Blog Post

Online Video Ad-Support Begins To Follow Broadcast TV Model; Performance-Based Coming?

With online video attracting more viewers and advertisers, many sites are moving away from offering sponsors a flat-fee and toward a pricing model tied to how many eyeballs the content receives, Mediaweek reports. Next month, as it relaunches its online media player, MSNBC.com will make the switch to impressions-based pricing for pre-roll ads for videos shown on its website, similar to the model adopted by the likes of ABCNews.com and video sites VideoEgg and Heavy.com.

Among the factors driving the shift are the growth of online video audiences, the greater availability of full TV episodes on the net, and an increased willingness on the part of buyers and sellers to experiment with differing forms of pricing. In some ways, the impressions model is even more ideal for web video than TV. Like TV ad deals, MSNBC.com will guarantee the amount of impressions an advertiser wants its ad to receive. Also, MSNBC.com will rely on a time-based model that lowers the amount of ads viewers are forced to watch. Right now, a new ad comes up everytime a viewer clicks a video. Under MSNBC.com’s new system, a timer begins when the viewer clicks on a video, making sure that the user won’t see another ad for at least three minutes, no matter how many videos are viewed.

Aside from the benefits for viewers, advertisers get the advantage of better measurements. As Jeff Ratner, managing partner and digital director at WPP Group’s MindShare Interaction, tells Mediaweek, the second that a video is played on someone’s computer, it counts as an actual impression, not an estimated one, which is the case with TV. Ratner adds that he views impressions-based pricing as an experiment that will at some point lead to a pay-for-performance model.