Written by Liz Gannes
Posted Thursday, April 3, 2008 at 1:15 PM PT

 

Nailing Down the Video Ad Market

After we quoted the CEO of VideoEgg this week as saying that the market for overlaid video advertising would be a smaller than previously expected, we got a lot of feedback from his competitors. When it comes down to it, they don’t disagree with VideoEgg’s estimates, they just think their own approaches are better. But along the way they shared some interesting quotes and numbers.

Tremor Media Chief Revenue Officer Randy Kilgore:

“If your perspective is that you have only user-generated content that you’re trying to monetize, then overlay is right, but where we work the commitment between the user and their content is much greater. Then you’re far more likely to appreciate the fact that the ad is helping make that content available for free. So that’s a huge market.”

Translation: Pre-roll is where the money is. “It’s working,” Kilgore said. “It’s not sexy.”

His market size estimate: Kilgore referred to eMarketer’s estimate of $1.35 billion in online video advertising spending this year, calling it “conservative.”

Brightroll CEO Tod Sacerdoti:

“It is April, 2008 and VideoEgg is now realizing that the bulk of the video ad business is in pre-roll and in-banner video? We have [been] expressing this belief (and building a business around it) since a year and a half ago, and it shouldn’t take burning through $32 million in financing to figure it out.”

Translation: It’s not that I agree with you, it’s that you agree with me.

His market size estimate: Sacerdoti said he sees $500 million in advertising placed against video content this year: $200 million in pre-roll, $50 million in in-video/overlay, and $250 million in display. And a kicker: “I would be shocked if there was $10 million in non-YouYube in-video in the entire business. If you take out YouTube I think it’s just literally irrelevant.”

To sum up the arguments so far: After VideoEgg determined that overlays on video content were a small market, it found other content (Flash games, Facebook apps) on which to overlay ads. Tremor Media and Brightroll agree that overlays are a small market, but they think other opportunities to monetize online video content are more promising. So buck up and watch the pre-roll, already.

If you want to keep the conversation going (especially if you have numbers to back up your argument), please contact me or leave a comment.

 

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Topic: Money Power
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Comments & Trackbacks

  1. Then you’re far more likely to appreciate the fact that the ad is helping make that ad available for free. So that’s a huge market.”

    Is that supposed to be the content is available for free or are they serving ads in front of more ads?

    lokey on April 3rd, 2008 at 2:00 pm - Permalink

  2. Wow, those are surprising numbers. So we’re stuck with pre-rolls, eh? That’s okay, I guess. Let’s just make better, shorter pre-rolls!

    Mark Schoneveld on April 3rd, 2008 at 2:20 pm - Permalink

  3. Thanks for catching the mistype, lokey. Fixed.

    Liz Gannes on April 3rd, 2008 at 2:30 pm - Permalink

  4. [...] Nailing Down the Video Ad Market « NewTeeVee on April 3rd, 2008 at 1:15 pm - Permalink [...]

    VideoEgg CEO: In-Video Ads a Tiny Market « NewTeeVee on April 3rd, 2008 at 2:34 pm - Permalink

  5. [...] Just how big is the video ad market, [...]

    GigaNET PM: Video Ads, Web Apps, Green Money - GigaOM on April 3rd, 2008 at 3:21 pm - Permalink

  6. [...] Just how big is the video ad market, [...]

    - GigaNET PM: Video Ads, Web Apps, Green Money on April 3rd, 2008 at 4:18 pm - Permalink

  7. The point is that there are numerous opportunities to create video experiences in various media environments: video, casual gaming, social applications, etc.

    • Pre-roll is definitely one and it’s not going anywhere. It’s nearly 10 years old and as a more mature format, it’s easier to sell. $500 million makes sense.
    • In-video overlays is another and it’s getting incredible response from the market. This isn’t a small market, it’s just early. We are committed to expanding distribution here. The $50-60 million number reflects the market today, 18 months in. There is a lot of work to do around ad technology, standardization, etc. to open up inventory, but the opportunity is huge and adoption is just starting to take off.
    • Advertisers demand tremendous scale and they want to spend their dollars efficiently. To address this, we see huge opportunity in video experiences inside of applications, games, etc. along with video. Compelling video experiences in places people want to engage with brand messages.

    We aren’t abandoning any ad format. They are all showing tremendous promise. $500 million in pre-roll is a drop in the bucket relative to the amount of reach and scale captured by the $65 billion television market. To offer marketers a similar level of scale and efficiency, we are building a video ad network that aggregates attention across multiple media environments: video along with others.

    Matt Sanchez on April 3rd, 2008 at 4:29 pm - Permalink

  8. We are seeing a much larger opportunity in offering engaging video formats. At coull we experimented with monetisation of UGC, we didnt burn through $? millions doing it however, but it doesnt take a genius to work out that the large advertisiers are not ready to spend big on UGC yet, if ever!

    Irfon Watkins on April 4th, 2008 at 9:15 am - Permalink

  9. [...] I’ve just been reading Liz Gannes on newteevee [...]

    blog.coull.com » Blog Archive » UGC video advertising is’nt such a large market after all! on April 4th, 2008 at 9:19 am - Permalink

  10. Did they factor branded content revenues into their calculus?

    Eric on April 4th, 2008 at 10:56 am - Permalink

  11. As one of the founders of Hot Pluto, I wanted to throw us in the mix in terms of what we think will become a home for many of the video ad content.

    Gettting people (consumers) to look at the ad’s is really what makes or breaks Internet based video advertising.

    We understand many company’s will match ad’s with relevant content but they will still show up on various websites in a somewhat intrusive maner.

    With Hot Pluto, consumers know they are going to the site to shop and to shop by looking a products and services showcased in motion. It’s looked at as much less a commercial and more like making a personal connection with the consmuer and helping them make more informed purchases. The other issue is, they don’t have to click a link to go check out an Advertisers website–they have everything they need to know about the company on Hot Pluto–if they like what they see, they can then click through to the website and make a purchase.

    Yes it is in Beta and no there is not much content. We are currently creating partnerhsips and cross-promotion opportunities where we feel this will soon change.

    Interested in thoughts about Hot Pluto

    Brett Hill on April 22nd, 2008 at 10:35 am - Permalink

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