Online Video Viewers Open to Seeing More Ads, But Marketers Fear Being Shut Out

SAN FRANCISCO -- There’s a huge potential to show online video viewers more ads when they watch professionally produced TV programs, said Gian Fulgoni, executive chairman and co-founder of comScore, during the OMMA Global conference Tuesday.

The ratio of ads to programming minutes for online video is far lower than on TV, and closing the gap could prove lucrative for content owners and brand marketers, he said. “I think we can expect to see ad loads increased,” he said. “Consumers are willing to accept a lot more ads and the issue will be how many ads can we push it to.” But there is a concern that online video platforms could keep advertisers from reaching viewers, said Mitch Oscar, executive vice president of televisual applications for MPG, and ad agency.

Though online advertising already captures a large portion of all direct-response ad spending in the U.S., it takes a relatively small share of all brand advertising, said Fulgoni. “It’s the branding area where the big, big upside opportunity exists,” and online video is uniquely poised to capture it, he said. Other online ad forms, such as search and display, have been effective at communicating promotional messages, but “if you're going to communicate a branding message, there’s an emotional aspect to it that only sight, sound and motion can really deliver in a persuasive manner.” But burgeoning online video platforms such as Netflix don’t include advertising, he said. “I look at it and say ‘Where can I advertise?'” he said. Netflix has great subscriber numbers but there’s no obvious path for marketers to reach its viewers, he said.

Different types of content will be delivered in different windows with different monetization strategies, said Anthony Soohoo, senior vice president of entertainment and lifestyle at CBS Interactive. First-run shows will have a split of ad support and subscription fees, he said. “Right after that, they'll probably be available on demand but with advertising support,” through programs such as TV Everywhere, he said. Even later, they'll appear on platforms such as Netflix where there is less of an opportunity for ads, he said.

Consumers will accept more ads as long as they feel they're being properly compensated for watching them, said Ginny Musante, director of channel marketing for Microsoft Interactive Entertainment. “It used to be that an advertiser could just put their ads in content and interrupt the experience,” she said. While DVR owners often skip those types of traditional ads, viewers “are actually incredibly tolerant and appreciative of advertising when they actually get something of value in return,” she said. On the Xbox Live platform, sponsored programs where a marketer has offered a free piece of premium content such as a movie in exchange for a viewer watching a longer ad, have been very popular, she said.