Web Watch: Interactive video advertising will become the standard

Someday we’ll look back at the early days of the Internet and realize that banner ads were the Internet’s training wheels before interactive video advertising became the standard ad units on the web. There are some early indications that this is starting to happen right now.

In December 2008, American adults watched 14.3 billion videos online. This was 13% more videos viewed than the prior month, according to comScore. Mediamark Research and Intelligence (MRI) reported in their Fall 2008 Survey of the American Consumer that downloading TV programs and watching online videos posted the largest year to year increase among adult Internet users. More than 23% of the adult population in the US watched online video in the past month, according to the MRI study.

Additional evidence of this media shift comes from a recent report from Contentinople Insider, a subscription research service that concluded “as viewers spend more time online watching video, ad spending is starting to shift and is expected to increase by as much as 50% this year.”

TV viewers have come to realize that a commercial interruption is the price we all pay to watch programs we want to see. The pre-roll video ad is the price we pay to see a free online video that we have decided is of interest to us. Longer video formats may also use mid-roll ads as a way to offset production and distribution costs. If you place the ads at the end, you won’t get a lot of viewers so pre-roll and mid-roll ads will eventually become the standard compensation model for companies distributing video over the Internet. There may be a place for banner ads in the future but video advertising will be the dominant ad unit on the web. Are you ready?