Monday, July 30, 2012 - 12:55pm
Today Inside Radio looks the growing profitability of video ads on radio station sites and streams. The effectiveness of the ads are driving demand, and compelling radio to conceive of new ways to create video ad inventory.
First, the news source reports that "pre-roll" videos -- those ads you're forced to watch before the content you want begins -- are about 80% of all online video ads; among broadcast radio streams, it's closer to 95%. It's not surprising then that given their position, pre-roll video generates a much higher response than in-stream display or audio ads, and commands higher CPMs (advertisers routinely pay more than $20 for every thousand impressions (cost-per-thousand, or CPM) for streaming video, while audio ads tend to come in between $6 and $10).
The high effectiveness of the ads, and associated revenue, mean advertisers are are demanding more video inventory, and publishers (like radio) are scrambling to meet that demand. The IAB (Interactive Advertising Bureau) reports online video ad revenue grew 29% to $1.8 billion last year. BIA/Kelsey predicts it will grow 51.6% in 2012 and at a compound annual rate of 36.7% from 2011-2016 (more here). Likewise, Forrester predicts online video advertising will reach $5.4 billion by 2016.
Given this environment, Inside Radio reports some stations and sites are experimenting with "mid-roll" or "in-stream" video ads that run during the spot breaks in their audio streams. The question yet to be answered, of course, is how the effectiveness of these ads could possibly match that of pre-roll video.
"The challenge is compounded by passive listeners who minimize the streaming audio player while engaging in another activity on their screen," writes Inside Radio. "That’s why some audio publishers will only serve video ads based on engagement with the player so the consumer has a higher probability of watching the full-length video ad before they get back to audio content."
Of course, one way to get people to keep the player front and center is: original video content. Inside Radio says "radio stations need to become original video content producers... with access to celebrities, involvement in live events and creative on-air talent, radio has plenty of raw materials to draw upon."
One company that has extended its brands with original video content and seeing growing client demand for video ads is Emmis in New York. "If you’re in the radio business, you better be in the video business," Alexandra Cameron, market manager at Emmis-New York, told the news source. Last July Emmis launched its online music video channel, Loud Digital Network. And just last week Emmis-New York's WQHT launched a new web television drama called "Los Blancos" (our coverage here). Emmis is even making money in video through product placement: Ciroc vodka and Boost Mobile were heavily integrated into live streaming of its Hot 97 Summer Jam concert.
Subscribe to Inside Radio here.