its biggest market.

This budget shift is of particular interest because it’s P&G, owner of the world’s largest ad budget and a company renowned for brand marketing.

Traditionally brand marketing has foremost meant television commercials, but the WSJ article also highlights a significant media-consumption milestone:  2013 is projected to be the first year that Americans spend more time with digital media than watching TV.

Which nicely segues to data included in an eMarketer article published yesterday:  eMarketer projects that in four years (2017) total U.S. digital advertising expenditure will be $61.4 billion, closing in on television’s projected $75.3 billion.

Within digital, the fastest growing format is video advertising. According to another eMarketer article from earlier this week, U.S. digital video advertising will increase by about 40% this year and next, and it’s growth is coming at the expense of television ads.

That article highlights research from the Interactive Advertising Bureau (IAB) that finds “much of that increased digital video spending will come out of former TV budgets. Seventy percent of buy-side US senior executives told the IAB they would likely move TV dollars to digital video in the coming year.”

Earlier this summer I wrote a blog post talking about the growth of online video. In that post I included an eMarketer projection estimating U.S. digital video ad spending will more than double from $4 billion in 2013 to $9 billion in 2017.

Putting this growth another way, eMarketer’s data indicates that video advertising will go from being approximately 6% of TV advertising in 2013 ($4.1b vs. $66.4b) to about 12% in 2017 ($9.2b vs. $75.3 billion).

A $9b market is relatively small but not insignificant. And as I explained in my earlier post, Google is especially well positioned to benefit from the shift in ad budgets.

More upside?

To add a personal prediction, I think there’s a good chance eMarketer’s forecast about upcoming video advertising growth is understated.

From my experience as a digital ad buyer, video ads have been surprisingly effective, not only for the brand-awareness building for which they were mainly purchased (targeted impressions were the primary goal) but also in terms of tracked view-thru conversions (i.e., online purchases made by people within 30 days of seeing the ad, meaning the video ad was likely at least one factor in the purchase decision).

As more digital marketers experiment with video advertising and as marketing departments overall continue to become more metrics focused, I believe there’s a strong likelihood that the shift to video advertising — and its increasingly sophisticated audience targeting — will rapidly increase.

Candy from trees

Candy Tree installation art

I wanted to share the above photo from Buenos Aires (which I recently visited, as mentioned in my previous post). What great storefront marketing! It’s hard to miss this chocolate shop thanks to the whimsical candy tree. How can you not stop and look in the window?

Since I’m sharing, why stop at one quirky marketing-related pic. Check out this vintage beer ad, found in an old restaurant that’s something of a time warp to the 1950’s.

Viintage Quilmes beer ad

As some readers know, one of the interesting things about Buenos Aires is the amount of colorful (and sometimes sinister-looking) street art. Here are a few random examples.

Grouchy Smurf!?!

Online video: eyeballs, headlines and ad dollars

"Airport" by .michael.newman (Michael Newman). Used under a Creative Commons License.

(Photo by .michael.newman)

There’s been one news story after the next about online video.

The stories have ranged from Netflix and Amazon expanding original programming for their respective streaming services (“Arrested Development”, etc.) to DreamWorks Animation buying a YouTube video creator (Awesomeness TV) for $33M, to the ongoing bidding war for Hulu.

Two news stories that especially caught my attention highlight the mainstreaming of mobile video viewing:

  • Verizon Wireless paying $1 billion for rights to expand the NFL games its customers can view via smartphone
  • Twitter and ESPN expanding their collaboration to distribute (and monetize) sports highlight clips

The underlying situation is that online video viewership continues to explode, and more and more of this viewing happens on mobile devices.

Regarding the first part, the numbers are staggering:

  • comScore recently reported that 181.9 million Americans watched 38.8 billion online content videos in April 2013
  • YouTube’s monthly global audience is now 1 billion unique visitors. According to YouTube’s official blog, this audience watches “more than 6 billion hours of video each month on YouTube; almost an hour a month for every person on Earth and 50 percent more this year than last.”

The shift to mobile is also remarkable:

  • YouTube says that its traffic from mobile devices tripled in 2011, and 25% of global YouTube views now occur via mobile

It doesn’t require a crystal ball to see that news about the online video industry will continue to come rapidly. It’s a young, growing industry with a shifting landscape (e.g., Viacom’s recent licensing of exclusive streaming rights for Nick Jr. content such as “Dora The Explorer” to Amazon).

One story we’ll surely hear more about:  increased ad dollars flowing to online video.

The shift of ad dollars from TV has been on the slow side but that’s changing as more advertisers are becoming – or are being made to become – more comfortable with online video. Inevitably, as the saying goes, ad dollars follow the audience.

eMarketer estimates US digital video ad spending will more than double from $4.14 billion in 2013 to $9.06 billion in 2017.

Truck loads of cash heading toward Mountain View

Google should continue to be a big winner in the competition for these growing ad dollars. Foremost because they own YouTube, the single largest platform, but also because of their existing search-ad relationships.

And very importantly to me as an advertiser, they offer the most innovative ad products. (I previously posted a similar opinion)

These products belong to YouTube’s TrueView category of video ads, a distinguishing feature of which is that advertisers only pay when viewers don’t choose to skip their ads.

An example TrueView ad format I particularly like is called “in-stream.” These ads appear before or during another video on YouTube. Viewers are required to watch the first 5 seconds of the video ad, and then have the choice of continuing to watch it or to skip it. Advertisers only pay when a viewer watches for 30 seconds (or to the end of the ad if its length is less than :30). So if an advertiser puts a 30-second ad on the platform, costs are only incurred when 100% of the ad is streamed.

Add robust geographic-targeting options, view-to-conversion tracking capability and the ability to test campaigns with minimal budget, and I have to wonder why advertisers wouldn’t initiate a test campaign with YouTube.

I believe more and more advertisers will start placing TrueView ads once they understand the program better — perhaps driven by more aggressive selling by the AdWords sales team.

As advertisers become more comfortable with the ad formats, a likely result will be the development of more creative customized for online viewing. For example, front-loading content specifically aimed at preventing viewers from hitting the “skip ad” button right after the mandatory 5 seconds of in-Stream ads.

It’s hard for me to imagine Google not gaining a significant revenue boost from the shift to online video advertising in the coming years (especially since I believe the budgets are more likely to transition out of traditional ad formats than out of other digital ads such as paid search).