Audience Targeting, ROI Draw Advertisers to Digital Video - eMarketer
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Audience Targeting, ROI Draw Advertisers to Digital Video

Audience and ROI both biggest draw and downside of online video advertising

April 15, 2011

Digital video advertising is steadily gaining momentum within online marketing, with eMarketer estimating a 38.6% online video ad spending increase this year alone. And while Break Media indicates most advertisers (79%) will spend less than 25% of their online display budget on digital video advertising in 2011, the majority (70%) plan to increase digital video ad spend within the next 12 months.

Data from the Interactive Advertising Bureau (IAB) shows agencies and marketers are looking to take advantage of online video advertising for its audience targeting capabilities and higher return on investment (ROI).

When choosing online video ad placements, channels or providers, the most important determinants are audience targeting capabilities, results—also defined as ROI or campaign performance—and audience reach. Among agencies, targeting was the most important factor: 88% rated it “very important.” Results (85%) and reach (84%) were also important. Interestingly, marketers valued ROI and targeting as much as their agency counterparts, but they placed less emphasis on reach, perhaps indicating marketers tend to demand quality over quantity, but agencies expect both.

Criteria that Are Very Important in Their Decision to Spend on Online Video Ads According to US Marketers, by Segment, Dec 2010 (% of respondents)

Data from Break Media echoes the importance of audience targeting and ROI, with advertisers slightly emphasizing targeting capabilities over ROI metrics. The Break Media and IAB data sets differ on the importance of reach. Directionally, agencies appear to place far more importance on reach at present, as depicted above. However, more data might be required to determine just how important reach is for agencies or marketers.

Criteria Used to Determine Where to Spend Video Advertising Budget According to Advertising Decision-Makers at Agencies and Marketers in North America, 2010 (% of respondents)

Although advertisers are finding success with digital video ads and are keen to make placements based on targeting, reach and ROI, they also see these areas as obstacles to boosting online video advertising budget and expanding programs.

Advertising decision-makers in North America are challenged to increase their use of video advertising; 41% find it difficult to measure ROI for digital video ads and 33% are hindered by lack of standardized metrics, according to Break Media. About a quarter (27%) also said they find it difficult to get enough reach, thereby limiting available video advertising budget.

According to the IAB, ROI measurement and lack of standard metrics were both reported roadblocks to increased use of digital video advertising. Compared to agencies, marketers were 20 percentage points more likely to see ROI measurement as the top obstacle.

Were the industry to improve ROI measurement, 56% of marketers said they would increase their use of digital video advertising, perhaps reflecting the need of in-house marketers to prove advertising value and ROI for each channel before receiving additional budget, compared to agencies who often have more budget fluidity within ad channels and formats.

Factors that Limit vs. Increase Their Use of Online Video Ads According to US Marketers, by Segment, Dec 2010 (% of respondents)

Without a doubt, the targeting capabilities and ROI of online video advertising has agencies and marketers looking to open their wallets in the coming year. But just how wide their wallets will open—and for which channels and placements—depends on both the industry’s ability to standardize metrics and measurement and the individual provider’s targeting and reach capabilities.

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Check out today’s other article, “Zappos Embraces Continuous Iteration with iPad App.”


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