With viewership of long form content on a rapid upward trajectory and its addressable audience representing more than 80 million Americans, we are clearly in an era of significant opportunity for the online video advertising market. But despite its growth, the industry is still tinkering with the most effective business model to monetize this valuable, engaged audience.

Among the questions currently being debated by online video publishers is: should we stick with an ad supported model or move towards paid subscription models? (Or possibly a hybrid of the two?) Will viewers prefer monthly flat fees a la Hulu Plus, or episode/series-level micro payments that resemble the iTunes model? Within ad-supported models, how do we get to an ad load that can begin to reap TV-like revenues from online eyeballs, now that we’ve taught our audiences to expect a greatly reduced ad load online?

Putting aside the subscription versus the ad supported debate, and focusing on how to make an ad supported model work, the key starter question seems to be: What is the right amount of advertising to run against a TV program online?

This question splits into two parts:

1. How much advertising will viewers accept as fair exchange for free programming that they can view on their own schedule?
2. At what advertising threshold or with what kind of ad mix will brand metrics and favorability measures begin to exhibit diminishing returns such that it reduces the incremental profitability of more commercials?

This post and related whitepaper examines question 1, and specifically focuses on how the age of the viewer impacts the answer and its implications for developing the optimal ad experience for different programs online.

Survey takers were asked to nominate/choose the length of video ads against a TV hour which they felt was ‘negligible’, ‘minimal’, ‘long enough’ and ‘too long’. We then conducted a sensitivity meter analysis to see where the results intersected, giving us the optimal length of video advertising per TV hour.

In researching this report, we considered multiple variables beyond age, including income, platform preference, reasons for viewing online, satisfaction with TV and opinions on advertising both on TV and online, before continuing to explore age as the variable that revealed the most useful learning.

Key Findings

Across ages 18-49, 7 minutes per hour represents the upper limit of advertising load for which viewers will remain engaged, with just over 6.5 minutes being the middle ground for achieving maximum engagement. Importantly, this 6.5 minute threshold represents an ad load that is more than 50% greater than what is currently being served to online audiences.

6 minutes against a TV hour is at the low end of expectations across all age groups, revealing that there is nothing to be gained by ever lowering ad loads beneath this threshold against a TV hour online:

How Sensitive is Your Target Audience?

Although the optimal and lower end of ad tolerance show strong similarity across age groups, the sensitivity band and upper limit vary greatly, cautioning publishers to be flexible and agile when experimenting with ad loads depending on the age of the intended or likely program audience to avoid viewer abandonment.

For instance, 18-24 year olds show vastly greater sensitivity to ad loads. The difference between negligible and too long is very slight, at less than half a minute, revealing an audience with lower frustration tolerances and less willingness overall to have their viewing experience become too cluttered online. Advertisers need to exercise greater caution with campaigns aimed at this age group and pay careful attention to audience retention and drop-off rates as ad thresholds rise to avoid impacting their online reach.

Interestingly, more than 20% of 18-24 year olds thought that 10 minutes of advertising was still minimal, although at this threshold, you run the risk of going beyond the comfortable threshold of nearly 60% of your viewers. Ad loads against original TV programming can be increased, but a one-size fits all approach will miss the greater opportunity.

The starting point lies at a threshold 50% greater than where we are currently, taking the ad load against a typical TV hour up to around 6.5 minutes. However, when considering the best approach, it is important to bear in mind that ad sensitivity thresholds vary by age and other factors, with 18-24 year olds showing particular sensitivity and the greatest need for upfront and ongoing behavioral testing.

The progress of models for monetizing original TV programming is critical to the growth of the video advertising industry, and will become increasingly important to the evolution of TV advertising as more and more viewers opt for platform agnostic viewing habits. But, we do need to exercise caution when experimenting with video ads online, and look beyond pure replication of traditional broadcast ad models as this fails to recognize the value in new platforms beyond additional eyeballs.

For further exploration of this topic, download the whitepaper: ‘Great Expectations: How Advertising for Original Scripted TV Programming Works Online’. The full study explores the particular question of ad load and ad sensitivity, and does not cover the question of how best to leverage the online platform experience when innovating around video advertising. This, and other related questions will be important ground for future studies, so as to be able to take into account the social, viral and interactive nature of video which provides new value to advertisers in addition to the traditional TV experience.

I am extremely excited to share with you our announcement from earlier today that comScore has just introduced Video Metrix 2.0, the next generation of our industry leading online video measurement product. comScore was the first company to introduce online video measurement about 5 years ago and to say that the online video landscape has changed since that time would be an understatement! YouTube was still barely a blip on the video radar and Hulu wasn’t even a figment of someone’s imagination…

But here we are today, 5 years later, and online video has become a massive media channel in its own right. 180 million people in the U.S. watch online video for an average of 13 hours each month. And what was once a huge repository of primarily user-generated content video has now evolved to become a secondary (or in some cases, primary) channel for viewing professionally produced long form content like movies and TV episodes. In a recent study about the interplay between TV and online viewing of TV programming, we learned that online video typically adds an incremental 6% to the size of a TV audience for original scripted programming. That incremental viewing audience is even greater among 18-24 year olds (13%) and 25-39 year olds (9%).

As online video has evolved, so too has its ability to monetize through advertising. When we first began measuring this medium, video ads were virtually non-existent but today they account for about 12% of the total number of videos viewed online. As this shift occurred, comScore recognized it was time to rethink the way we were measuring online video in a way that not only accounted for ads and monetization rates, but also in a way that makes online video more directly comparable with TV.

So with Video Metrix 2.0, you are going to see a different look in how we present this data to better conform to the new web video paradigm. Among the innovations available are the ability to segment between online video content and ads, several new reporting metrics to better evaluate video ads and their reach and engagement within video audiences, and TV-show level reporting. Our new ad reporting will also help advertisers understand which of the sites featuring predominantly long-format content are monetizing most successfully and reaching audiences with video ads throughout their programming. Below is a view of the average number of video ads delivered over the course of June to viewers on the site:

We will also have the ability to provide show-level reporting for the major TV broadcast sites. Below are the June rankings of top shows being viewed online ranked by number of viewers for ABC.com, CBS.com and NBC.com. (Please note that these figures represent viewing during TV’s summer hiatus, and online audiences should surge as fresh episodes hit the air this fall.)

We hope you are as excited about these enhancements as we are, and we look forward to continuing to bringing you the most detailed, accurate and innovative online video measurement in the industry!

Note: Video ads include streaming video-advertising only and do not include other types of video monetization, such as overlays, branded players, matching banner ads, homepage ads, etc.

As we further explore the possibilities of cross media advertising, we are beginning to see that the value of “transmedia” as a strategy that can assist marketers in leveraging the unique benefits of multiple platforms and activate deep brand experiences that entertain and invite participation and engagement from its viewers. In his book Convergence Culture, Henry Jenkins defines transmedia as storytelling that “immerses an audience in a story’s universe through a number of dispersed entry points, providing a comprehensive and coordinated experience of a complex story.” Some prominent examples of transmedia storytelling in the context of entertainment include movies like The Matrix and TV series such as Valemont High, Lost, Heroes, and In the Motherhood.

Often mistaken for simple cross channel distribution, (wherein the same content is sent across multiple platforms) transmedia is not about milking one storyline or set of characters across multiple media. While cross platform distribution is important in an increasingly platform agnostic world, (a recent comScore study found that 35% of audiences tune in on platforms other than TV to watch original scripted TV programming), transmedia goes deeper and requires knowledge and appreciation of what each platform does best.

When thinking about a transmedia strategy, it is important to first understand the unique benefits of each platform. TV, for example, is undeniably the most powerful reach vehicle, but online video often delivers higher impact per viewer. In fact, it scores higher across several key brand metrics with regards to advertising:

Source: ‘The Future of Original TV Viewing and the New Digital Consumer’ (January 2010 study conducted by comScore.)

In addition, an astounding 43% of people who watch original TV programs on both TV and the web have stopped a TV program that they were viewing on the web midway in order to visit an advertiser’s website, which indicates some exciting opportunities for brand advertisers to reach the right consumers via online entertainment channels. And that doesn’t even address the potential of brand integration, relevant placements, and sponsorship that come with transmedia implementations.

The key point of transmedia storytelling is that dispersed entry points contribute to a complex (and complimentary) universe that is greater than the sum of its parts – so that at the point of origin, multiple channels are not just considered, but deeply planned out and integrated in ways that will engage the viewer where he/she is already spending their time. Only with this kind of tight creative integration and clarity of purpose are we able to create true cross media experiences that add value across dispersed narrative paths and entertain consumers as they evaluate their options.

Transmedia advertising requires a fundamental re-think of how the creative and planning process is organized, demanding a breakdown of silos and greater collaboration and agreement on campaign objectives across teams at the outset. The potential obstacles to successful implementations include lack of planning and integration, as well as any assumption that new channels are merely ‘another screen’ for which the same creative can simply be repurposed. While this may work in part, it misses the larger opportunity.

With so many easily available screens and media platforms, the attention and engagement of consumers will only be won by higher quality, more enriching and relevant experiences. It’s up to brands – and a new breed of agencies and advertisers – to understand how consumers are spending their time at each new touch point and to entertain them there.

It’s occurred to me as of late that the online video conundrum – simply put, the fact that online video advertising growth is not tracking at the same rate as that of online video consumption – is in many ways self-inflicted. While there are several reasons for the slow shift in ad spend, I can’t help but think that one of the biggest is the apparent disconnect between the way agencies and their brands want to work with producers and how producers expect to work with agencies.

I recently moderated a discussion at the LATV conference about this very topic and wanted to share some thoughts…

On the panel titled “Digital: Show Me the Content: Online Video from the Media Buyer and Brand Perspective” were five people from the agency world, all of whom have had successful forays into original video and branded content campaigns. The audience, on the other hand, was largely composed of original content producers and writers, mostly from the traditional TV and film world. The unanimous agreement among the panelists was that the huge barrier to working with original content producers (assuming the agency had already overcome the barrier of convincing their client to invest in video), was the lack of understanding of how brands and agencies work and their expectations of the agency-producer relationship.

If you think about it, this shouldn’t be too surprising. After all, the video industry exploded without a business model, and then decided that advertising support was how it was going to deliver on its potential. Agencies and advertisers were told to quickly catch up, without much evidence of the value of online video. At the same time, video producers and publishers saw this uncharted territory as a “big party” happening at the brands. They showed up with all their friends, the circus and pyrotechnics, and knocked on brand advertisers’ doors with the good news, to which brand advertisers responded blankly and fairly, “who are you and what are you doing here?”

Online video represents a different paradigm from the traditional TV development model. This new model is much closer to the world of product placement and brand integrations. Whereas an independent producer in the TV world would find it very typical to pitch several fully-baked ideas, this is not the case in today’s new world of original web video. It no longer cuts it for a content developer or producer to simply pitch an idea and run with it, without considering how a brand might fit into the piece. Agencies and brands want to be a part of the creative process so they can ensure the brand is being fully integrated into the story in an authentic way. They want the producer to truly understand the brand essence and broader brand objectives while allowing their agency to be more iterative.

This disconnect between the agencies and content producers is certainly one of the factors contributing to the slow shift of marketing dollars to the online video space. The conversations we had at LATV help bring these two sides closer together, which is why I wanted to continue the discussion here.

So, what are the key takeaways? How can we bridge this gap to create a more harmonious union between the two stakeholders? The message to producers from my agency-packed panel was simple: Content developers and producers must find ways to identify true synergies between a brand (its essence and objectives) and a particular media experience. Know the value you bring to the table and express it to agencies using quantifiable evidence (research, research, research!). Who is your audience? What will the distribution strategy be? What is the fallback in case you are not able to deliver the audience that you promised to the brands? In TV, you have make-goods. In video, what’s your proposed equivalent?

And finally, I think we all recognize that relationship-building is critical. There are no shortcuts to building strong relationships with agencies – or with anyone for that matter. Any producer, whether from the traditional or new media genre, understands that these relationships are built on trust over time, and a few solid credits under your belt also go a long way in proving in advance that you’re going to be able to deliver.

If the content producers and agencies can really begin to collaborate and see eye-to-eye, it will result in creating more integrated and compelling advertising efforts that will drive eyeballs and engagement. When that begins to happen, the trickle of advertising dollars to online video will become a flood and the medium will begin to fulfill its true potential.

I was a member of the measurement panel at the IAB Social Media Conference recently, and we talked a lot about the social media ‘scorecard.’ There were a variety of perspectives represented as Bryan Wiener, CEO of 360i, moderated the discussion between Liza Hausman of Gigya, Keith Kilpatrick from Buzzlogic, Jonathan Carson from Nielsen Online and me. We all agreed that we wanted the discussion to be practical and useable.

I imagined the social media scorecard in vivid color, its clarity overwhelmingly simple, something marketers and agencies could put in their pockets and use immediately when next evaluating the effectiveness and efficiency of social media channels in an upfront media mix. Sounds easy, right?

Enabling quality conversation (ranked on a ten point scale) with my consumers? Check. Possessing pass-along value that inspires influencers to inspire others about my core brand message, directly relatable to product sales? Check. The fundamental elements of virality, guaranteed to spread like wildfire through cyberspace? Check. Keep full control of my brand? Double-check.

Now, I am fully in favor of scores and scorecards. Without them, how can you know if your efforts are effective, or if you are winning or losing? But while we all agreed that measurement must be the cornerstone, we also recognized that there is no silver bullet. Especially in emerging areas that are still defining the rules of the game, where many marketers are still deciding whether to get in the game to begin with.

So let’s put away our scorecards and magic bullets just for a little while, and talk about what we need to know to get started.

Three Useful Points to Consider in Social Media Marketing and Measurement

1) Clarity is key: define your success
As with all media, before diving in, ask yourself: what will it take for you to look back at the campaign and say that it was successful? Perhaps it will be based on the number of coupons downloaded, the number of 18-24 year olds who become fans on Facebook, CRM signups or overall brand effectiveness measures and attitudinal shifts… Only you know what is important, but whatever it is, be clear about it so you can prepare to measure it, and adjust your campaign on the fly if need be.

2) Keep measurement simple and familiar

To break this down, separate quantity questions from quality questions. On the quantity side, keep it simple: know how many people you want to reach, and then measure how many you actually reached post-campaign. Make these metrics as familiar as possible – if they are expressed in comparable terms to other parts of your campaign, they are more likely to be tangible and accepted. Reach and frequency metrics are not going away any time soon.

The quality question allows for a bit more creativity – here is where you can bring in ‘engagement’ and otherwise tie in your KPI’s from (1) back into your web program. Basically, you are building a track record with your brand and making the case that there were quality elements which underscored that social media marketing was a good choice. Depending on what your success markers were, these metrics will vary – but can range from ‘branding” metrics (e.g. as measured through comScore’s Brand Metrix studies) all the way to the lift in offline purchasing.

3) Control is not the point, listening is

We know, we know… this is a scary premise. But even the best clarity, choreography and execution cannot completely guarantee control in a social media campaign. So let’s imagine for a moment that we can suspend our disbelief about relinquishing control and needing to communicate, and focus instead on how to be heard -- because attention, after all, is a scarce commodity. How might this be valuable, and what is the added value of being able to listen directly, and adjust when needed?

The value proposition here is also the trade-off – this is two-way, and frequently one-to-many. Listen to the good. Respond quickly to the bad, and respond even faster to the ugly. Enable the conversation, rather than attempting to put it in a chokehold. People are talking about your brand anyway, so you may as well get down in the weeds and know what’s going on.

And don’t forget to bring your scorecard with you.

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Fourteen billion is a big number, and we like big numbers. They have impact. They are bold. They make great headlines (see above). But when it comes to making online video audiences targetable and valuable, big sweeping numbers can mislead us into thinking that video is complicated, or that streamers are somehow hard to reach in meaningful, measurable and scalable ways.

So how do we crack open the black box?

To begin, understanding audiences is key. Demographic composition – based on real people, not cookies or machines – is crucial to ensuring that target audiences are capable of being reached via the planned streaming channels. And it’s dangerous to just make media decisions off a website’s demographic breakdowns – remember, frequently between 20-50% of a site’s video traffic occurs through syndication and viral distribution.

Further, understanding the nature of video experiences themselves is mission critical. Not all video experiences are created equal, and therefore cannot be used to achieve identical – or even similar - ends.

Put loosely, an online video experience can be broken down in two ways:
1) As transportation
2) As education or information

A transportational video experience – aka “Get me outta here!”– occurs when a viewer engages with online video in order to be swept away and consumed by the media experience. The program is the end in itself.

This can be in the form of a bite sized SNL clip parodying Sarah Palin designed to wipe momentarily the world’s woes (or in the case of the Palin clip, accentuate them but with humor). It can also take the form of longer format programming such as Lost, Heroes and Desperate Housewives, where traditional broadcast programming is repurposed for the web. In both cases, the viewer is looking to be entertained and to be immersed in the world of the show, and to receive a familiar experience sweetly reminiscent of turning on the TV or going to the movies. In this zone, the viewer will probably be reachable by ads, albeit passively. Not to abandon the program right in the throes of Peter Petrelli being flung from a window by Sylar in Heroes, but to hear the message and, if it resonates, potentially look for more information afterwards or otherwise hold the information in the psyche, filed for when it is needed when it comes time to pick brands and make purchases. In this instance, the effect of advertising is ‘soft’, and more likely to result in benefits such as increased brand awareness, brand lift and – ultimately – a purchase.

An educational or informational video experience on the other hand – aka “make me smarter, more interesting, informed or otherwise more able to be competent at something” – occurs when a viewer actively seeks out information that can be shared in video format. Here, the video is the means to an end – be it news information, cooking a meal, picking a travel destination, learning how to play the guitar. Something is shared with the viewer that he/she didn’t know prior to watching, and the viewer is in “action mode”.

Ads can become highly targetable – and content can encourage the type of engagement that prompts the person to do something – with this kind of programming. Imagine that you were researching or planning a holiday to Mexico, and wanted to see some video clips about the beaches along the Caribbean Coast, or the best cabanas. Targeted to this video, is a special overlay for Expedia offering cheap flights to Cancun. Or an offer for a package deal vacation, or 3 night stay in a beachfront cabana. Or even for travel insurance. The chance that the video experience would cause you to act is far greater than if you were treated merely as if you were part of a mass audience, none of your likes/dislikes or intentions discernible from the next person. Similarly, the viewer that avidly watches how-to-play guitar videos might be a great target for live concert deals or real-life guitar lessons, having already put up their hand and shown interest.

The takeaway here is this: the size of a network measured via streaming numbers is important to show scale and the potential reach through video advertising. Audience demographic profiles are also crucial in getting past “streaming” and to the people who are actually capable of being reached. But there is also a lot to be said for understanding both the content and the context of videos when considering this aspect of a campaign, in order to optimize the information that audiences are already volunteering about what they’re up for, and what they’re into.