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Editor's Note:

I just wanted to let my readers know that I've created a blog where I will be posting essays and articles I've written on digital and online marketing. It's an extension of Media Perspectives. I hope you continue to read and enjoy!

Here's the link: Jaffer Ali's Blog - Perspectives from a Media Contrarian

Thanks for Reading!

Pre-Roll or Not Pre-Roll, That is the Question
By: Jaffer Ali

So much has been written about online video and everybody seems to offer self-serving proclamations. This is an exciting time as business models are being created. You Tube has sucked most of the air out of the online room regarding business models. Many "me-too" sites have thrown their hat into the ring after lining up their VC rounds.

There are many new aphorisms sprouting up. The most repeated is "The consumer is now in control". Aphorisms are catchy, but we often don't get what they mean. Will the consumer decide which advertising model will emerge from the chaos?

Publishers seem to think so. As someone who is on every side of the online landscape: Publisher, Ad sales and Advertiser, I am not sure the aphorism about "the consumer uber alles" is quite true. Why?

Well, we know that in most cases, consumers rather not see advertising. They want the content, but will tolerate advertising rather than "want" it. This is hardly earth shattering. Video publishers recognizing this fact have decided to forgo ads to build their audience. The thought here is to build the audience and worry about monetizing it later

I seem to remember this line of thinking in, well, 1999 and 2000. Many companies evaporated before they discovered the magic economic potion to monetize the eyeballs. But that was then and this is now.

Many publishers have decided against pre-roll and post-roll commercials as the user experience is what they tout. They secretly know that something will have to give because without some sort of video advertising, the business simply is not very exciting. But they are afraid to institute video ads because they believe the audience will simply go to the next, temporary cash rich competitor.

The viewer is fickle. He will click to the site that can deliver what he wants with the minimal advertising. If the sites go out of business due to an inadequate revenue stream, so be it. The publisher only needs to stay in business until they get sold to a big company, then the monetization headache is not theirs anymore.

That brings us to the title of the article. Pre-roll or not pre-roll... Who is going to decide whether commercials get placed in front of content clips or after as a post roll ad? Publisher? Agency? Advertiser?

My money is on the aphorism that my father taught me when I was nine-years-old: "He who pays the piper calls the tune." I probably didn't understand it then since I had no clue what a piper was. But if you have a mind filled with the jargon du jour, you will ignore my father's wisdom in much the same way I did when I was nine.

Before you go further, let me share some real statistics that we accumulated on our video portal, EVTV1:

Pre-Roll Abandons 18%

Post-Roll Abandons 76%

18% of those who clicked to view a content clip that they WANTED TO VIEW could not sit through the commercial and clicked away, most likely in disgust. 76% of those who clicked to view a content clip never stuck around to view the commercial that rolled immediately after the content clip.

Pre-Roll CTR* 2.2%

Post Roll CTR* .34%

2.2% of the viewers clicked on a 300 x 250 banner after seeing the pre-roll commercial. Only .34% clicked on the 300 x 250 banner with the post roll commercial.

*The same campaign and same commercial for this test

As an advertiser, if you are buying on a per click basis, you don't really care. But as a publisher, you better care. The eCPM for the pre-roll at $.50/click would be $11/M for the pre-roll and only $1.70/M with the post roll.

If you are a CPM advertiser, you most likely want to see your commercial watched at least half way through. If the abandon rate is 76%, that means the advertiser will most likely only pay for 24% of your traffic (we did NOT measure the halfway the numbers are a bit off).

The site owner who advocates post roll will not get paid for 76% of their traffic. They will see their eCPM degraded by that percentage. A $20/M CPM will yield an eCPM of $4.80. That is a huge differential. With pre-roll yielding an 18% abandon rate, a $20/M CPM yields an eCPM of $16.40.

I think the publisher and advertiser will demand pre-roll ads BECAUSE they are more effective. The click through rate differential will eventually cause advertisers to demand that their commercials pre-roll content. If I was a betting man, I would bet on the one paying the piper.

Original Article: Pre-Roll or Not Pre-Roll, That is the Question

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