The rise of interactive video and what it means for online marketing

Online video isn’t exactly the new kid on the block amongst those the digital industry, but it is maturing into a meaner, tougher kind of service. It is also the one area of display advertising that I’m expecting to flourish over the next twelve months or so, especially in the interactive segment. 

It’s no surprise that video in general is on the increase, given that users are continually wanting an engaging experience. According to comScore’s US video metrics, 14.5bn online videos were watched during March this year - a massive 11% increase from February - and I’m equally of the opinion that this trend will be very similar in the UK. 

Although a great deal of online video is user-generated content, there remains a large proportion that is not. This crosses over slightly into the realm of IPTV, where the likes of the BBC’s iPlayer and the recent Sky Player continue in popularity. Furthermore, on-demand media services such as Joost or Hulu, (which has just broken into the top three platforms with which users view videos in the US), show no sign of slowing down. 

Signs are therefore pointing towards the fact that users are increasingly looking for engaging experiences online, and the more personal, the better. In reality, this notion isn’t actually all that new, but the fact that advertisers need to understand how to successfully use video in the marketing mix is a recent evolution of this line of thought. 

For a number of years now, generally the standard video advertising formats within the industry have been either viral, pre- or post-roll, or a straightforward static or automatic-playing video advert as a display campaign; all which are arguably un-engaging (viral to a lesser degree) and often give poor conversion results, whether they’re placed on an internal or external website. 

In a recent study by IBM, they were quick to highlight that businesses need to realise that as user expectations of online content shift, any engagement with an online audience needs to match this: 

In light of the explosive growth in online and digital media formats, and a corresponding decline in traditional advertising (such as print, TV and radio)... Companies must move closer to adopting an integrated, measurable marketing services model as they identify and adopt the next generation of digital formats."

Organisations continue to push the boundaries of engaging users within websites – a great example being the recent Amazon Windowshop - but I feel there is still a lack of capturing people this way through online advertising. Flash is fantastic, but it does have limits, so I’m going to go out on a limb and suggest that with online video on the rise, there's a massive untapped opportunity for advertisers to embrace this medium successfully, especially given the sudden blossoming of interactive video. So, let’s look at this brave new world of interaction and the possibilities that exist. 

Over the next couple of years, making online advertisements engaging to the user will continue to be important; more so when the prediction by eMarketer that more than four out of five (around 80%) internet users will watch online video ads in 2012. 

At the moment, technological developments mean that video already has a varying level of engagement and whilst there’s no reason that this won’t develop further, those who are considering running online ads would be wise to consider the options that currently exist. 

For example, many of the available types of video interaction are offered by the startup company Quick.tv. These include: 

• Text or Image Overlay – Where text or images are inserted into, or over, a video. (A good example of this are the pop-up ads that can be found on YouTube). 
• Chapters - Allows viewers to skip between sections within a video by inserting chapter points.
• RSS - Display an RSS feed within your video – this can be automatically updated within a video in real-time. 
• Tagging/Hotspots - Tag objects in a video with a description. A URL can then be set to drive users to a specific destination when the tag is clicked. This is especially useful for e-commerce, where the user can be taken directly to a product within an online store. 
• Forms - Insert forms into video ads to gather data from your viewers. 
• Voting Overlay - Insert voting forms into a video and display the overall results to the user when the video finishes. This is done in real-time. 
• Videowall - Display numerous interactive videos within the single screen of a video player.

VideoClix.tv presents a great demo of how some of these options look in reality and how easy it is to work them into a campaign: 

There are also many other companies that exist who provide these kind of interactive video services, such as coull, liveclicker, ooyala, treepodia and vzaar. So there’s no excuse for organisations not to at least explore the possibility of creating video ads that capture users, especially given the evidence that they’re performance driven. 

“Interactive video consistently drives the user to take action online, instead of prompting offline activity,” Jack Thorogood from Swiffen says. “It’s been proven that interactive video easily manages to drive the results above and beyond an advertiser’s expectations”. 

He also added that in the view of Swiffen, a campaign is deemed a failure if there is an engagement rate of less than 15%. All of the interactive companies I spoke to agreed with this, which is fairly remarkable if you consider that a 10% engagement is generally considered to be fairly high for standard video ads and even less for normal display. Banner ads - and many networked paid search ads - generate far lower click rates. 

As if this wasn’t enough, many interactive companies ask only for a fixed fee and/or a CPA rate, which stamps heavily on the worn CPM model and is likely to save the advertiser money against lost impressions. 

So, to try and summarise what is a complex but important issue, although online video is being used as part of the online marketing blend, in line with an unarguable increase in user-demand and consumption of video media as a whole, there is an enormous amount of potential to engage users to a far greater degree. 

This in itself can increase conversion rates and ensure that any advertising spend is used even more efficiently to deliver both a measurable and justifiable ROI, especially when the ease of implementing efficient tracking and analytical technology into video campaigns is taken into account. 

Although there are some great new tech companies flourishing to support and create such interaction, I suspect that we’re only seeing the tip of the iceberg in terms of visual gratification, user engagement and overall use of video within the internet. Who knows what the future holds? All I can suggest is that this is one area that anyone seriously involved in interactive marketing, advertising or e-commerce needs to watch closely in the very near future. 

If you know of any other companies offering interactive video services, or can point me towards any recent examples of companies or campaigns that are using this medium, I would be extremely interested to know. Please leave the relevant details in the comment box below.