The Revolution Online Advertising Report: Beyond pre-roll

of the clip.

Oliver Smith, sales director at digital content producer Perform, is
getting great results. He says: "The in-stream video formats are still
in their honeymoon period of terrific click-through rates. We're getting
rates of between three and eight per cent."

However, there are signs that pre-roll blindness is beginning to affect
advertising effectiveness. Andreas Bernstrom, chief operating officer at
digital marketing company TradeDoubler, explains: "Pre-roll is a
disruptive method of advertising, not dissimilar to pop-ups. Conversion
rates and effectiveness of this kind of method are traditionally very
poor. Advertisers should not do pre-rolls. They should opt out and
instead find better, more relevant placements."

Obviously, not everyone believes in pre-roll blindness. Diane Rowe,
business director at media agency Zed, says: "Pre-roll blindness is not
an issue yet. Last year was the year the UK public embraced online video
advertising and I expect take up to grow in 2008. As it's still
relatively new, we see video advertising and pre-roll as an opportunity
to achieve cut-through in a very busy online environment."

However, Smith believes that this will soon change. "The UK video
advertising market is probably 12 to 18 months younger than that of the
US," he says. "Advertisers there are having to work harder to achieve
results now."

For many then the answer is to develop a new format that stops the ad
interfering with the content. An example of this is InSkin ads, which
wrap around a media player like a frame. The ad plays independently of
the content, and each ad can include calls-to-action, peel-down banners,
advertiser's promotional videos, links to websites, data-capture and
lead-generation forms.

Patrick Knight, chief executive at InSkin Media, says: "Consumers are
sick and tired of TV commercials interrupting their viewing experience
and pre-roll blindness provides us with the evidence to suggest that
online video viewing is not the place for an intrusive ad format like
pre-roll."

The early success of InSkin suggests it may be the successor to
pre-roll. Test data has shown click-through rates of between five and 20
times that of banner campaigns on the same page. It has been adopted by
publishers such as Dennis, Emap and Mirror Group, and by advertisers
such as Coca-Cola, Warner Bros, and Kia Motors. In fact, the buzz around
it is similar to that which surrounded pre-roll a year ago, or search
marketing five years ago, or email marketing a decade ago.

The problem of course is that it will become redundant just as quickly,
if not more so, as all those other technological developments.
Advertisers need to confront the fundamental issue here: good
advertising works regardless of where it plays.

There are two fundamentals of good advertising. First, it must be
properly targeted. Jamie Estrin, director of the Web TV Enterprise,
says: "We're seeing a huge take-up in pre-roll because our users are
engaging with short ten-second ads that are relevant to the clips
they've selected. So if you click on a video clip on Maxim TV, you'll
see a short movie trailer for the new Rambo film. Consumers are watching
that channel to find out about the latest movies, so that ad is directly
relevant to them."

Second, the creative must be high quality. Jonnie Coffin, director of
digital content at Film38, believes the main cause of pre-roll blindness
is poor creative. She says: "Traditional ad agencies are holding back
brands by making them re-purpose their TV ads, which are designed for
the broadcast medium only."

When it comes to making consumers take notice, getting the fundamentals
right is far more important than where it runs. As Andrew Brown,
creative director at ad agency Swamp, concludes: "Consumers say they
hate pre-roll advertising. But consumers hate all advertising, except
good advertising."

XLeague.TV focuses on content

XLeague.TV launched on Sky in May 2007 as a channel dedicated to
electronic games. It has advertisers such as Nationwide, which sponsored
its Fifa 2008 tournament, and it makes extensive use of pre-roll
advertising.

Ray Mia, channel head, admits pre-roll blindness is creeping in. He
says: "Web TV viewers are becoming blind or immune to the messages
advertisers want to impart. We're particularly conscious of this because
we cater for the most marketing-savvy demographic - video gamers."

He continues: "People now expect to see pre-roll, but they are simply
not as patient as they were two or three years ago. I don't believe that
the vast online audience has become completely blind, but early adopters
have. At best it induces blindness; at worst, it loses the audience and
dramatically reduces the stickiness of a website."

There is only one way to solve this problem, he says: provide content
consumers want to see. He says: "The more dynamic and thought-provoking
the content and the more closely it is linked to the values and
demographic of the target market, the more likely it is that surfers
will accept any associated advertising. Video gamers are so keen to see
our programmes that they engage with the ads that play while they wait."