Video Best Practices. In-Stream. In-Banner and Floating

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1 Eyeblaster Research Analytics Bulletin Online Video Advertising: November 2009

2 Highlights Video growth has outpaced Rich Media growth by 6 in the last three and a half years. Video increases Dwell Rate by 2 and doubles Dwell Time. The ROI on video ads is double that of non-video Rich Media ads. Video outperforms in the news, sports, music and finance sections and lags in social networks and games environments. Rollover user-initiated video performs best, followed by auto-initiated video; click user-initiated performs worst. Weekdays from 9am to 5pm is users preferred time to watch In-Banner and Floating video ads. An increase of video length by five seconds reduces Video Fully Played rate by 2.8%, on average.

3 Video Best Practices General General Expandable Banners Polite Banners Floating Ads In-Stream Short online content videos should have short In-Stream ads, while full shows and movies can have longer In-Stream ads. In-Stream ads have a very high Video Fully Played Rate, and therefore the main point of the ad can be presented at the end. In-Stream is a sound-on environment. Ads can rely on sound as a part of the brand experience. In-Stream ads especially increase upper funnel attributes such as unaided brand awareness and online ad awareness. In-Banner and Floating Typically, In-Banner and Floating video ads experience is comprised of two stages: First, advertisers need to draw users attention to the video; then, users should be drawn to play, turn sound on, or engage with the silent video. Combining interactive features and placing users in the middle of the experience may increase Dwell Rate and Dwell Time. In-Banner and Floating ads are typically sound-off environments; users rarely un-mute or may keep their speakers turned off. Ads should not rely on sound to make the point, and can use text to subtitles to augment video. Longer videos tend to have lower Video Fully Played Rate, and therefore should make their point clear from the start. In some environments, starting videos with sound turned on with very low volume increases Dwell Rate without reducing Video Fully Played Rate. In-Banner and Floating ads positively impact especially lower funnel image and persuasion metrics such as brand favorability and intent to purchase. Weekdays from 9am to 5pm, during office hours, is users preferred time to watch In-Banner and Floating video ads. Add a teaser video on the pre-expanded ad or a clear call to action. The teaser video can be lightweight and invite the user to engage. Use Expandable Banners for video campaigns that require ample space for the brand, as they expand after a user interaction, such as a click or a rollover. Expandable Banners are a good fit for campaigns with longer marketing messages, as they maintain attention for longer. Can be used with user-initiated and auto-initiated video. In the auto-initiated case, the video in Polite Banner is exposed to the user at first glance, but without sound. If sound is turned off by default, use a clear sound on call to action and make sure that the point is clear without sound. Can be used with repurposed TV ads in implementations such as Eyeblaster TV. Exceptional in gaining users attention. Typically maintain attention for a short duration of time.

4 Table of contents Executive Summary...5 The evolution of online video...7 Impression growth...7 Online video capabilities...8 Video and branding...9 Online video measurement...9 Video and Rich Media...10 Comparing results...11 Video best practices...12 Video and formats...12 Video and section/environement...13 Video by hour of day...14 Initiation methods...15 Video and sound...16 Call to action...18 Video length...18 Regional differences...19 Summary...20 Glossary...21

5 Executive Summary Adding video to your online campaign can significantly improve your marketing results. Marketers are responding in kind with a larger slice of their advertising budgets. What makes online video advertising so successful? What can make your video campaign even better? In this in-depth bulletin, based on the knowledge accumulated at Eyeblaster from serving a large portion of the online video campaigns worldwide, we share our insights. Online video advertising can be delivered in many forms. Browsers, desktop applications, mobile phones, portable players, IPTV devices and even outdoor billboards deliver online video advertising. In this research we will focus on three formats In-Banner, Floating and In-Stream video advertising. 5 Eyeblaster Research Analytics Bulletin

6 Executive Summary Online video advertising spending is projected to quadruple in the next four years. In the last four years, Eyeblaster has seen a tenfold growth in video impressions. In addition, at the same period, video impressions have climbed 6 faster than Rich Media Impressions. This overwhelming growth is facilitated by the strong branding powers of online video, the increase in time spent online and the displacement of TV viewing with video viewing across other devices. Video boosts the performance of ads, compared to creatives with no video. Particularly, in In-Banner and Floating ads, video doubles Dwell Time, and depending on ad format, significantly increases Dwell Rate. Campaigns based on video require fewer exposures to reach the same Dwell Time and Dwell Rate as campaigns without video. For In-Stream video ads, panel based market research suggests that online video advertising is superior to TV advertising in advancing consumers down the purchase funnel. Online video is also a smart financial choice. Slightly higher cost and a dramatic increase in Dwell yields 20 incremental return on investment on video, as compared to non-video Rich Media. Viewing habits of online video ads are notably different from those of TV spots. A significant portion of In-Banner and Floating video ads is watched while at the office during weekdays; however, during weekends, users watch video ads evenly throughout the day. For In-Stream video ads, the length of the ad is dependent on the length of the video content. For In-Banner and Floating ads, different video formats coincide with different marketing objectives. Expandable video banners increase the space for the brand and work well with longer and more complex messages, as they maintain longer attention span. In Polite video banners, auto-initiated video can allure users attention from the publisher s content. Floating ads are successful in drawing users to engage, but typically for a shorter duration. Users are more likely to engage with an ad and to play a larger portion of the video in the news, sports, music and finance sections. Social networking and games environments tend to have lower Dwell Rate and lower Video Fully Played Rate. Within Expandable Banners, Polite Banners and Floating Ads, creative decisions may have a significant impact on results. Auto-initiated video has the highest start rate followed by user-initiated rollover and click. However, in auto-initiated video, it is hard to infer on the level of attention while the video ad is played, as the user does not have to take any action if watching the ad while muted. Dwell Rate is highest for rollover user-initiated videos, while auto-initiated comes only second. Click user-initiated video is both low on Video Started Rate and on Dwell Rate. Online video advertising spending in the US is projected to grow from $1.1 billion in 2009 to $4.1 billion in 2013 quadrupling in four years The vast majority of the auto-initiated and rollover userinitiated videos start with sound turned off by default due to strict publishers rules. Videos with sound turned off by default play for longer, compared to ads with sound on, as users feel less compelled to click on the stop button. Relatively few users un-mute video ads. When looking at unmute rate out of total video impressions with sound off, autoinitiated video has the highest rate, following its high video start rate. Click user-initiated video maintains users attention for longer with sound turned on by default, as these users were interested in watching to begin with. All user-initiated videos perform significantly better with a clear call to action. For In-Banner and Floating video ads, the video length does tend to be short yet, the 30-second video is still the most widely used, closely followed by the 15-second. An analysis of the influence of length on Video Fully Played Rate indicates that longer videos have higher attrition rates, as fewer users play the ad in full. Overall, online video advertising is now at its tipping point and is bound to take a center stage. With such an array of creative possibilities, online video has a steep learning curve. Marketers and advertisers should master it now, as sufficient experience may be the difference between a blockbuster and a flop. 6 Eyeblaster Research Analytics Bulletin

7 Beyond TV s Second Fiddle Superfast growth In 1895 the Lumière brothers played one of the first videos in history. The film, lasting only 50 seconds, showed a train arriving to the train station at La Ciotat, a serene town in southern France. When the film was first publically shown, the audience was so overwhelmed by the moving image of a lifesize train advancing directly towards them that they rushed to the back of the room, trying to avoid being run over. Nearly 115 years later, audiences respond more mildly to moving pictures; nevertheless, video has remained one of the most engaging forms of media. Studies in the field of Psychology have shown that the combination of senses creates greater retention and brand recall. It has been estimated that people retain only 1 of what they read, 2 of what they hear, and 3 of what they see. When these senses are combined, however, retention takes a dramatic leap forward. Those same estimates say that when someone hears and sees, retention jumps to 5. Delivering video online provides another benefit interactivity and touch. Stimulating retention by combining interactivity has shown to increase retention to 7 and in some cases up to 9 1. Video has come a long way since these first experiments in France. In the early days, it was mostly played in cinemas; before the end of the last century, it was viewed on TV. Nowadays, video can be delivered via an array of devices from computers and media centers through mobile phones to billboards. Far from the low quality image of the past, faster broadband connection, WiMax, and 4G, combined with better compression algorithms have transformed online video quality to match the quality of TV, and in some cases of HDTV. Online video advertising is also changing in the way in which it is consumed. Media center computers and online videos are moving from the home office to the living room. emarketer projects that while in 2008, 98.4% of the video content was delivered via TVs, this share is expected to drop to 38.5% in 2013, where the remainder of videos will be delivered via computers 2. While online video advertising sums to only a fraction of total advertising spending, it is projected to grow rapidly. emarketer projects that online video advertising spending in the US, the world s biggest advertising market, will grow from $1.1 billion in 2009 to $4.1 billion in 2013 quadrupaling in four years 3. In the UK, online advertising spending, including video, rich media, display and search, has already surpassed TV spending in the first six months of Impression Growth Chart 1: Growth in Video and Non Video Rich Media Impressions Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 The growth of online video advertising is staggering. Eyeblaster has seen a remarkable increase in usage of video in online advertising. From the beginning of 2006 to Q2 2009, video impressions have increased over tenfold worldwide and over seven times in the US market. Furthermore, online video advertising outpaces even the growth of Rich Media. From 2006 to Q2 2009, Rich Media impressions containing video grew 6 faster than Rich Media impressions that do not contain video. Nowadays, 35% of Rich Media impressions contain video. Rich Media and video advertising demonstrate seasonality. Each year, strong growth in Q2, Q3 and particularly in Q4 is followed by a decline in Q1 of the following year. This cyclicality is more pronounced in video than in Rich Media. Q has witnessed an unusually sharp decline in Rich Media and video impressions due to the economic turmoil. However, in Q2 2009, when the economic forecasts became less gloomy, it experienced a strong rebound. With the world economy driving out of recession, Eyeblaster Research expects this rebound to continue Note: 2006 impressions indexed at 10. Source: Eyeblaster Research. Data: Video 2009 Non-Video 1 US Naval Education & Training Command. Navy Instructor Manual. August 1992, p. 25. Available at: 2 Hallerman, David. Digital Video Advertising: Where s the Money? emarketer. August Ibid. 4 Sandler, Kathy. Web Ad Sales In Britain Overtake TV. The Wall Street Journal. September Eyeblaster Research Analytics Bulletin

8 Enhanced capabilities The level of advertiser control over users attention is highly dependent on the environment. Cinema is an example of an environment with relatively high control over users attention. Users are in a dark room, with loud sound, and are unable to leave or speak to each other. TV and In-Stream are examples of intermediate control. In live TV and In-Stream, users cannot skip the commercial, but they can leave the room, read the newspaper, or engage in a conversation. With Newspapers, In-Banner and Floating ads, advertisers have a relatively low control over users attention. Users focus on the publisher s content, and it is the advertiser s job to allure their attention from the content to the ad. The environment makes In-Banner and Floating video different from TV spots and from In-Stream. In-Banner and Floating video ads experience is comprised of two stages. First, advertisers need to draw users attention to the video. Then, users should be compelled to choose to have a deeper experience with the brand, by playing the video, or in auto-initiated video by turning the sound on. In In-Stream, the audience is more captive and has to watch the ad before the content starts. Therefore, In-Stream may work with linear footage, while with In-Banner and Floating ads, advertisers need to work harder and combine interactive features. At present, online advertising still tends to use ads with linear stories such as repurposed TV ads; these do not take advantage of the full interactive capabilities of online video. It took TV advertising decades to evolve to the levels of sophistication that it currently has. The evolution of online video advertising is happening much faster with new and more effective features being developed every year. Video Focus: HD Video Ads It cannot get more engaging full screen, high definition video with a pair of eyes only one foot from the monitor. HD Video banners deliver an unparalleled experience with the brand. Highly utilized in the entertainment industry, and particularly in new movie launches, HD Video banners can transform an In-Banner and Floating video to a theatrical event. The brilliance of HD video lays in its ability to engage users step by step. Typically, the ad starts as a regular video; users can then expand the panel to view a full screen HD version. In some cases, an Expandable Banner expands to play a regular video, and then users expand to the HD version. Thus, this format ensures that users who are interested in a closer interaction with the brand will receive the best video experience there is, while others will be shown a regular video. The main challenge for advertisers is to attract users to activate the full screen HD video. In terms of performance, HD video exceeds regular video ads in both start rate and videos fully played rate. In fact, HD videos start rate is over 4 compared to 3 for other video ads; its fully played rate reaches nearly 6. Dwell Rate jumps from 8% to 1 25% increase for HD video. 4 HD Video Performance % Video Started Rate Video Fully Played Rate Dwell Rate HD Video Other Source: Eyeblaster Research. Data: Q4 08 to Q3 09 Creative examples for HD Video ads can be found on the Creative Zone: creativezone.eyeblaster.com 8 Eyeblaster Research Analytics Bulletin

9 Video and Branding Using video, marketers can quickly convey sophisticated ideas, tell a coherent story and persuade customers to identify with their brand message. Video ads on TV were the enablers of the creation of big powerful brands that customers are willing to pay a premium for. Now, as video is moving online, online video advertising will help them to stay. Online also changes branding, as consumers no longer take advertisers messages at face value. The power of online video stems from its ability to provide more information to users in an interactive manner. Online video is an unparalleled branding tool. As a lean forward experience rather than a lean back on the sofa experience, it provides enhanced levels of engagement. In terms of size, when the video is watched full screen, even a 14 laptop screen on your lap, one foot away, can look bigger than a 32 flat screen TV on the other side of the living room, 10 feet away. Touch and interactivity add more depth to the experience with online video and can place the user in the middle of the ad rather than as a bystander. A Millward Brown and Dynamic Logic survey has found that only 21% of the people watching DVR playback and 3 of people watching TV airtime pay attention to commercials, compared to 46% of people watching In- Stream video ads online Three parallel processes facilitate the growth of video advertising online. People spend more time online at the expense of TV viewing time; TV viewing is being displaced by video viewing across different devices, from computers to cell phones; and TV viewers and users of DVR systems like TiVo fast forward TV ads. A MillwardBrown and Dynamic Logic survey has found that only 21% of the people watching DVR playback and 3 of people watching TV airtime pay attention to commercials, compared to 46% of people watching In-Stream video ads online 5. In-Stream, In-Banner and Floating video serve different environments. In-Banner and Floating video ads reach consumers while they shop online, IM, communicate by and social networks or browse for information or entertainment. In-Stream video ads reach viewers of online video content; either on short clips or on full shows and movies. With more video content watched online, In-Stream Video is an adaptation of the 30 second TV spot to online video broadcasting sites like YouTube and Hulu. One of the advantages of In-Stream is that it delivers fewer ads per pod, compared to traditional TV gaining more attention for each ad. No more guesswork The measurability of online video advertising offers a great advantage to advertisers. While offline television advertising is measured by eyeballs extrapolated from a panel, online video offers a robust set of metrics that are based on the actual behavior collected from cookies on browsers. These metrics calculate not only the number of unique browsers but also the level of interaction and what portion of the video was played. The accurate measurement of online video advertising offers advertisers knowledge on their audience that is unimagined offline. Offline measurements, for example, do not measure how many people took a bathroom break or just read a book, while sophisticated online ad serving systems track exactly how many videos were touched, interacted with, played only half way through, and how many videos were played in full. All of these metrics are reported in real time. The added benefit from real-time accurate measurement is that advertisers can gauge on ad and publisher s effectiveness and optimize their campaign. Online allows advertisers to easily compare ads and publishers head to head and see which provides a better value. Panel based advertising research has a long 90-year history, since Arthur Nielsen first opened shop in Therefore, marketers feel confident that terms like lift in brand awareness and intent to purchase are going to convert to more dollars at the cash register at the end of the day. While online metrics do a good job of measuring online behavior, the inability to directly link between users online activity and their offline and sometimes online purchasing behavior limits the adoption of online metrics by marketers. With knowledge on users activity online, panel data becomes more powerful as a point of reference, linking online activity and offline behavior. Advertising research companies like comscore, Dynamic Logic and Nielsen are providing valuable research that correlate between users online behavior, and their behavior at the supermarket aisle. When measuring campaigns performance, online measurements such as Dwell Rate, Dwell Time and Interaction Rate complement offline measurement such as unaided awareness and intent to purchase. 5 Millward Brown and Dynamic Logic. Integrating online video advertising into the marketing mix. Available at: research/whitepapers/docs/mb_knowledgepoint_onlinevideo.pdf 9 Eyeblaster Research Analytics Bulletin

10 Adding a Flare to your Campaign Higher results One of the engines behind the growth of online video advertising is its success in retaining users attention for a longer period of time and in leaving a lasting impact. Advertisers should avoid looking at online advertising as a purely direct marketing tool, judging success with direct marketing measurement such as clicks. This approach misses much of what online video advertising is all about conveying branding messages. In this research, we use several metrics to measure the success of online video. For In-Banner and Floating ads, Eyeblaster s proprietary Dwell metrics are used to measure the level of engagement with ads containing video as compared to the level of engagement with ads that do not contain video. Dwell Rate measures how many impressions were intentionally engaged with by users out of total impressions. Average Dwell Time measures the average duration that ads were dwelled upon. In addition to the Dwell Metrics, to compare video ads head to head, this research uses specific video metrics: Video Started Rate measures how many videos have started out of total impressions; Video Fully Played Rate measures how many of the videos that have started played fully. Video Fully Played Rate is consequential for branding as it measures the portion of videos that were able to convey their full marketing message. Other metrics that were used are Video Length, which measures the length of the video of the ad, and Average Video Duration, which measures the average duration of the video that was actually played. 8% 6% 4% 2% Chart 2: Performance of Rich Media with and without Video Video Dwell Rate No Video Average Dwell Time (Sec) A close look at the results of billions of impressions served by Eyeblaster in the past year shows why video makes such a superb advertising tool. Adding video to a Rich Media ad doubles the amount of time that the average user spends with it, as measured by Dwell Time. In addition, users are more likely to engage with an ad in the first place, as evident from the higher Dwell Time. Interactivity is a key component of online advertising measurement; evidence here shows that consumers are more willing to both engage and maintain interest in the brand s message, when ads contain video. Chart 3: Performance of Polite and Expandable Banners with and without Video 1 5% Dwell Rate Video Expandable Banner No Video Average Dwell Time (Sec) 1 5% Source: Eyeblaster Research. Data: Q4 08 to Q3 09 Dwell Rate Polite Banner Average Dwell Time (Sec) Furthermore, examining the results of the two most popular Rich Media banner formats reveals the true potential of video in providing engagement. Adding video to Polite Banners increases Dwell Rate by 5, on average. In Polite Banners, in cases of auto-initiated video, the video is exposed to the users at first glance. Typically, even in user-initiated video, the user can visibly notice that the ad contains video. In Expandable Banners, on the other hand, the video is usually hidden behind the expanding panel and users are not aware of it until they roll over or click on the ad. From the user s point of view, Expandable Banners with hidden video look like ads without video, and therefore get the same level of attention between ads with and without video. To increase Dwell Rate, it is a good practice to put a teaser video on the pre-expanded ad. The teaser video can be lightweight and invite the users to engage. Also, using a clear call to action makes video easily accessible to users after expansion increases the rate of videos played (more details about call to action are coming). Source: Eyeblaster Research. Data: Q4 08 to Q Eyeblaster Research Analytics Bulletin

11 Overall, online video advertising does a very good job of attracting and maintaining attention across all formats, and it is excellent at retaining attention. More people engage with video ads, and when the video plays, they stay for longer. Online video is also a smart financial choice. Video costs on average 2 more than non-video rich media 6. The benefit is 25% incremental increase in Dwell Time and 10 incremental increase in Dwell Rate. That yields 20 return on investment on video, as compared to non-video Rich Media 7. Cumulative Dwell Rate Cumulative Dwell Time Chart 4: Dwell by Frequency of Exposure Frequency of 1 Exposure Campaigns with Video Frequency of 2 Exposures Frequency of 3 Exposures Campaigns without Video Frequency of 4 Exposures Source: Eyeblaster Research. Data: Q3 08 to Q2 09, North America Frequency of 5 Exposures An examination of users behavior by frequency of exposure shows that campaigns that are based on video advertising achieve better results with fewer exposures, as compared to campaigns that are based on Rich Media without video. For example, users who were exposed three times to an ad in a campaign without video have the same Dwell Rate as users that were exposed only twice to a campaign based exclusively on video advertising. Users need almost three more exposures of ads from campaigns without video to accumulate the same Dwell Time gained from campaigns based solely on video. These results are even more pronounced when it comes to Dwell Time. On average, users need almost three more exposures of ads from campaigns without video to accumulate the same Dwell Time gained from campaigns based solely on video. At any frequency of exposure, campaigns that are based on video have higher Dwell Rate and Dwell Time than campaigns without video. This is yet another indication that In-Banner and Floating video delivers a significantly higher ROI for advertisers. With slightly higher cost, advertisers obtain the same Dwell Rate level and save one impression on average. In addition, they accumulate more of users time as if they increase frequency by three impressions. For video ads, the increased engagement in terms of Dwell Rate and longer Dwell Time translates into higher marketing effectiveness. A Dynamic Logic research indicates that video ads are the most noticeable online ad format, generating an increase in all funnel effectiveness metrics. According to the study, ads with video generated an increase of 18 percentage points in online ad awareness 10.1 points above an index of online ads. In addition, video ads scored higher on aided brand awareness, message association, brand favorability and purchase intent 8. In-Banner and Floating video ads are clearly superior to In-Banner and Floating ads without video. What about In-Stream Video? A two year-research by MillwardBrown and Dynamic Logic indicates that spending time with an ad while watching a program online has a greater effect on total brand communication awareness as compared with regular TV advertising. The research indicates that the incremental awareness between people who viewed an ad once on TV and the control group is 1 compared with 38% for online video ads. Ad recall was also four times higher among viewers of online ads. The researchers attribute this overwhelming increase in awareness to users higher engagement with online media, and the tendency for fewer ads per pod online as compared to TV 9. 6 Based on serving cost and media cost, derived from a sample of publishers surveyed by Eyeblaster Research. Publishers incremental fee for video over Rich Media may vary. 7 The benefit of video is 2.5 times that of regular rich media, while the cost is 1.2 times. Overall ROI (benefit/cost) is Dynamic Logic. Beyond the Click. Enhancing the TV-like Power of Video Ads on the Web. November Available at: 9 Millward Brown and Dynamic Logic. Integrating online video advertising into the marketing mix. 11 Eyeblaster Research Analytics Bulletin

12 Tell me how! Online video advertising delivers a wealth of creative possibilities to craft an ad, the most important of which is interactivity placing the user in the center of the ad. Advertisers can choose not only multiple ad formats, but also the ad s length, initiation method, turning the sound on or off, and whether to place a call to action. Many of the creative choices are also affected by users viewing habits such as the environment and the time of day in which the ad is watched. Aligning the format with the message Chart 5: Video by Ad Format attributes such as unaided brand awareness and online ad awareness. In-Banner and Floating ads are more successful in positively impacting lower funnel image and persuasion metrics such as brand favorability and intent to purchase 10. Chart 6: Performance of Banners and Floating Ads with Video Dwell Rate Average Dwell Time (Sec) Expandable Banner Polite Banner Floating Ads Share of Video Impressions Source: Eyeblaster Research. Data: Q4 08 to Q3 09 Video Fully Played Rate Expandable Banner 2 Average Polite Banner Average Video Started Rate In-Stream Video Floating Ads Note: Share of video impressions out of Rich Media impressions Source: Eyeblaster Research. Data: Q4 08 to Q Each of the four ad formats has advantages and disadvantages, depending on the marketing objective. In-Stream Video is typically auto-initiated and therefore has a very high start rate. In many cases, it is served as a pre-roll or mid-roll, and users have to patiently wait for it to finish, so they can watch whatever video content they came for obtaining a very high Video Fully Played Rate. However, there is a caveat. Short online content videos should have short In-Stream ads. The industry rule-of-thumb is 15 seconds In-Stream ads for videos lasting less than 3 minutes of content, and 30 seconds for content lasting over 3 minutes. Research by the Interactive Advertising Bureau (IAB) suggests that In-Stream Videos have higher effect on upper funnel Under In-Banner ads, Expandable Banners increase the space for the brand, as they only expand after a user interaction, such as a click or a rollover. They are a good fit for campaigns with longer marketing messages as they hold people s attention with higher than average Dwell Time. In addition, Expandable Ads higher Dwell Rate and Dwell Time indicate that more people interact and touch them, leading to higher retention. Eyeblaster Research has found that a small portion of Expandable Banners require even more than five user interactions before playing the video. However, in many cases, advertisers hide the video behind several panels, which makes it difficult for users to find the video and results in lower Video Started Rate. Eyeblaster Research has found that a small portion of Expandable Banners require even more than five user interactions before playing the video. These advertisers rely on a very determined audience. A good practice would be to have 10 IAB Research. Case Study on Digital Video Advertising Effectiveness. December Eyeblaster Research Analytics Bulletin

13 the user-initiated video play after one interaction, preferably behind a clear call to action or a teaser video. Polite Banners seem as one of the more obvious choices for video. Advertisers can choose between user-initiated and auto-initiated video, but the high video started rate shows that advertisers choose the latter more often. In the autoinitiated case, the video in Polite Banner is exposed to the user at first glance, typically with sound turned off by default. A good practice would be a clear sound on call to action. Some floating ads have very successful implementations such as the Eyeblaster TV (see separate box). Floating ads are exceptional in gaining users attention, as evident by their higher Dwell Rate. However, they typically maintain attention for a short amount of time, as evident by their lower Dwell Time. Floating over the publishers content, floating ads remain in the range of user s vision. Many use auto initiated video to augment visibility. The Homepage is where people visit on their way to their destinations. However, this analysis shows that users do spend time on homepages to engage with video ads. Homepages are slightly higher than average on Dwell Rate and on Video Fully Played Rate. It has a higher portion of user-initiated video with Video Start Rate of 16%. In social networking and games sites, users tend to engage with video ads less frequently, and also have a lower video fully played rate. Videos on games sites are nearly always auto initiated with 7% video started rate. As a desktop rather than a browser environment, instant messaging is different. It nearly always contains user-initiated video, since the video is typically hidden behind the panel of an Expandable Banner. With predominantly user initiated video, it has only a 3% Video Start Rate. While it has slightly lower than average Dwell Rate, a higher proportion of videos are played to their full duration. Video and the section/ environment Video Fully Played Rate Average Chart 7: Video Performance by Section/Environment Instant Messaging Social Network Entertainment Lifestyle Mail Finance Music Home Page Auto Health Sports News Video Started Rate % Instant Messaging Chart 8: Video Started Rate by Section/ Environment 41% 43% 44% 37% 38% 4 33% 24% 14% 16% Health Home Page Mail Social Network Note: Includes In-Banner and Floating Ads. Source: Eyeblaster Research. Data: Q4 08 to Q3 09, North America. Entertainment Sports News Music Lifestyle Finance 71% 6 Auto Games 3 Games Average 2% 3% 4% 5% 6% 7% 8% 9% 1 11% 12% Dwell Rate Note: Includes In-Banner and Floating Ads. Source: Eyeblaster Research. Data: Q4 08 to Q3 09, North America. Users are more likely to engage with an ad and to watch video for longer in some online environments/sections rather than others. News, sports, music, finance and mail tend to have both superior Dwell Rate performance and higher Video Fully Played Rate. People spend a longer amount of time in these environments, browsing content and writing and reading s. Thus, users have more time to engage with advertisers ads. These environments have mixed auto-initiated and user-initiated videos, as indicated by their similar Video Started Rate of around Eyeblaster Research Analytics Bulletin

14 Video Focus: Eyeblaster TV Video Started Rate Video Fully Played Rate Dwell Rate EyeblasterTV Eyeblaster TV Performance Other 2 1 Source: Eyeblaster Research. Data: Q4 08 to Q3 09 It is possible to transform a successful TV campaign directly to the Web. Eyeblaster TV is a floating ad that plays video spots besides the publishers content. Typically, the video is auto-initiated and is played with the sound turned slightly on, to attract users attention. Once the video has finished playing, the floating ad collapses, leaving a reminder. Eyeblaster TV helps advertisers to stretch their investment in the production of TV ads to the web easily and with great results. Eyeblaster TV ads tend to be long for Web advertising 30 seconds; still their fully played rate is similar to the average. Therefore, this format provides a great platform for longer and more complex marketing messages. In addition, although Eyeblaster TV ads are auto-initiated with sound-on by default, users do not find them intrusive compared to other video ads as evident by their similar Video Fully Played Rate. Primetime at the office For In-Banner and Floating video ads, users viewing habits are very different from those of TV advertising. A large portion of TV ads are watched in the evening, during TV primetime while cuddling on the living room couch. Online video ads are mostly watched at the office during working hours and in the evening, at home. Share of Total Videos Started Chart 9: Video Started and Fully Played by Time of Day, Weekdays 6% 4% 2% Midnight Office Hours 1 am 2 am 3 am 4 am 5 am 6 am 7 am 8 am 9 am 10 am 11 am 12 pm 1 pm 2 pm 3 pm 4 pm 5 pm 6 pm 7 pm 8 pm 9 pm 10 pm 11 pm Video Fully Played Rate Share of Videos Started 7 65% 6 Video Fully Played Rate Note: Share of Video Started measure the proportion of videos started within hour from total videos started throughout the day. Source: Eyeblaster Research. Data: Q2 09, US East Coast, EST. Tracking the life of the average John Doe teaches valuable insights on when to deliver successful video advertising throughout the day. During weekdays, waking up at 6:00am, Mr. Doe does not usually surf the web a lot, maybe checking an occasional or so; not much time to hit the start button on many video ads. At 9:00am he gets to the office filled with caffeine after gulping the venti coffee during his morning commute. In the morning at the office he still feels energized, and ready to do some work! Quickly, just to keep his sanity, he opens his browser. That s when video ads played reach their peak. The office online activity is mostly comprised of news, researching information and communications, such as or instant messaging. A clear drop in video ads starts is felt at 5:00pm, when Mr. Doe is preparing to go home. Even when surfing at home, Mr. Doe would not play as many ads as he does from the office. Mr. Doe usually logs off before midnight, when he goes to bed. During his waking hours, Video Fully Played Rate remains high. This rate drops significantly at night. Creative examples for Eyeblaster TV ads can be found on the Creative Zone: creativezone.eyeblaster.com 14 Eyeblaster Research Analytics Bulletin

15 Share of Total Videos Started Chart 10: Videos Started and Fully Played by Time of Day, Weekends 6% 4% 2% 7 65% Video Fully Played Rate Making it roll, or click While In-Stream videos nearly always start automatically, In-Banner and Floating video ads have three major initiation methods: Mouse rollover, mouse click and auto-initiated video. Auto-initiated is the most popular, followed by mouse rollover. Midnight 1 am 2 am 3 am 4 am 5 am 6 am 7 am 8 am 9 am 10 am 11 am 12 pm 1 pm 2 pm 3 pm 4 pm 5 pm 6 pm 7 pm 8 pm 9 pm 10 pm 11 pm 6 Chart 11: Video Initiation Method Video Fully Played Rate Share of Videos Started Note: Share of Video Started measure the proportion of videos started within hour from total videos started throughout the day. Source: Eyeblaster Research. Data: Q2 09, US East Coast, EST. User- Initiated / Rollover Auto- Initiated Over the weekend, Mr. Doe s engagement with online video ads is vastly different than his engagement during the week. Starting ads more evenly throughout his waking hours, Mr. Doe has much more patience for watching ads between 8am and 10pm. The fact that a large portion of video ads are watched at the office also puts some constraints on the manner in which they are delivered. Depending on the country, culture and online environment, advertisers may want to refrain from delivering auto-initiated and rollover user-initiated ads with sound turned on by default, to avoid rubbing office etiquette the wrong way. When crafting their messages, advertisers and agencies should remember that their audience might be hard pressed at the office as opposed to relaxed at home. User- Initiated / Click Source: Eyeblaster Research. Data: Q2 09 Each of these methods has its own advantage. Autoinitiated video allows advertisers to attract users attention to the video passively; however, prospects may miss the beginning or see it without sound. Rollover is typically used in expandable banners to expand the panel and expose the video. Rollover requires fewer actions from the user than a click only rolling the mouse on the ad, compared to rolling the mouse and clicking. Also, many users refrain from clicking, to avoid leaving the publishers website or to avoid launching a popup. Chart 12: Video Started Rate and Dwell Rate by Method of Initiation % Video Started Rate Dwell Rate Auto-Initiated User-Initiated / Rollover User-Initiated / Click Source: Eyeblaster Research. Data: Q Eyeblaster Research Analytics Bulletin

16 Clearly, auto-initiated video has the highest start rate 53%. Impressions that appeared but their video did not start may have been designed to start the video after an intro, but did not have enough time to load before the user navigated to a different page. Rollover is superior to click, achieving three times the start rate 1 compared to 3%. However, these figures should not be taken at face value. An analysis of Dwell Rate by initiation method shows that while many auto-initiated videos start, many also go unnoticed. In auto-initiated video, it is hard to infer on the level of attention while watching the video, as the user does not have to take any action other than turning the sound on. Dwell Rate is highest for rollover initiated videos, while auto-initiated comes only second. Click user-initiated video is both low on Video Started Rate and on Dwell Rate. 5 4 Chart 13: Video Fully Played Rate by Method of Initiation Back to the silent film? There is an advantage in using user initiated video and click-to-initiate in particular sound. The majority of click-toinitiate videos have their sound turned on by default when the video launches, and so do nearly a fifth of rollover-toinitiate videos. Auto-initiated video nearly always launches with sound off. In many cases, the ability to use sound turned on by default is limited by publishers rules. The advantage in having sound turned on by default is that the user gets the full video experience from the get-go, rather than having to take an additional action and probably miss the beginning of the jingle accompanying the ad. Sound turned off by default may significantly diminish the effectiveness of repurposed TV ads and other creatives where sound is intrinsic to the story. Chart 14: Share of Impressions with Sound Turned On/Off Auto-Initiated User-Initiated / Rollover User-Initiated / Click 3 Sound On Sound On 2 Sound Off 1 Sound Off Sound Off Sound On Video Fully Played Rate Auto-Initiated User-Initiated / Rollover User-Initiated / Click Source: Eyeblaster Research. Data: Q2 09 Auto-initiated video has the highest video played duration and Video Fully Played Rate, as users do not stop them often. User-initiated Video Fully Played Rate is slightly lower than in the auto-initiated case. Source: Eyeblaster Research. Data: Q2 09 Furthermore, as shown earlier in this bulletin, many users browse sites and are exposed to ads while at the office. Thus, starting a video ad automatically with sound on may bother co-workers in the next cubical and alert bosses to employees who are checking football scores rather than their s. Depending on the country and online environment, abrupt loud sounds when loading web pages should be used cautiously. 16 Eyeblaster Research Analytics Bulletin

17 0.3% 0.2% 0.2% 0.1% Chart 15: Video Un-Mute Rate for Videos with Sound Turned Off As users only find out if the video has sound after it was initiated, sound turned on/off does not affect Dwell Rate for user-initiated video, only for auto-initiated video. In autoinitiated and rollover user initiated video, sound on tends to have lower Dwell Time, as users tend to turn the video off more quickly. This conclusion can also be derived by examining Video Fully Played Rate. 0.1% 0. Un-Mute Rate out of Video Impressions Auto-Initiated User-Initiated / Rollover User-Initiated / Click Source: Eyeblaster Research. Data: Q Chart 17: The Fully Played Effect of Sound on Video Video Fully Played Rate Relatively few users un-mute video ads. When looking at the un-mute rate out of total video impressions with sound off, auto-initiated video has the highest rate, following its high video start rate. Nevertheless, only 3% of click and 1 of rollover user-initiated videos are started, and therefore have the chance of being un-muted. When looking only at videos that have started with sound off by default, the proportion of users who turn the sound on is higher in user-initiated video as compared with auto-initiated video. To increase un-mute rate, it is a good practice to have a clear call to action on the video, rather than a small button at the bottom. Also, accompanying the ad with text or subtitles to augment the video while the sound is off can help users comprehend the marketing message. Auto-Initiated User-Initiated / Rollover User-Initiated / Click Chart 16: The Dwell Effect of Sound on Video Off On Off On Off On 5% 1 Dwell Rate Average Dwell Time (Sec) Note: For auto-initiated video, sound on increases Dwell Rate and lowers Dwell Time as users tend to turn the video off more quickly. Source: Eyeblaster Research. Data: Q Off Auto-Initiated User-Initiated / Rollover User-Initiated / Click On Source: Eyeblaster Research. Data: Q2 09 Advertisers need to find the balance between putting the users in control, and compelling them to experience the full video with sound on. The Eyeblaster TV format (see separate box) starts with the sound turned on with very low volume. Using this method, users do not find the ad intrusive and do not stop it more frequently than the average; the Video Fully Played Rate of Eyeblaster TV is similar to the average of other ads with video. In click initiated video, sound turned on by default is advantageous. Users who clicked want to watch the ad, so why not provide them with the full experience without forcing them to take any additional action. The reward for sound turned on by default, in this case, is an additional 5% of users who watch the video all the way though. Either way, the difference in performance between ads with sound turned on and sound turned off disproves an industry myth saying that many users browse the web with muted speakers. Thus, accompanying video with sound turned on to illuminate the marketing message or a memorable jingle or song, and delivering it in a courteous manner, may be a good way to enhance marketing effectiveness. 17 Eyeblaster Research Analytics Bulletin

18 You didn t call, they didn t play Chart 18: Share of Video Impressions with Call to Action No Call to Action Call to Action Note: For user-initiated video only. Source: Eyeblaster Research. Data: Q2 09 If there is one golden rule of success in user-initiated video, and in online advertising at large, it is to use a crystal clear call to action. In user-initiated video, a call to action should entice users to play the video, or expand the ad. While it may sound obvious to many, some advertisers choose to keep the space for their marketing message, rather than to use a call to action. This line of thinking may not be prudent. Call to Action Chart 19: The Impact of Call to Action No Call to Action Video Started Rate Note: For user-initiated video only. Source: Eyeblaster Research. Data: Q2 09 Overall, ads with a call to action have nearly 2% higher Video Started Rate compared with ads with no call to action. A clear call to action should also be used to entice users to turn the sound on for video with sound turned off by default. Eyeblaster Research analysts have noticed that ads with large and clear triangles signaling play, clear large icons indicating sound on and large scripts saying click to expand or rollover to play video entice users for that particular behavior. Overall, a clear call to action increases the likelihood that users play user-initiated video or turn the sound on in auto-initiated video. The brand experience gained by a video played outweighs the space gained by omitting the call to action. Is 15 the new 30? For In-Stream, particularly in pre-roll and mid-roll, users are required to see the full ad if they wish to view the content. This is not the case for In-Banner and Floating ads. Wary of lower attention span of users who are browsing or communicating, many in the industry call for shorter video ads with more concise messages. Share of Total Impressions Sec 10 Sec Chart 20: Videos by Length 15 Sec 20 Sec 25 Sec 30 Sec 35 Sec 40 Sec 45 Sec 50 Sec 55 Sec 60 Sec Note: In-Banner and Floating video ads. Source: Eyeblaster Research. Data: Q2 09, North America A review of In-Banner and Floating ads served in Q2 09 indicates that ads lasting for 30 seconds are still the most popular kind, accounting for over 2 of total video ad impressions; they are closely followed by the 15 second ads that were featured in 17% of video ad impressions. Ads lasting longer than 30 seconds are rare and may contain several sequenced videos. One of the advantages of shorter In-Banner and Floating videos is the higher likelihood that users will watch them all the way through. High attrition rates for longer videos diminish the primary advantage of video its ability to deliver marketing messages as a story, with a start, middle and end and promote users to identify with the brand message. 65 Sec 70 Sec 75 Sec 80 Sec 85 Sec 90 Sec 18 Eyeblaster Research Analytics Bulletin

19 Video Fully Played Rate Chart 21: Video Length and Performance 5 Sec 10 Sec 15 Sec 20 Sec 25 Sec 30 Sec 35 Sec 40 Sec 45 Sec 50 Sec 55 Sec 60 Sec 65 Sec 70 Sec 75 Sec 80 Sec 85 Sec 90 Sec Note: In-Banner and Floating video ads. Source: Eyeblaster Research. Data: Q2 09, North America A statistical analysis conducted by Eyeblaster Research shows that for In-Banner and Floating ads, an increase of five seconds in video length reduces the likelihood that users will watch the full ad by 2.8%, on average. This should not be alarming; one reason for the decrease is that in the case of auto-initiated video the shorter the video is (and with sound off) the lower the likelihood that users will click stop before the end of the clip, even if in reality they stop watching. Also, shorter videos have a higher chance of rolling fully before the user has navigated to another page. Research by the IAB indicates that different lengths are appropriate to different marketing objectives. Shorter videos of 5 seconds may work for simple communication, but have the weakest levels of breakthrough and are the most difficult to understand. The IAB suggests that longer videos are more effective. 15-second videos have the highest brand association, are easiest to understand, obtain the highest engagement and are the most cost effective. They are most appropriate for simple messaging and for a pre-roll in In-Stream. Thirty second ads are the most persuasive; they allow for complex communication and work well as user-initiated video 11. In general, it is hard to identify a clear rule of thumb on what length should be used. Ad format, the complexity of the marketing message and objectives, the environment, and many other considerations affect the choice of length. Regional differences Most of this analysis was conducted with worldwide data; however there are regional differences. There are no significant variances between North America, Europe, and Latin America in the share of video impressions out of Rich Media impressions. However, East Asia tends to have a lower share of video impressions, out of other Rich Media impressions. Video Fully Played Rate 55% 5 Average 45% 4 35% Latin America Chart 22: Video by Market AU and NZ North America Average Europe East Asia 1 15% 2 25% 3 35% 4 45% Video Started Rate Note: Share of video impressions out of Rich Media impressions Source: Eyeblaster Research. Data: Q4 08 to Q3 09 Share of Video Impressions 1 All regions are relatively similar in users tendency to watch video ads in full. However, some markets have lower Video Start Rates. This may have several reasons: Lower autoinitiated video rate, quality of creative execution, videos starting with sound on by default and differences in behavior between markets may be among the more prevalent explanations IAB Research. Case Study on Digital Video Advertising Effectiveness. December Eyeblaster Research Analytics Bulletin

20 What s next? Video is expected to be one of the major drivers of online advertising in the next few years. At current levels of spending, online video advertising has plenty of room to grow. Even with projected growth of 4 annually, online video ads will amount to only 1 of total online advertising spending by Advertisers have gained experience in the art of TV advertising for decades, until they were able to bring it to its current effectiveness frontier. If current growth rates persist beyond 2012, Eyeblaster Research and many other industry analysts estimate that online video advertising is going to become a staple of every branding campaign similar to what TV is now. This may have a disruptive effect on marketers and advertisers who are caught unprepared. Online video advertising has a steep learning curve. The unique attributes of online video advertising, such as the different time and surroundings in which it is watched, the choice of ad length, the variety of ad formats and creative features suggests that the mere repurposing of a successful TV spot may not guarantee success online. Marketers and advertisers who will not have a strong online branding capability using online video advertising may risk jeopardizing their brand s health. In a few years, when online video ascends to be advertising s branding engine, sufficient experience in running online video campaigns may be the difference between a blockbuster and a flop. 12 Hallerman, David. Digital Video Advertising: Where s the Money? emarketer. August Eyeblaster Research Analytics Bulletin