Why the US is Ahead of Europe in Online Video Advertising

An old friend of mine, Rachel Barnhart, is a local TV reporter and anchor at Rochester station 13-WHAM. When I visited her station's site this morning, I was surprised to see how well they do pre-roll video ads. They follow many of the rules we lay out in our Online Video Advertising Best Practices Guide. The site keeps the ads short (all are under 15 seconds), they rotate through advertisers so users don't see the same ad several times in a row, and they run companion banners for each pre-roll advertiser. They even help their advertisers design custom video ads for use online (in one pre-roll ad, the spokesperson points to the companion banner and says "click here" -- corny, but probably effective). The only thing they don't do well is limit frequency: there's a pre-roll ad in front of every single clip.

It stands to reason that TV broadcasters should be good at deploying in-stream ads. After all, video advertising is their business. But not all of them are, especially in Europe: last time I visited Virgin Media's video portal, I was subjected to the same exact pre-roll ad 12 times in a row, with no companion banner. Recently Finland's MTV3 was showing users both a 15-second pre-roll ad and a 30-second post-roll ad on its video clips, which completely overwhelms users. Meanwhile, many other large European broadcasters still don't offer in-stream advertising at all.

When you compare major European broadcasters' relatively poor execution of online video ads with the nearly perfect execution at 13-WHAM, a local affiliate in a small city (Rochester is only the 78th largest TV market in the US), you can see one indication of why the US video ad market is so far ahead of the European market.

We've just published our new European online ad forecast (Jupiter clients can read the report and download the forecast model here), and for the first time ever it includes forecasts for spending on creative formats like online video ads and rich media ads. We'll be releasing some extensive data from that forecast shortly, but for now I can tell you that US advertisers spent more than twice as much on online video ads last year as European advertisers. And while European video ad spending will grow quickly over the next few years, the video sites need to do a better job implementing these ads in order for that growth to occur.