The truth about video-on-demand advertising

30 Oct 2018

Image: © terovesalainen/

Ellen Kelliher examines the growing advertising market in online video, and notes how many advertisers are doing it wrong.

The current conversation in the advertising world could lead you to believe that although digital platforms have hit a speed bump, they are still kingpin when it comes to where people spend their leisure time. Nothing could be further from the truth.

If we focus specifically on the medium of video, 90pc of brands’ advertising budgets are still committed to linear TV. There is no denying that the overall growth in video consumption is increasing and, although linear TV viewing and advertising investment are strong and stable, the growth is driven by online platforms rather than by traditional broadcasters.

A clear example of this was demonstrated last year by Television Audience Measurement (TAM) Ireland, which, in conjunction with Nielsen, released a piece of research – the first of its kind in this market. According to this ‘moment in time’ study, 20pc of video consumption for adults aged 15 years and over is through online video, with the other 80pc taken up by traditional TV, both live and recorded. If we look at young adult audiences, such as those aged 15 to 34, the move to online video comes into sharper focus, with 44pc of video consumption by this age group through online platforms.

Brands need to continue investing creative and media resources in linear TV, but the time has come to consider how online video platforms require a different approach.

What does this mean for advertisers?

Advertisers need to ensure their strategy is tailored to the platform on which consumers are viewing their content. Whether it’s short-form YouTube content or long-form broadcaster video consumed on mobile or desktop, advertisers need to ensure they approach each platform separately to provide the smoothest experience for the user on the player.

Key to this is the length of the video ad that is served to the user. Locally, we believe more than 50pc of video ads are regurgitating the TV ad online, which is beginning to have a negative impact on both video in general but, more importantly, on the brand’s advertising.

Video advertising facts

Over the last six months in Core, we analysed more than 300m online video impressions in Ireland and found some alarming statistics:

  • 75pc of ads are skipped when the consumer is given the option
  • Completion rates for ads longer than 30 seconds is 14pc
  • Completion rates for ads longer than 20 seconds is 42pc

In parallel, our research team also surveyed 1,000 people and organised eight focus groups to obtain people’s perceptions of the online video market. Once again, the outcome was not positive:

  • 60pc of people are concerned there is too much video-on-demand (VOD) advertising
  • 68pc of people are concerned VOD advertising will continue to increase
  • 35pc of people get frustrated with VOD advertising, as they want to watch their programme
  • 75pc will try to skip the ad
  • 80pc of people will skip the VOD advert in less than 20 seconds

In summary, users are getting more frustrated than ever with online video as advertising budgets increasingly move to these platforms. Potentially, we are now at crisis point as bad practices are starting to have an impact on both video players and the brands themselves.

Even though consumers are getting more frustrated, the possibility of moving their behaviour to a paid or subscription model, such as Netflix, is less likely in the short term. From our research, the average price they are willing to pay for paid video content online is €8.10 per month. This would exclude them from most online platforms. Amazon Prime’s hybrid model is a viable alternative, but we believe a fully ad-funded model, as with the RTÉ Player or Facebook, is still the future of the industry.

What’s next for advertisers?

With this in mind, the advertising industry must work to improve the online video experience. There is no doubt that viewers will continue to migrate to online platforms, so now is the time for a different approach.

To avoid intrusive behaviour in the online video market, we are proposing that advertisers follow these standard guidelines when creating their video strategy:

  • Tailor your content to the platform for best user experience
  • Stick to the following lengths (recommended based on our data analysis): 10 seconds for short-form (less than 15 minutes); 20 seconds for long-form (more than 15 minutes)
  • Include branding or a call to action at the start of the ad (remember, 75pc of people skip ads on YouTube)

By 2020, it is predicted that more than 35pc of video consumption will occur online. Small but significant changes are already occurring across key demographics, which advertisers are still not embracing.

If 50pc of ad copy online is still based on linear TV, the potential of damaging the perception of your brand among consumers is higher than ever. If this isn’t actioned soon, consumers will be pushed to paid channels, reducing the opportunity to advertise across one of the most powerful media channels.

By Ellen Kelliher

Ellen Kelliher is group head of AV with Core, a marketing communications company based in Dublin.