Break Media Releases 2011 Video Advertising Study

Digital Video Advertising Spend to Grow in 2011 with More Than 70 Percent of Advertisers Planning an Increase; Marketers Cite Lack of Standardized Performance Metrics as Barrier to Further Adoption

LOS ANGELES – Break Media released the results of an in-depth study of online video advertising and the issues faced by marketers and their agencies. Break Media partnered with leading market research firm Advertiser Perceptions to survey hundreds of advertising decision-makers about their 2011 digital video advertising (DVA) plans, overall advertising goals, opinions on how the industry is succeeding, and thoughts on how it can improve. Among other key findings, the study shows that more than 70 percent of advertisers plan to increase their DVA spend next year; video ad networks (VANs) are under-utilized; pre-roll remains the dominant video ad format; and DVA adoption is hindered by difficulty measuring ROI and a lack of standardized performance metrics.

Key Finding #1: Video ad spend is growing, albeit slowly

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Of the 70 percent of advertisers that plan to increase DVA spend next year, agencies — rather than marketers — are largely driving the increase. This increase will be funded from television and online budgets and will be relatively small, with 71 percent increasing DVA budgets by only 1-24 percent. This means a minority of advertisers will be the real drivers of growth in video ads. Despite these growth projections, video ads will continue to be a small part of overall display advertising budgets, with 79 percent of advertisers planning to allocate less than 25 percent of their total online display ad budgets.

Key Finding #2: Video ad networks are under-utilized

65 percent of agencies and marketers used video ad networks in 2010 and intend to use them again in the coming year. Study findings also indicate that 74 percent of advertisers expect to spend less than a quarter of their DVA budgets with networks next year. This could possibly be due to that fact that awareness of VAN resources is low among advertisers overall–less than half the advertisers surveyed were familiar with all of the 10 largest VANs in the US.

Key Finding #3: Advertisers favor pre-roll over other video ad formats

Study results show that there is high awareness of almost all video ad formats among advertisers; however, pre-roll still dominates (60 percent) among formats used. Advertisers are so strongly wedded to pre-roll that they prefer it by a more than 2:1 margin over the next most favored format. Around 40% of these advertisers favor pre-roll because they believe the audience is “held hostage to watch” and thus the format “garners the most attention from the viewer.” An additional 25% say the format has the “best completion rates,” “best performance” or “best ROI.” With advertisers using an average of three video ad formats in the past year, we are not convinced a sufficient range of formats have been experienced to conclude pre-roll is most effective.

Key Finding #4: Hindrances to greater DVA adoption and online GRP

Targeting, metrics, and cost are cited in the findings as top criteria when determining where to allocate video ad budget. When asked what is not working among these criteria, advertisers agree that the top hindrance to greater use of digital video advertising is difficulty measuring ROI (41 percent). Secondary hindrances are lack of standardized metrics (33 percent), difficulty getting enough reach (27 percent), and insufficient ROI (27 percent). Despite wanting standardized performance metrics, advertisers are divided on the need for a GRP (gross rating point) for video ads. Even those who call for a GRP exactly equivalent to TV GRPs do not necessarily believe it will lead to higher spend on video ads.

“The projected growth for digital video advertising in 2011 is encouraging, and it reinforces what we’ve been seeing at Break over the past year,” said Andy Tu, vice president of marketing, Break Media. “The digital video ad space has tremendous potential, and while we clearly have some work to do as an industry to help fulfill that potential, we expect that DVA spend will only accelerate as measurement capabilities improve and as more advertisers discover how effective the major video ad networks can be.”

For the full study from Break Media and Advertiser Perceptions visit: www.breakmedia.com/video-study.

About Break Media:

Break Media is a leading creator, publisher, and distributor of digital entertainment content including video, editorial, and games. The company’s properties include the largest humor site online — Break.com — as well as MadeMan, GameFront, HolyTaco, ScreenJunkies, CagePotato, AllLeftTurns, Chickipedia, and TuVez. The Break Media Creative Lab is an in-house production studio creating original videos that range from award-winning branded entertainment to celebrity-driven web shorts to viral one-offs. The Break Media Network represents hundreds of publishers as one of the largest video advertising networks online, reaching more than 125 million visitors each month. For more information, visit www.breakmedia.com.