What is video advertising? A thorough explanation of the reasons behind its popularity, its advantages and disadvantages, and the key points to success

The video advertising market continues to expand due to the rise of video platforms such as YouTube and TikTok. As a result, many people are considering using video advertising to effectively promote their products and services.

However, even though they are all referred to as video ads, there are multiple types and delivery destinations, so you first need to understand the characteristics and differences of each.

In this article, we will explain the overview of video advertising, its advantages and disadvantages, differences in delivery destinations, and four points for successful ad delivery.

What are video ads?

Video advertising is an advertising method that uses video creatives. In a broad sense, it includes commercials that air on television and advertisements that air on outdoor screens, but this article will focus on web advertising.

A typical example of web advertising is a 15-30 second video that plays within YouTube content. Many web video ads can be viewed easily regardless of device, so they can be expected to be very effective as advertising.

Why video ads are gaining attention

What is the reason behind the huge attention being paid to video ads? Below are three points that explain why video ads are attracting so much attention.

The expansion of the video market

While the younger generation is increasingly moving away from television and print media, the video market continues to expand. This expansion is expected to continue in the future, with the market size in 2024 predicted to be approximately 2019 times that of 2.6 (*1).

Smartphone video advertising has grown particularly significantly, accounting for 2020% of the total market size in 89 and growing at a rate of 114.8% compared to last year (※1).

※1 Source:CyberAgent "CyberAgent Announces 2020 Domestic Video Advertising Market Survey"

Increasing demand for video

As personal devices such as smartphones and tablets have become widespread, there is a demand for videos tailored to the needs of each individual. Especially since the COVID-2020 pandemic in XNUMX, people have been spending more time at home, and the amount of time they spend watching videos has increased proportionately.

The usage rate of paid video streaming services in 2021 was 25.6%, an increase of more than 2 points for the second consecutive year (※ 4), indicating that demand for videos continues to grow.

※2 Source:Impress Research Institute "Video Streaming Business Survey Report 2021"

Improved communication environment

One of the reasons for the growing demand for videos is the improvement of communication environments compared to the past. Until now, communication environments were not very well developed, and it was often difficult to play videos smoothly.

However, Wi-Fi is now widely available in public spaces, and 5G, which enables high-speed, large-volume data communication, is now being offered. As the communication environment has improved and high-quality videos can now be played smoothly, the demand for videos is thought to be expanding.

Benefits of video advertising

From here, we will look at the five benefits of using video ads.

A lot of information can be conveyed

One of the advantages of video advertising is that it conveys far more information than still images or text. One paper (※1) states that a one-minute video contains about one million times as much information as text.

The biggest advantage of video is that it appeals to both the visual and auditory senses. By taking advantage of the characteristics of video that still images and text cannot offer, you can maximize the effectiveness of your advertising.

※3 Source:Aichi University Information Media Center "From text to images and videos"

Easy to convey the image

The advantage of videos is that they can easily convey the image of a product or service. Even if a product is difficult to express with still images or text, videos can be used to concisely promote the product, including how to use it and its convenience.

It is also possible to include footage of the product's manufacturing process in your video ads to tell the product's story in detail.

For example, if you have a product that is manufactured using environmentally friendly methods, you can tell that story in a video ad, which explains the added value of the product and increases its appeal to customers. Video ads can convey the strengths and selling points of a product in a concise and easy-to-understand way.

Easy to spread

Compared to text or still images, videos have a stronger ability to attract people. This is because people have an instinctive tendency to be drawn to things that are moving.

Additionally, in recent years, many people have begun to communicate through social media, including Twitter and Instagram. This means that if you deliver a highly relatable video ad, it is more likely to be shared widely by people.

Easy to adjust budget

One advantage of video is that it is easy to adjust the advertising budget. Although it depends on the distribution platform, in many cases the cost is set per impression (the number of times an ad is displayed), so it is possible to advertise with a small budget.

In addition, you may be able to run a test run with a limited budget before fully deploying your video ads. This allows you to estimate the approximate cost-effectiveness and then adjust your advertising budget.

Easier to verify the effect

With video ads, the following main items can be quantitatively measured:

・Number of impressions

・Number of views

・Playback time

Click count

Based on these measurement results, we will verify the effectiveness of the video ads and create ads that appeal to users. Another advantage is that the results are objectively shown as numbers, making it easy to share information within the company and set goals.

Disadvantages of video ads

While video ads have many advantages, they also have disadvantages. Below, we will explain the disadvantages in three points.

It takes time and money to produce

Compared to still image or text type ads, video ads tend to take more time and cost to produce. This is because video production requires many steps, from planning to filming and editing.

For example, even just looking at editing, there are multiple steps, such as adding music and effects, and inserting captions (titles, descriptions).

In addition, because it requires specialized skills and know-how, few companies can produce video content in-house, and they have no choice but to outsource it. As a result, it takes time and there are cases where the outsourcing costs money.

Skipped

Depending on the type of video, viewers may skip the ad before watching the entire video. In order to prevent viewers from skipping video ads, you need to hook them in early on.

To ensure that viewers watch your video ad until the end, it is important to conduct thorough user analysis and targeting and reflect this in your video creation. Specifically, making an impact at the beginning and developing an appealing storyline are effective measures.

There is a possibility of being disgusted

In the case of non-skippable video ads, if the playback time is not set to an appropriate length, users may be put off by it. In particular, when it comes to video ads that are shown on personally owned smartphones or tablets, it is important to conduct thorough user analysis and targeting.

If users watch unpleasant video ads during their private time, it may lead to strong backlash. As a company, it is important to not only maintain compliance, but also to create videos that are in tune with user psychology.

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Types of video ads

Here we will introduce the main types of video ads and their respective features.

In-stream ads

In-stream ads are ads that are delivered in the video slots of video platforms such as YouTube. The main feature is that they are delivered in the same slot as the main video, so there is a high possibility that they will be played on a large screen.

Also, since sound is on by default, it makes it easier to convey the appeal of the advertisement.

Another feature is that it is possible to approach users who are active in watching videos. However, if you want to deliver video ads in a way that they cannot be skipped, you need to improve the quality to attract viewers.

In-stream ads are divided into three types depending on when they are inserted into the main video:

・Pre-roll: Advertisement that plays before the main video is played

・Mid-roll: Advertisements that play while the main video is playing

・Post-roll: Advertisement that plays after the main video is played

In-stream ads can be delivered not only on YouTube but also on Facebook and other platforms, so it is important to thoroughly analyze your target audience before placing an ad.

Outstream Ads

Advertisements delivered via banners on websites, application feeds, etc. are called outstream ads. A feed is a method of delivering ads that are tailored to the needs of users based on data such as purchase history and browsing history.

In-stream ads are generally distributed on platforms that specialize in video playback, such as YouTube, because the ads are displayed in the same frame as the main video. On the other hand, out-stream ads are suitable for distribution on a wider range of media, making it possible to reach a wider range of users.

However, since the number of users you can reliably approach is limited, you need to create video content that will appeal to your target audience.

Outstream ads can be broadly divided into two types, so let's take a look at the characteristics of each.

・In-banner ads

In-banner ads, also known as in-display ads, are video ads that run in banners on websites. The video plays automatically without the user having to take any action, and the audio plays when the user clicks.

For example, the video that plays in the banner on the right side of Yahoo! JAPAN is also an in-banner ad. The big advantage is that it can appeal to a wide range of users without being limited by the format of the website.

Even users who are not used to watching videos on YouTube etc. will have more opportunities to see in-banner ads. Another advantage is that the conversion rate is high because the system basically delivers videos that users are interested in.

However, because it is delivered via video, the costs tend to be higher than traditional still image banner ads.

・In-lead ads

In-lead ads are ads that are inserted between articles or feeds on a website. They scroll down the screen, and the video starts to play after the ad appears on the display.

Since playback begins with the user's action, it works better for users who rely on content to load.

In addition, because the video can be played from the beginning, it is a good match for creatives with a story. For example, if you incorporate a story-based hook at the beginning that draws users in, the chances of them watching until the end will increase.

However, since it is not a "search-based ad" that displays ads based on the keywords searched by the user, you will need to be creative in your approach.

Video ad billing method

From here, we will explain the three billing methods for video ads.

CPV

CPV is an abbreviation for "Cost Per View" and refers to a system in which a fee is charged for a certain amount of time a video is played. This is a common billing method for video advertising, and the timing of billing differs depending on the platform on which the ad is displayed.

For example, "Website A charges if the video is played for 5 seconds," and "Website B charges if the video is watched to the end." In some cases, the pricing may differ depending on the playback time.

It is important to determine the compatibility between the platform you use to deliver ads and the video playback time before starting delivery.

CPM

CPM is an abbreviation for "Cost Per Mille" and is a method of charging according to the number of times an ad is displayed. "Mille" means "1,000" in Latin, and the system is such that costs are incurred every time an ad is displayed 1,000 times.

Since you are charged according to the number of times your ad is displayed, this is sometimes called "cost per impression."

CPC

CPC is an abbreviation for "Cost Per Click" and is a method of charging when a user takes a specific action, such as clicking on a video ad. It is used for in-lead ads and in-banner ads.

One advantage of this method is that you are not charged unless a specific action is taken, making the cost-effectiveness clear. However, advertising costs increase with each click, so it is important to have content on the destination website that will attract users.

Where to find video ads

There are many options for platforms to deliver video ads. The following section explains the characteristics of the seven most common delivery platforms.

YouTube

YouTube, a video distribution platform, has over 6,500 million monthly users in Japan (as of September 2020) and is characterized by its support from a wide range of users, from teenagers to those in their 9s.

Not only can it be easily played on smartphones and tablets, but it has also been viewed on television screens by over 1,500 million people (as of June 2020), making it a highly effective advertising tool.

Another feature is the wide variety of ad types available. You can choose the one that best suits your needs, including in-stream ads, "bumper ads" that cannot be skipped and are less than 6 seconds long, and "masthead ads" that appear at the top of the YouTube home screen.

Instagram

Instagram is a social networking site where users mainly communicate through visual elements such as videos and still images. The number of monthly active accounts in Japan exceeds 3,300 million (as of March 2019).

Another feature of the service is that Japanese users are balanced (57% female and 43% male), and it allows for highly precise targeting.

Instagram video ads can be delivered on the "Instagram Feed" and "Instagram Stories" screens. The Instagram Feed in particular is suitable for raising awareness of your company's products and brand among your target users.

Twitter

Twitter is a social networking site where users can post short texts of 140 characters or less, videos, and still images, and the number of monthly users in Japan exceeds 4,500 million (as of October 2017). Video ads are delivered on the Twitter timeline, which makes it easy to attract users' interest.

Another major feature of Twitter is its real-time nature and ability to spread information. This is related to the fact that Twitter has a spreading function called "retweet."

If you deliver video ads that are likely to resonate with your target demographic, you can expect them to spread through retweets.

Facebook

Facebook is a social networking site provided by Meta, a major American company, with over 2,600 million monthly active users in Japan (as of July 2019). In Japan, the site is characterized by a relatively large number of business-oriented users in their 7s to 30s.

Another feature is that users must register using their real names, ensuring high accuracy of user information. The targeting of video ads is highly accurate, and the ability to set delivery destinations in detail is appealing.

LINE

LINE is a communications app that allows users to exchange messages and make voice calls, and has over 9,000 million monthly users in Japan (as of the end of January 2022).

LINE accounts for approximately 7% of the population of Japan, and many users use LINE only as an SNS. Therefore, the fact that it can reach a wide range of people through video advertising is a major advantage.

In addition, since many of the users are smartphone users, you can also use the "vertical format" of LINE's unique vertical video ads. In the vertical format, videos are played in a 9:16 ratio, which allows for a wider range of creative expression.

TikTok

TikTok is a social networking site where users can create and post short videos between 15 seconds and 3 minutes, and has 1,690 million monthly users in Japan (as of October 2021).

Its unique feature is that it can reach out to users in their 10s and 20s as well as those in their teens and 30s. The user composition is 40% under the age of 25, and 40% over the age of 25.

Another key point is that, as it is a platform that primarily focuses on posting and watching videos, users have little resistance to video advertising.

There are three main types of video ads: in-feed ads, pop-up ads that are displayed when the app is launched, and hashtag challenge ads that can be linked to hashtags to encourage video posts.

WEB SITE

When delivering video ads on a website, you can use ad networks provided by Google or Yahoo. An ad network is a system that allows you to deliver video ads to multiple websites (advertising media) at once.

Google Display Network provides an ad network called "GDN," and Yahoo! Ads Display Ads (performance-based) "YDN." The advantage of each is that they can deliver video ads on a wide range of platforms, including affiliated websites and applications.

It also makes it possible to approach potential customers, so it is expected to be effective as an awareness-raising measure.

4 Key Points for Successful Video Advertising

Here are four key points to making your video ads successful:

Clarify the purpose of video ad delivery

When distributing video ads, it is important to clarify the purpose. If you start distributing without a clear purpose, the effectiveness of the video ad may be reduced.

Therefore, first you need to clearly define the purpose of your broadcast, by following the steps below.

・Increasing awareness of products and brands

・Consideration of purchase

・Acquisition of conversions

Having a clear purpose will help you determine the direction of your video creative.

Use the right targeting

It is important to use appropriate targeting depending on the purpose. If the targeting is incorrect, there will be a mismatch with the users who watched the video ad, and they may end up feeling aversion to your brand or product.

Video ads have excellent visibility and therefore leave a strong impression on users. Appropriate targeting is essential to effectively appeal to the users you are aiming for.

Create video ads for different platforms

Depending on the platform that delivers video ads, the target audience is different. Therefore, it is important to create video ads that will attract the interest of that audience.

Also, keep in mind that the types of video ads that can be delivered vary depending on the platform. For example, on YouTube, in-stream ads, which are video ads that run in the same frame as the main video, are the norm.

In contrast, on social media platforms such as Instagram, in-read ads, which are video ads that appear on the timeline, are the norm.

When creating videos, it is necessary to take into consideration the characteristics of each platform.

Implementing the PDCA cycle

Video ads do not end after they are delivered, but it is important to continuously verify them using the PDCA cycle. Therefore, it is necessary to set KPIs (indices that quantitatively grasp the degree of goal achievement) according to the purpose, and then measure and verify the effectiveness.

For example, if you have a KPI aimed at awareness, you would set goals such as "number of views" or "number of impressions," and if you have a KPI aimed at action, you would set goals such as "number of clicks" or "sales."

If you want to manage your video ads efficiently, you may want to consider using effectiveness analysis tools and collaborating with external partners.

Summary

Video advertising has now become one of the essential advertising methods for promoting your company's products and services. It has many advantages, such as "a lot of information that can be conveyed" and "ease of adjusting the budget," and there are multiple types of video ads and delivery destinations.

However, in order to achieve solid results with video advertising, it is important to quantitatively measure the effectiveness and implement the PDCA cycle.

XICA Corporation can provide proper support for measuring and verifying the effectiveness of video advertising. For example, more than 250 companies, including major corporations, have adoptedMMM (Marketing Mix Modeling) Services"MAGELLAN" uses statistical analysis to verify the effectiveness of video advertising, quantifying the contribution of each video ad to final business results such as sales and unit sales.

In addition, Creative production service "ADVA CREATOR'With EEG analysis and data science, we can create video ads that deliver targeted results.

If you are considering actively using video ads in the future, or if you are interested in verifying the effectiveness of video ads and improving creatives based on data science, please come and join us!Please feel free to contact us.

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XICA Co., Ltd. Marketing Team