Given these formidable disadvantages, it’s no wonder that many sites and advertisers are aggressively experimenting with other video advertising formats.  The most prevalent alternative formats currently are either the graphical overlay ad or textual overlay ad (see www.youtube.com or one of BIM’s current clients www.wkbw.com for examples of sites experimenting with such formats).

The advantages of such formats are considerable, and follow much more closely the AdSense model of advertising delivery.

• The ads are generally not as intrusive in nature, as they allow a user to immediately begin viewing the video content requested and can be closed by the viewer.
• The ads require minimal creative effort on the part of the advertisers, and campaigns can be varied much more quickly and easily because of this.
• Such ads can realistically be sold on a CPC basis as necessary, as the action desired by the user is truly a click rather than simply a tracked impression.  This leads to less risk on the part of the advertisers.
• Text and graphical ads are less expensive to store, serve, and manage than are video assets.
• Given the large amount of advertisers already participating in contextual ad programs, it’s easy to use textual or graphical overlay ads as remnant backfill.  This means that a site publisher is protected against any bandwidth overage charges from a video that may go viral from their site.

However, for content creators and owners (especially news-production shops), text and graphical overlay ads pose a number of challenges:

• Such ads may appear and cover up critical areas of the video (such as a station logo or weather ticker).
• Some users may not realize that they can minimize the ad, and be forced to watch a ‘covered up’ version of the content.  This will most likely lead to the user going to another site for the same or similar content.
• Selling overlay ads via CPC rates may never fundamentally value the branding awareness given by being associated with a piece of desired video content.

These are major disadvantages, and certainly sites will need to experiment aggressively with different solutions to make this type of ad work.  Some ideas, such as minimizing the video rather than covering it up to serve the ad, may pose a good middle ground between the two formats.

What’s the ultimate solution?  While some may advocate one format as completely preferable to another, or state that overlay ads are only a good solution to monetize lower quality video content such as user-generated video, I believe the answer is simple: It’s too early to tell, and the sites and ad networks that can most quickly experiment with multiple formats and adapt to the successful models will win the lion’s share of ad revenues.  Those that are unwilling to experiment or force one format over another will fail.

And what’s the opinion of the folks here at Broadcast Interactive Media?  Based on a recent straw poll at an all-hands meeting, the following video ad formats were the winners with our “mostly twenty-something recently graduated from the University of Wisconsin” group of employees (when they were asked what they would prefer as users when surfing their favorite video sites):

• Those that prefer an overlay ad to a 30-second pre-roll: 95%
• Those that prefer an overlay ad to a 15-seond pre-roll: 80%
• Those that prefer an overlay ad to a 5-second pre-roll: 50%

This is of course an unscientific study, and I encourage you to actively experiment and ask the same types of questions at your organizations and share your thoughts with me and this community via our commenting feature on this blog.