Video Online Ads Three Times as Valuable as Display, But Still Have a Ways to Go

Last Updated Sep 20, 2008 5:56 PM EDT

Within online, video ads are the next big thing, but there's still an uphill climb. According to a new report out via eMarketer, video ads are now generating the highest revenue per CPMs out of any online medium. Bain & Company, working with the IAB, surveyed seven anonymous publishers, and found that video ads were uniformly drawing a much rate than display ads.

But eMarketer offers the following caveats:

  • Advertisers rarely reveal exactly what they pay for ads, and publishers hardly ever let on exactly what they charge.
  • The cost of ads is based on at least two factors: the rate card cost and the discounted cost, which changes based on inventory, timing and customer. Typically, the data here does not indicate which cost--rate card or discounted--is being counted.
  • Even when the ad prices are essentially accurate, they are averages.
Indeed, a recent post over at NewTeevee found that the average CPM for a video ad was only $12.39. According to a separate eMarketer report, online ad spend will only amount to $505 million this year, a drop in the bucket compared to the nearly $20 billion spent in online last year. Even though video ads are more valuable, there's resistance enough to cause worry among those purchasing inventory.

Video ad networks such as VideoEgg or Tremor Media have every reason to be optimistic. While banner blindness may plague many display ad vendor, video ads can anticipate increased double digit growth -- as much as 50 to 70 percent according to eMarketer -- as they find their legs. It's just that for the current moment, things may remain tight.