Testing the Waters of Online Video Advertising

GigaOm’s NewTeeVee blog has screenshots of YouTube’s freshly integrated inline video ads. This is another example of the experimentation happening with online video advertising, to find a better and more seamless ad delivery method than the largely despised pre-roll ad.

Other interesting ad integration with video (as we wrote about here) is being developed by companies such as ScanScout, which employs speech recognition technology to dynamically insert contextual ads around video content, and in some cases at the exact moment a keyword is spoken. Ad formats can be text and display and offer the ability to watch an accompanying video or go to a company’s Web site.

Good news here comes from recent research from Millward Brown and DoubleClick that points to the quality traffic that video sites receive and the higher response rates of video advertising over other forms. Data from The Kelsey Group’s most recent User View study supports this (explained in this previous post).

There are still a lot of challenges here, but also a great deal of experimentation to test the waters of consumers’ preferences and threshold for enduring various forms of creatively integrated ads. As for local, the integration of small-business video ads, served on local online destinations (such as Citysearch and, in the future, IYPs) is explored in a Kelsey Group report due out this week.