Press Coverage
May 21, 2009

Dynamic Logic in NMA Magazine
Online Video: Watch Closer
By: Nick Huber

Thanks to YouTube, audiences have grown comfortable with streaming video and such sites are now booming. But what impact will more video sites have on viewing measures?

YouTube brought short-form online video to the masses and showed that streaming, rather than downloading, was the distribution model that would open up this market. The BBC adopted this model and ran with it for its iPlayer and, as these latest figures from Nielsen reveal, has enjoyed phenomenal success. "The iPlayer is the breakthrough application to make online long-form video a viable mass-media platform," says Alex Burmaster, communications director EMEA at Nielsen Online. "The fact that one in seven Britons online now visits the iPlayer is testament to this."

As YouTube and the iPlayer have fed Britons' appetite for online video, the whole content category has benefited. According to Nielsen's panel, almost 2% of all UK internet time is spent on YouTube alone, and there has been a 31% annual increase in time spent on the video-sharing site. Broadcasters have also experienced an uplift. People are now spending more time watching video on the BBC iPlayer and ITV Player sites than they were a year ago, and channel4.com has enjoyed a 142% increase in minutes spent, up from 13.2m to 31.9m.

With such audience growth, it's no surprise the sector is getting crowded. While the audience to all these sites is increasing, Burmaster points out that many are suffering falls in the amount of time people spend on any one site. According to Nielsen's data, the number of minutes spent with sites like Metacafe and Dailymotion has dropped year on year, although their unique audience numbers are up.

"There are an increasing number of video sites and the sector is starting to get quite fragmented," Burmaster says. "I wonder if this will be good for the industry or if it only confuses consumers." This jockeying for position will intensify, particularly ahead of the likely arrival of Hulu, the US video site co-owned by NBC Universal and News Corp.

The BBC iPlayer doesn't need to monetise its content, of course. But for commercial providers, the big question is how much advertising viewers will tolerate and what formats are most effective. In September 2007, Dynamic Logic in conjunction with Lightspeed ran a survey of consumers in the UK, France, Germany, Italy, Netherlands, Spain and the US. It found that a quarter of respondents in the UK had a very positive view of advertising around online video and were ready to tolerate longer ads before and after clips, although they weren't keen on long ads interrupting their viewing experience.

Dynamic Logic points out that not all video ad formats are created equal. Indeed, as the sector matures, video's impact on persuasion and purchase intent is becoming less marked. Ads have to be very strongly branded and entertaining, but they also have to take advantage of the lean-forward context of online. When a Dynamic Logic Market Norms study surveyed 3,889,602 respondents' reaction to 2,380 campaigns over the three years ending Q4 2008, they found video ads outperformed other online formats for persuasion and communication. In other words, it takes fewer video ads than non-video ads to achieve a greater impact on brand awareness. As the honeymoon phase of online video advertising come to an end, marketers need to pay close attention to the role of creative and targeting if they want their online video to cut through the clutter. "Video is very strong at building awareness and can also work well for influencing persuasion," says Christina Goodman, head of global marketing and business development at Dynamic Logic. "A lot of the time brands just put their TV creative online. They need to make changes to that creative to make it relevant to the media it's running on."

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