Slicing through the myths of online video

Digital advertising has always struggled to match up to TV, but with the advent of online video, the gap has been bridged.

Given the ad format is on a par with TV, many advertisers who were TV skewed have slowly shifted budgets to online video. As they plan all video channels in an integrated way—now known to industry as multiscreen planning, online video advertising has seen explosive growth in the past few years.

Though it has been established that multi-screen planning not only improves reach and cost efficiency but also effectiveness (brand KPIs), fast growth of the medium has put advertisers in a conundrum that they may be overinvesting in online video. This has resulted in some doubts about the viability of using online video.

Some of the key myths prevailing about online video are:

1. Clutter: Consumers are overexposed to ads versus TV
2. Duplication between TV and online video is high
3. Online video buys have huge wastage compared to TV
4. Ads are likely to disrupt consumers’ content viewing experience

In order to validate the above-mentioned skepticism on online video, OMD has validated these hypotheses with data, and the results have proved otherwise.

Myth #1: Clutter: With many advertisers joining the bandwagon of online video advertising, it has caused the ad environment becoming so cluttered that consumers are drowned in a sea of ads.

Truth: TV exposes consumers to twice as many ads as online video

• In Tier-1 markets, consumers see twice the number of ads on TV (42) as they do online (19) daily. In Tier-2 cities, the number of TV ads is even greater, as people spend more time watching TV.
• The truth is that online video is relatively uncluttered versus TV, and it will take at least three to four years before the clutter levels become comparable.

Myth #2: Duplication: Though it has been proven that multi-screen improves overall reach and efficiency, many people believe that audiences reached by TV and online video are highly duplicated.

Truth: While duplication between TV and online video is high at 1+, it is much lower at 3+. Online video, therefore, is an effective medium to achieve the 3+ reach goal.

• As most campaigns are planned at 3+, online video remains the key component in building efficient reach
• Also, a combination of TV and online results in much 1+ reach that cannot be achieved by TV alone

Myth #3: Wastage: Since online video sites don’t allow demographic targeting, and frequency capping is not guaranteed, wastage is high when investing in online video.

Truth: Wastage on TV is two times higher than with online video.

• Even though frequency capping is limited to a site and not the entire campaign, wastage on online video is still less than half that of TV. Consequently the average OTS delivered to the consumer is much lower, resulting in less ad fatigue.
• Therefore every RMB/GRP shifted from TV to online video results in an increase in efficiency and reduces wastage.

Myth #4: Disruptive viewing experience: Online video ads prevent viewers from maximizing their content viewing time, thus turning them away eventually.

Truth: Consumers spend approximately 8 per cent of total viewing time on ads while viewing online video, versus 11 per cent with TV.

• Online video is a more engaging platform given the content ratio is higher than TV.
• Given that the cost-to-reward (advertising-to-content) ratio is still in favour of online video, consumers will keep shifting from TV to the medium to maximize the benefit.

Implications for advertisers

Even with the increasing advertising on online video, it remains a better bet than TV in some of the key parameters:

• Improves reach efficiently with minimal duplication:
  • Ad environment is less cluttered and less disruptive versus TV, resulting in consumers being more engaged.
  • As wastage is smaller, so every dollar shifted to online video increases efficiency.
• Time spend will continue to shift to online video as it offers a better experience to consumers in terms of viewing. 
• As pressure of budgets and inflation remains, advertisers should not be wary of spending even more on online video to drive higher efficiencies in 2014.