By NYU Staff

Some are professionally edited and packaged, others are boring and have wobbly footage, but all have one thing in common: they force viewers to endure to a 15-second ad that rolls before the video. Online video units are selling at a higher cost-per-thousand (CPM) than standard display ads. Some advertisers are willing to pay more than $25 per thousand views (CPM) for a video ad compared with $7 for a standard display ad.

“It used to be like the Wild West out there, no consistent formats, infrastructure and bandwidth to watch online videos,” said Paul Johnson, multimedia journalist and partner at Studioe9 in New York.

 But as technology evolved and formats become more uniform the interest of advertisers for this rich media format sparked. A study released by the Online Publishers Association, a non-for-profit trade organization, shows that weekly online viewership of videos has jumped more than 80% since last year. The study also found that “if a consumer had a positive attitude toward an advertised brand, and liked the video content that the ad appeared within, brand consideration jumped 61%.”

Another study published recently by the research firm Nielsen showed online video usage grew by 25% in September from a year ago with websites like Yahoo, Fox Interactive Media and MSN topping the list.

Although more and more websites are jumping on the online video bandwagon it is still unclear what is the best way to attract eyeballs online and create viral videos that bring in traffic. 
 

The Wall Street Journal launched in September The News Hub, a live video steam while CNN.com has recently scrapped its online TV channel CNN.com live. CNN.com sacked its anchors as it plans to focus more on original content rather than emulating the traditional broadcast model.  CNN.com senior vice president KC Estenson wrote the unit will shift its resources to on-demand video “to create a unit focused on streaming major live events, producing video packages especially for CNN.com and increasing our overall on-demand offering,” according to media reports.

 “The online video format it is still finding its way to grab viewers’ attention,” said Rick Edmonds, media analyst. “It is still unclear how interested people are in spending time watching videos.”

 Another unknown in the online video equation is the production of pre-roll ads. Some online websites are creating online TV shows that are sold to advertisers months in advance. Other websites are still learning how to sell pre-roll video advertising. “Print sales haven’t been trained to sell pre-roll video advertising,” said Regina McCombs a multimedia faculty member at the Poynter Institute.   

On the other hand an increasing number of small, local businesses would like to roll their ads before videos, but lack the resources and capabilities, said McCombs. To raise more revenue, some media companies could offer a special service to produce these ads at a lower cost. “St. Petersburg Times was discussing how to produce ads for online video,” according to McCombs. 

Other media analysts are positive about online videos and estimate the format will grow in the future. The question remains about the right recipe for success, now that we have the ingredients and a consumers ‘appetite for this format.

“It will grow and grow and it will become part of how people communicate with each other online,” said Johnson. “The potential for video is wide open you can do more and more with it.”