Like a lot of you, I spend a lot of time online, and a good amount of it is watching video. As I've often said - at VideoNuze's Online Video Ad Summits and elsewhere - advertising is critical to online video, because, with the exception of paid services like Netflix, Amazon, iTunes, etc, the vast majority of online video is free and ad-supported. Despite how important advertising is, I'm constantly amazed at how untargeted so many pre-roll ads still seem to be.
I'm not claiming anything close to a statistically significant study here. But because I pay relatively close attention to pre-roll ads, I have a pretty decent handle on how relevant the ads are or aren't, at least to me. This morning I saw a perfect example. Tempted by a tweet, I watched a video on Boston.com of a truck flipping over on a local highway. I actually watched it 5 times to see what would happen with the pre-roll. Each time, one of 3 versions of an ad for cable operator Charter Communications played. All nice ads, however, Charter only operates in the Worcester, MA area and further west, not even close to where I live, which is served by Comcast, Verizon and RCN. Why am I seeing this ad over and over again when I can't even buy their service?
I don't mean to pick on Boston.com, it's just the latest incident. Depending on the site where I watch video, I frequently see pre-rolls for cars (though I'm not in the market), lots of movies (many of which don't map to my interests) and random things like enterprise software, detergents and health/beauty products that have no relevance at all to my life.
Conversely, though I see plenty of unrelated display ads, I see lots that are highly targeted. If I've searched for hotels recently in a certain area, I'll start seeing ads for that area or airline/rental car deals. If I've searched for a product (e.g. kids' boots), I'll start seeing ads for them. I'm assuming all of these occur due to cookies.
Now admittedly, the display ad business is a lot more mature than the online video ad business, and has become more transactional in its objectives. But it's not like online video advertising is brand new either. In fact, one of the key selling propositions of online video advertising, vs. TV advertising is online's improved targeting.
So why so many untargeted pre-rolls? One explanation I hear often is that online video advertising is still reach oriented and buyers are focused more on "top of the funnel" branding, and less on transactions. Because ad inventory on premium sites (where I spend most of my time anyway) is still scarce, these buyers are looking mainly for exposure for now and even this can be hard to achieve. Down the road, when more inventory exists, targeting and transactions will get more emphasis. To be sure, video ad tech providers have invested heavily in targeting and analytics, so as the market shifts, the technology will be there.
In the meantime however, online video is at risk of turning off viewers to the ads much as what's occurred in TV. In other words, as viewers see/notice ads that aren't relevant to them, they'll learn to ignore and view these ads as an intrusion on their experience. Personally, I actually don't have anything against advertising. And as a content provider who provides free content, I'm keenly aware of the critical role it plays. But for online video to continue to succeed with advertising, the ads need to become more relevant and targeted, as quickly as possible. As this happens, they can provide real value to viewers.