What Consumers Want from Online Video Ads

There are 3 irrefutable facts about online video advertising:

1. The number of US online video viewers is consistently growing year after year.

2. In Europe,  online video ads have the highest click-through rate out of all types of online ads. This trend has been observed in the USA as well, but there are no specific numbers, yet.

3. In the US, online advertising growth is the format that is expected to have the biggest growth.

Do YOU know what consumers want from online ads?

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Online Video Ads: What’s the hype?

Word-on-the-street: Video ads are a savvy strategy for marketers because the number of online video viewed has been steadily growing, as reported by eMarketer, and has a high click-through rate when compared to its alternatives.

The number of U.S. online video viewers is growing.
The number of U.S. online video viewers is growing.
Video ads had the highest click-through rate of all online ads in Europe during October-December 2008.
Video ads had the highest click-through rate of all online ads in Europe during October-December 2008.

Even more, there is talk that online video ads should perform better than its alternatives during recessionary times.  Erik Sass from MediaPost reports:

While not exempt from recessionary trends, it probably won’t suffer as badly as traditional media because it’s more cost-effective — but it’s still going to take a substantial hit, according to the lead speakers at OMMA Hollywood on Monday morning. Still, there are some glimmers of hope that certain recessionary trends have already bottomed out.

Online ad spending will probably fall 8%-9% in 2009, according to Dr. Paul Kedrosky, an economist and the editor of Infectious Greed, a financial blog — but that looks good compared to the rest of the media.

So, how is it possible that online ads are so great and recession proof?

One plausible explanation is the law of reciprocity by Robert Cialdini, in his book, Influence: Science and Practice (New York: Harper Collins, 1993).  Basically, the law of reciprocity boils down to this:  “a person can trigger a feeling of indebtedness by doing us an uninvited favor”.  Consider this example from Cialdini (p. 29):

For instance, the American Disabled Veterans organization reports that its simple mail appeal for donations produces a response rate of about 18 percent.  But when the mailing also includes an unsolicited gift  (gummed, individualized address labels), the success rate nearly doubles to 35 percent.

Online video ads are a form of entertainment and people are willing to be entertained.  An IBM study reveals that almost 60% of its study respondents said they were willing to provide to advertisers some personal information about themselves in exchange for something of value, such as access to high-quality music videos, store discounts or airline frequent-flyer points.

Therefore, the success of online video ads lies in the law of reciprocity.