Co-Founder and CTO
Interactive video advertising has been a clear winner for entertainment companies and automakers. But now, unlikely suitors including consumer packaged goods (CPG) and pharmaceuticals are seeing success with the immersive ad concept. Tal Chalozin, co-founder and CTO of Innovid, a New York-based technology company that creates and measures video ad campaigns, spoke with eMarketer’s Danielle Drolet about where interactive video advertising is headed and what marketers need to know as it evolves.
eMarketer: How do you define interactive video advertising?
Tal Chalozin: Beyond two-way communication, which is “I’m the viewer and clicking,” it’s also about dialogue between the viewer and the content or the viewer and the marketer.
Technically, what we are calling interactive video is video that has a nonlinear capability. This means you can click, the video will pause and expand, and ultimately, you spend more time with it. It goes beyond the typical 30-second spot.
eMarketer: What elements turn a regular pre-roll, for example, or in-banner video ad into an interactive one?
“What we are calling interactive video is video that has a nonlinear capability.”
Chalozin: There’s definitely the video ad itself, which could be 30 or 60 seconds. On top of it, there is overlay that we call a bug, which has two things. It has graphics, and it also has what I refer to as direction, which describes to the viewer what he or she needs to do. This bug can have an animated element. It could be another piece of video that is an overlay.
We do a lot of campaigns for movies. For example, with DreamWorks Animation’s “Puss in Boots” movie, we had many cool assets, including the cat dancing in the corner. And he had a text bubble that said, “Click to watch me dance more.” Depending on the device, you may roll over or tap, and the call to action not only describes what will happen, but also what action the viewer is required to do.
eMarketer: How do the calls to action work?
Chalozin: Our calls to action change based on the technology. The bug will change based on the consuming device. If it’s running on a tablet, it will say tap. On connected TV, it will point to the right button in your remote. For Microsoft Xbox, click X, and so on.
Next, following your click, it will open up something inside a video, which we call an engagement slate. This is the point in time where the video itself pauses, and the slate opens up. It looks like a microsite, but it all happens inside the video player. For example, you can be on a Hulu page or on ABC.com watching “Modern Family.” There will be an ad break, and the video will start. You click, and the slate opens up inside the player.
eMarketer: What share of Innovid’s video ads are interactive?
Chalozin: About 85%, but we are closing in on 90%. Since we started, we’ve been pushing the envelope on allowing viewers to participate in the video. The interactive part is our bread and butter, so this represents nearly everything we are doing.
“comScore is reporting that in the US there are about 15 billion video ads being delivered a month. This number will increase upward to between 20 billion and 30 billion a month.”
Our market share of the overall US is increasing dramatically. Now if we’re delivering 15% to 20% of the ads across different devices, then the overall US portion of interactive is increasing dramatically. Innovid’s interactive part is not really increasing because it’s been high since the beginning. But our portion of the overall market share is because the overall market is increasing.
eMarketer: What do you expect over the next two years?
Chalozin: It will definitely grow. comScore is reporting that in the US there are about 15 billion video ads being delivered a month. This number will increase upward to between 20 billion and 30 billion a month.
Currently, the interactive part is 15% to 20% of the overall number. We are seeing more and more brands involved. We start with the more obvious advertiser. For example, an advertiser that first, understands interactivity, and second, one that it makes more sense for viewers to interact with, which could be entertainment and gaming-type brands, where you can easily tune in. You see this with the “Puss in Boots” campaign or more recently, with The Walt Disney Co.’s “Oz the Great and Powerful,” where there’s more obvious interactive capabilities.
eMarketer: Entertainment is clearly a winner for interactive video ads. Are some industries better suited than others?
Chalozin: The three biggest verticals right now from a spending standpoint are CPG, then automotive, and finally, retail. Out of the top five, automotive is really the one you’d expect to be a true fit for this type of technology.
As we’re expanding, we’re breaking into verticals that you would think do not cater well to the advertisers such as CPG, quick-service restaurants and even pharmaceuticals. We’ve been creating what we call “productized capabilities,” where we’ll have something that makes sense and resonates with each vertical.
For example, with pharmaceuticals, one element we can utilize is the warning text that lists side effects. Without interactivity in an ad, it was difficult for drug companies to include it inside of the video. They needed room to have the text next to the video. Because of regulations to include this information, most did not run video ads.
“The three biggest verticals right now from a spending standpoint are CPG, then automotive, and finally, retail.”
Now they’re using the technology to do a split screen. For example, you could see an ad on ABC.com with half of it having automatically scrolling text, and the other half is the video. That space can show those side effects or can even be used to find a local pharmacy and see if it’s in stock, if it’s an over-the-counter [drug], and so forth. We’re creating capabilities that make more sense for different verticals. And by doing that, we’re increasing the addressable market dramatically.
eMarketer: What are brands concerned about when considering interactive video ads?
Chalozin: It’s a lack of understanding of what the actual value is that they can get from the ads. The actual value is that big picture question: “If I run interactive video for my Pampers campaign, how do I know it helped me sell more diapers?” It scares them.
In addition, new clients who have never worked with these ads usually ask, “Why would people interact with it?” They know about banners in a more general way in that very few people actually click on them—and therefore ask, “If it’s those numbers, why would we go through the trouble of having all these bells and whistles?” But we’re showing over and over again that the numbers are actually very high for interactivity—way beyond expectations.
eMarketer: What improvements are you looking for over the next few years?
Chalozin: The industry needs to push forward with measurement. We are doing more business with brands and getting a better sense of what drives marketers and CMOs. They are asking what the actual effectiveness of it is, and I still don’t have the answers.
They want to know if we can correlate it with other things that can be converted in dollars. We’ve been thinking about this in a couple of ways. We’d like to connect it to offline measurement or other types of traditional marketing channel metrics, including brand awareness or recall, and ultimately correlate our metrics. We are looking for metric access—where more senior people who are looking at an overall marketing expense can have a unified metric. At the end of the day, interactive video is only one component in the overall breadth of the marketing plan.
eMarketer: What best practices can you share?
Chalozin: First, good creative works. Time and time again, we see that you should go the extra mile and build something that is appealing and exciting such as the “Puss in Boots” dancing cat campaign. That campaign was amazingly successful. It wasn’t because it’s “Puss in Boots” and cool, but because it leveraged these assets in a nice way.
Another is to understand the medium. For example, take a Netbook Pro ad. Most people would not buy a $2,000 laptop directly from a video, though we are beginning to get requests to have shopping cart integration.
However, what’s relevant is that we are seeing people spend lots of time watching content or a how-to video, as well as reading reviews and browsing product carousels. By understanding the medium, you can have the capabilities fit the experience the consumer is in.
Don’t bombard people with too many options. We’ve seen a tendency toward this because the technology is easy and allows you to do many things. For example, if you are a car manufacturer, you can have an explanation about the car, location of the closest dealer, a discount offer, a test drive, and so forth—and bombard the consumer. At the end of the day, we see an overall decrease of performance with too many options.
Corporate subscribers have access to all eMarketer analyst reports, articles, data and more. Join the thousands of marketers who already benefit from eMarketer’s approach. Learn more.