Wednesday, May 4, 2011, 8:58 AM ET|Posted by Will RichmondAt WPP Group's Global Video Summit yesterday afternoon, hosted by Kantar Video, GroupM and WPP Digital, Baljeet Singh, YouTube's product manager for video monetization reiterated a bold assertion YouTube has made periodically over the past 6 months: by 2015, 50% of video ads will include cost-per-view video.
Baljeet defines "cost-per-view" as an engaged view of a video ad where "engaged" means the user chose to watch that video in some way. The vast majority of today's in-stream pre-rolls, mid-rolls and post-rolls that auto-play during the content experience wouldn't qualify under the definition. If YouTube is right, then massive change is coming in how online video ads are created, purchased, valued and measured.
Baljeet's remarks came in the context of explaining that while YouTube offers advertisers valuable new reach over and above what TV advertising is capable of - particularly for "light TV watchers of under 16 hours/week - the real goal of online video advertising should extend to impact, engagement and effectiveness. The key to this is giving users a choice of which ads they want to watch which helps provide a "signal" that they are engaged in some manner. In this model, advertisers win by only paying for people who care about their products. As a proof point of how much stronger the engaged value proposition can be to advertisers, Baljeet noted that YouTube has found with its "Promoted Video" ad unit that advertisers are willing to pay - in an auction setting - 10-40x more than traditional pre-roll ads.
To support the engaged model, YouTube has been recently rolling out its "True View" skippable ad format that lets the user close the ad and move on after 5 seconds. The unit is a win for advertisers who only pay when the user has actually watched the ad to completion. Baljeet pointed to Ad Selector from Hulu plus units from Pandora and VivaKi's The Pool as other examples of engaged video ad approach. No question though, when a user has their "finger on the trigger" in this way, the stakes for great creative increase dramatically.
No surprise, the cost-per-view model feels similar to Google's core search-based ad model in which advertisers only pay on engagement, or user clicks. While a move of this magnitude over the next 4 years would be a wrenching adjustment for many in the ecosystem, it would provide a far better alignment for advertiser spending than has ever existed in traditional TV advertising, much of which is both costly and wasteful. Since YouTube is the 800 pound gorilla of the online video market, with around 40% of stream volume month-in and month-out, it is likely in the best position of anyone to try to evolve the market in this direction, particularly if others begin to follow. It will be interesting to see.
Note - Ad formats and measurement are just one of the many topics we'll be discussing at ELEVATE: Online Video Advertising Summit on Tues., June 7th. Early bird discounted registration is now available.