With 93% viewers choosing ad blockers & 82% watching mute videos; are online video ads effective?

The highly respected 2016 Internet Trends Report compiled by Mary Meeker suggests that digital video ads might not be as effective as they are expected to be

e4m by Abhinn Shreshtha
Updated: Jun 6, 2016 8:10 AM
With 93% viewers choosing ad blockers & 82% watching mute videos; are online video ads effective?

The highly respected 2016 Internet Trends Report compiled by Mary Meeker was released recently. The report, which among its usual interesting insights, had a surprising revelation, with Meeker suggesting that digital video ads might not be as efficient as they are supposed to be.

Meeker quotes a survey carried out by Unruly, an ad tech company that specializes in video, which stated that 81 per cent viewer’s mute videos, 62 per cent are annoyed by pre-roll ads while 93 per cent consider using ad blockers. The report further states that video ads that work are authentic, brief, contextual and entertaining.

That questions should be raised about the effectiveness of the digital medium is not without precedent. When Google said last year that more than 50 per cent of ads on its network are not seen, it created panic in certain quarters, but for others it was not that much of a surprise. Similarly, Facebook’s decision to stop development of a DSP earlier this year was a direct result of the amount of bad ads and bot traffic residing on ad networks.

Given how new the ecosystem is and how quickly it is growing, these aberrations are not unanticipated. And that video ads; the shining light of an exploding digital advertising, would also be victim to the general malaise is hardly surprising.

One way of looking at it is, as Madan Sanglikar, Co-founder & MD (ad2campaign) at Affle says is that even if the numbers are true, the advantages of targeting and measurement beyond the first engagement provided by digital platforms can still provide advertisers with more value at lower levels.

“There are only two kinds of ads----good ads and bad ads. The whole thing about intrusive and non-intrusive is a myth. All there is to it is whether the viewer is in the market for a product and this is where the great advantage of digital is; it allows you to reach the right TG. And if viewers are skipping ads, it is better for advertiser as he does not have to pay, and now he knows that this person is not interested in his product,” explains Sanglikar.

Other digital experts we spoke with opined that the question of ad efficiency is a broader one and not limited to video advertising.

“Video ads are similar to most other ads. The click through rate for text ads is around a percent, display is much worse. For TV on the other hand you don’t have the choice to skip the ad. So, in the greater scheme of things, video ads are not that bad. Could they be delivered better? Sure and with advent of native advertising there will be more competition to video. But, right now, they are the key way of monetizing video so they’re not going away soon,” says Venugopal Ganganna, CEO and Partner at Langoor.

The video advertising explosion

 A February 2016 market report by eMarketer says that mobile video ad spending in the US jumped 80.6 per cent in 2015 and is expected to see double-digit growth through 2019. A similar trend has been forecasted by different sources for global video ad spending too.

For example, according to BI Intelligence, online video ad revenue will reach almost $5 billion in 2016, compared to $2.8 billion in 2013.

In the Global Entertainment and Media Outlook 2015-2019 report, consultancy firm PWC says, “Video exhibits the fastest growth in wired Internet advertising. Although video Internet advertising revenue comprised only 4.7 per cent of total Internet advertising revenue in 2014, it has been identified as a potential source of growth for publishers and broadcasters alike due to the increased adoption of tablets and the rise of IP-delivered video services. Rising from $6.32 billion in 2014 to $15.39 billion in 2019 at a 19.5 per cent CAGR, video internet advertising’s rate of growth will exceed all other sub-segments of wired Internet advertising revenue.”

The questions of viewability and efficacy

That video advertising provides one of the best ways to engage consumers is something most digital agencies believe in.  For example, Lavin Punjabi, President and CEO of Affinity Global, is of the opinion that the quality of ads needs to definitely improve but this, he says, does not erode the fact that there is nothing “more compelling” as a story telling tool than a video ad. “That’s not going anywhere for the next 100 years. Let’s establish that one fundamental,” he said.

One report puts the click through rate (CTR) for video ads at 1.48, the highest for any digital ad type. However this does not mean that all is rosy in the segment.

A case in point; the same eMarketer study quoted earlier also says, “Almost any advertiser worth their salt knows that these lacklustre experiences won’t deliver the desired results. And yet bad user experience is, if not the rule, certainly more than mere exception.”

The fact that video ads, especially pre-roll ads, are considered unwanted is no surprise. In its 2015 viewability report, Google said the average viewability of video ads across the internet (not including YouTube) was just 54 per cent, while for YouTube, the company claimed it was as high as 91 per cent across devices and platforms.

The problem here is that if these numbers are true, then brands need to start looking at whether their digital video strategy is actually getting the right results for them.

“The majority of the video ads today are in pre-roll formats. This is a copy paste of the ad experience from TV. That in my opinion does not work. You have to customize the video ad experience to suit the mobile device and the ever changing consumer behaviour. The internet is open and free for anyone to consume any content. Within that context, when he (a viewer) is forced to watch pre-roll, he is bound to get annoyed. Video will evolve to become vertical, will mainly play in mute state, will carry captions by default, will become interactive and will not be forced upon users,” said Punjabi.

More choice, more brevity--the solution?

For agencies, ensuring ads are properly certified is one ways of resolving questions about effectiveness, said the South Asia Head of one of the largest ad tech platforms.  “I think this (numbers mentioned in the report) might be an oversimplification. They might be looking at the overall picture,” he said. However, he also agreed that different platforms might have different definitions of viewability, which could lead to confusion and hence the need for following a single standard.

Another issue could be that brands are now creating a lot of long format content, opines Piyush Chhaperwal, Director (Sales) for Mobile & Online at Vdopia India.

“The shorter the communication, the more it engages the audience.  Frequency capping might help or shortening the length of the ad. Even when skippable ads are used, you are just forcing the consumer to take more steps to view the video. Increasing the length of their videos is actually hurting the brands,” he added, further stating that new formats like pushing ads ‘outstream’ might just be the solution in video advertising.

The basic ideology behind digital advertising has always been that ads support a free ecosystem for the user, but Punjabi and Chhaperwal feel that overdoing the advertising bit combined with intrusive or bad quality ads is further pushing the consumers towards options like ad blockers; especially if viewers feel that they are being forced into watching ads.

Pointing out to the fact that the Internet Trend report 2016 states that 93 per cent users consider using an ad blocker, Punjabi says that this clearly shows that all current ad formats are broken, especially in display advertising. “So many accidental clicks, forced pre-roll videos, forced interstitials, constant retargeting can upset consumers. Let’s build ad formats that are more consumer-friendly. Stop forcing ads down the consumer’s throat and he will not want to install an ad blocker,” he said.

This thought was also echoed by Sanjay Mehta, Co-CEO of Mirum India. “We have seen that video ads work but pre-roll ads have always been an irritation. The larger issue is of ad blocking. Since users now have an option to use an ad blocker, they are more willing to try it,” he said.

There is some truth to this. By 2014, nearly 76 per cent of YouTube ads were on TrueView, which are the skippable ads on the platform. The reason for this was that brands generally saw much better CTRs on these ads; because the viewers have the choice of watching ads that they actually wanted to watch.

The road ahead for advertisers, if they want their online video ad strategy to succeed, is to make ads that are authentic, brief, contextual and entertaining.

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