Tarana Khan afaqs! New Delhi, June 25, 2008 Brands in India have done well in adopting the Internet for their branding and marketing activities. So far, they have experimented with display ads, search ads and even social networks. Now, marketers have another avenue opening up for their brand communication -- online video.Who’s watching?In the US alone, Internet research company comScore reports that 141 million people watched 10 billion videos in December 2007. Citing ABI Research, eMarketer predicts that ad spending on online video in Asia will be $202 million in 2008 and will grow to $3.3 billion in 2012, scoring over the ad spends in Europe and the US.According to research agency JuxtConsult, 36 per cent of the 35 million active Internet users in India share videos online. This audience represents an opportunity for brands to not only use audiovisual ads on the Internet, but also make them interactive. The growing interest in this medium is evidenced by the entry of online video ad agencies in India. One of them is Jivox, a US based online video ad agency, which recently received $10.7 million in funding. Similarly, Vdopia, an online video ad network, has operations in India and the US. Home grown agencies in the category include Monsoon Ads and Nautanki.tv.The challenge for these agencies is to give marketers another reason to increase their spending on the Internet, touting video ads as TV commercials, which actually let the viewers interact with the brand on the spot. "The online video industry currently is a small fraction of the online ad spends in India, but the volumes are growing in leaps and bounds. What’s interesting is the fact that a lot of small advertisers -- the ones who never went online for their requirements -- suddenly feel that their TVCs can run (on the Internet) and give them branding opportunities that TV cannot because of the costs," says Sunil R Nair, director of Nautanki.tv, which runs video ads online through its network of original productions.Nair predicts that in the next two years if the Indian online ad industry reaches Rs 1,000 crore, videos would account for about 30 per cent. An internal survey conducted by the company suggests that around 670,000 unique visitors watch a video on the Nautanki.tv network per day. The broadband penetration in India is 3.5 million (referring to Internet speeds of more than 256 Kbps) and this could be a factor in pushing the consumption of online video. YouTube, which recently launched an India site due to the growing usage in the country, is another indicator of the changing habits of users as Internet connections get faster.Naren Nachiappan, managing director of Jivox India, believes that about 15 million videos are watched online in India every day. He also thinks video ads comprise 15-35 per cent of the online ad industry, which he pegs at around Rs 400 crore.Is it an online TVC?Video advertising on the Internet is not simply playing the TVC online. It comes with a range of response mechanisms, which allows customers to interact with their brands. Harsh Nagpal, director of Monsoon Ads, says, "Unlike television, online video advertising is extremely focused and guaranteed. An advertiser is only billed for an ad seen by a viewer as opposed to being billed for the ‘perceived reach’ of a given TV channel. Furthermore, we leverage user location and demographic data to provide advertisers an opportunity to target ads better. For example, advertisers should be able to say ‘Target this ad only at women between the ages of 25 and 35 in the Mumbai region’."Online video is also different from search, which is the fastest growing segment in Internet advertising. Saurabh Bhatia, managing director, Vdopia, says, "What distinguishes video advertising from search advertising, which is the major chunk of Internet spending in India, is that search finds who is needy and video ads create that need and desire. Video ads create brand recall... It’s the same difference as between TV advertising and classifieds."Some of the common formats of video ads on the Internet are pre-roll and post-roll ads, video overlays and in-stream ads. Pre-roll ads play in the form of a short video before the actual video content being watched plays, and post-roll ads refer to ads that follow at the end of the main video. Overlay ads work by providing textual information in the form of a banner at the bottom of the screen when the ad is playing. These can be clicked on for more information or turned off if desired. In-stream ads play between the video, similar to how we see ads in TV shows.Elaborating on some of the innovations in video ads, Nachiappan says, "Video advertising itself, and particularly the capability to deliver video ads via existing ad units on a web page (such as banners) and within video streams, is a recent innovation. Other innovations that are particularly relevant in India include the capability to automatically and quickly detect connection speeds, and then serve up the most appropriate ad to that user, based on the ad’s bandwidth needs and the user’s Internet connection." He explains how ‘bugs’ may be inserted in video ads -- animations superimposed on the screen and product placements -- where the user can click on a particular portion of the video for more information. Microsoft also rolled out contextual video advertising earlier this year, which is similar to product placements. The company was also the first to launch a simpler form of video advertising in India, Desktop TV, which plays TV ads online. Speaking about the platform, Rajnish, India head of Microsoft Digital Advertising Solutions, says, "The response has been encouraging as it has allowed us to reach out to a large set of advertisers and sample the medium with them as an effective option." Apart from Desktop TV, Microsoft also offers video ads on its MSN Video site and has recently launched Messenger TV, where videos can be viewed while chatting. It recently tied up with MTV to use Messenger TV to promote its new series.While regular portals such as Yahoo! India and Rediff have not warmed up too much to video ads, the portals of media companies have been showing the way. NDTV, CNN-IBN, Zoom TV and Network18 have all adopted video ads in association with some of these agencies. This could possibly be because media companies own a lot of video content, which horizontal portals don't.A range of advertisers such as HDFC, Idea, DLF and Jeevansaathi.com are doing video advertising on these portals.Does it work?It may be a little early to say whether online video ads are actually delivering results. More so because video ads are seen as a brand building medium as compared to display and search ads, which are more performance driven. Nagpal says, "We have the capabilities to send users to online surveys, direct brand sites and microsites to obtain a direct response during the ad. Advertisers are guaranteed that the response rate will be higher than on television because every ad played is actually viewed by a user."Online videos are usually measured in terms of CTR (click through rate), the parameter used for display advertising. Therefore, if the video is delivered 100 times and one person clicks on it, the CTR is 1 per cent. According to Nachiappan, the average response for an in-stream video ad in India is between 0.7 per cent and 2 per cent, that for an in-banner video ad (where the video plays within a banner) is between 0.1 per cent and 0.5 per cent, and that for an in-text video ad (where a text link opens up a video) is between 1 per cent and 3 per cent.The industry average for banner ads in terms of CTR is between 0.5 per cent and 1.5 per cent, so video ads are not far behind. However, CTR may not be a suitable measure at all. Nair says, "Online video ads are normally in the range of 10-30 seconds and the engagement is far greater since the audience knows that the ad is followed by content that is of his choice. Unfortunately, media agencies are stuck on CPC (cost per click) campaigns, forgetting that the branding that an online video ad provides is far greater than a text or banner ad." Nautanki.tv recently launched a rating system for video content and is in the process of launching parameters to measure the effectiveness of online video ads.Bhatia agrees, "CTR is just one of the parameters and it is a function of creative and many other factors. It does not mean leads. With video, it means you have generated user interest and engagement."As Internet advertising increases in value, advertisers will look for diverse ways in which to cut the clutter of banners and search listings and ‘talk’ to the audience. Video advertising will present that opportunity to them, and as video content (both original and user generated) grows, it will be the right platform to do so.