Annoying Internet-Video Bloat
It's hard to find a website that doesn't feature videos, frequently self-launching ones. If you're like me and they turn you off, consider this: The sites aren't doing it for your benefit, they're trying to extract more money from advertisers that don't realize video ads are overpriced.
On the face of it, video is essential to a successful site. According to comScore, 190.3 million Americans watched online video content in July. In February, the research company estimated the number of videos watched in the U.S. in a month had increased 72 percent from a year earlier, to 73.8 billion. If you're not in on the trend, you're dead. Executives at Buzzfeed, the ultimate modern media platform, say most of their revenue could eventually come from from videos, and much of the $50 million the company recently raised from venture capital company Andreessen Horowitz will go toward beefing up video production.
Buzzfeed aims to produce viral content that does well on social networks. Facebook Inc. is the second biggest online video content site, with an audience of 103 million, up from 91 million in February.
It's possible, however, that we're watching more videos because they've become more ubiquitous, and not because we are clamoring for them. Since December, Facebook has rolled out autoplay videos that start as you scroll through your news feed. You watch them without meaning to, unless you shut off the feature to save on your phone bill or tweak your browser settings. The same is true at many other sites. Even if you leave a site five seconds after it automatically launches a video, you've added to the number of viewers the site can claim and provided another argument for more sites to inflict videos on users.
It's not that Internet businesses are deceived by their own statistics. The video growth stats are great advertising sales tools because video ads have much higher click-through rates than ordinary banners. Here's how much more likely a user is to click on a video ad than on a banner, according to the mobile-advertising company Millennial Media:
The difference may be even bigger. Web users suffer from progressing banner blindness, and advertisers realize they need something different to draw their attention. For now, video is the answer: According to eMarketer, video advertising grew 43.6 percent last year, and accounts for 2.4 percent of all advertising and 9.7 percent of digital ad revenue.
Because they are so hot, the cost of video ads per 1,000 views is much higher than that of banners. According to the advertising platform TubeMogul, the cost for pre-roll ads, which play before the main content opens, increased to $9.11 per 1,000 views in the second quarter of 2014, from $8.04 in the previous quarter. Banners cost an average of $2.80.
Yet, because they are more than three times more expensive, video ads are less cost-effective for most advertisers than banners. Carmakers and education providers are exceptions, the former because people like to look at sleek cars and the latter because their offerings are hard to judge without a video presentation. No matter: In the tech world, and in the ad industry, buzz is often more important than mundane questions such as efficiency. It's important to get involved with the next big thing.
Until we develop video ad blindness, we will be bombarded with videos we may not want to watch: Here are some examples of such superfluous content from Buzzfeed. Then, as the novelty fades and the click-through rates start slipping, videos will increasingly appear in ever more improbable settings -- as occurred with banners. And then, videos will give way to something else that will probably be equally annoying and intrusive but temporarily lucrative: the Internet needs to feed its advertising addiction.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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