By Chris Lee

2012 will see huge growth in online video. An increasing number of brands will invest in this form of advertising and media companies will move towards digital as consumers’ definition of TV will start to change. This is the view of Daniel Ruch, vice president of Europe for video marketing agency Tremor Video.

Ruch is also co-chair of the Interactive Advertising Bureau (IAB) video council and he is predicting a very busy year for video marketers. NMK’ asked him for his highlights.

Netflix will begin running video advertising against premium content

Netflix, which has more than 20 million streaming members globally, watching films and TV programmes, will begin running video advertising against premium content. Nielsen reported an excess of 220 million streams earlier this year, so Netflix's options for ad strategy are limitless. It makes sense, therefore, that next year Netflix will begin running video advertising against premium content. It has been coming for a while and Netflix's understanding of what customers like will let them sell advertising by audience, programme, genre and geography.

Less than 20 per cent of video inventory will be traded on exchanges

Trading video inventory is in its infancy with spending still well under five per cent of total video ad spend. The forecasts suggest that this is set to change significantly next year with all of the major agency trading desks ready to spend significant budgets on real time bidding (RTB). However, RTB spending is not without its problems. Video is technically unique, it’s complex. Think of multi-platform delivery or limited Video Ad Serving Template (VAST) wrapper support. Or what about engaging, highly interactive, customized ad experiences that cannot technically be transacted via exchanges? Publishers worry that they are devaluing their premium video inventory. They are concerned about issues like channel conflict and data leakage. For the big premium TV networks, the prospect of opening what limited inventory they have to third-party RTB demand comes with a lot of uncertainty.

At least five major fortune 500 advertisers will publicly make a big change in their media planning away from traditional and towards digital media

Digital media will continue to make the headlines next year as brands realize the potential of this medium. The big brands are already showing a tremendous amount of interest in video advertising and I believe that they will move away from conventional TV advertising slots, shifting towards digital which is much more measurable and targeted.

There will be a move toward greater Industry consolidation

Extended consumer reach is made possible through the consolidation of communications and digital (mobile and web assets, advertisers, buyers and media agencies). I predict that we’ll see at least one from each group of cable, telco, and media companies make a big acquisition of a digital company next year. The scale and reach across web, mobile and interactive media will be unparalleled, with particular strength in online advertising. Similarly, traditional media companies will make bigger bets on original web video content via acquisition or major investments.

Brand marketers will embrace their own need to understand the power that online video has

The advent of connected TV brings a whole new dimension to advertising on TV. Video on demand (VoD) presents an opportunity for brands to drive targeted campaigns through video advertising. Video advertising has measurement technology that provides detail that is changing the way brands think about this medium. Through catch up TV and the like, brands can not only consider whom they are targeting, but also whether or not their ad is working and more importantly, why it’s working. I believe that brand marketers will embrace their own need to understand the power that online video has to improve effective reach over TV and inform their non-digital strategies.

Consumers’ definition of television will tip from being about the type of box they have

A VoD user complained recently that the service lacked quality movies for streaming. They added that while they understand that a lot of newer movies aren't offered as part of the streaming service it was more frustrating that its streaming catalogue is clogged with hundreds of B-list and C-list movies. That’s not what they wanted.

My point here is that consumers’ definition of television is changing. The importance of flat screens, PVRs, HD ready and so on is becoming more and more diluted as consumer's definition of good television will be about the type of content made available rather than the type of box its wrapped up in.

The UK online video market will continue to grow

A recent report from Futuresource Consulting announced that the consumption of legitimate free and paid for online video is on track to exceed 770 billion views across the USA, UK, France and Germany. Improvements in accessibility and ease of use are among the growth triggers that have seen the rise from around 640 billion views last year, with the USA dominating the market. Total online video views are on track to grow by 20 per cent. I forecast that in 2012 the UK online video advertising market will continue to grow at high double digit, perhaps even triple digit percentage growth rates.

We will see a shift in focus away from the click through rate as a proxy for online video performance

I have been saying this for a while now. The method of using click rates as a proxy for online video performance is shifting. Video ads can target consumers in a much more sophisticated way than simply by age, sex, and site lists and they can also be measured in a way that tell us a great deal about if and how they’re working. Success is measured by how long a viewer spends with the ad but there are also factors which determine brand performance such as time of day, what viewers were watching beforehand and so on. All are signals that tell us if something is working or not. These are the real measures which determine success and what marketers should be measuring.   The wealth of data available to help marketers make those important changes that will elevate the brand and really engage with their audience. Next year will see measurement through real branding metrics, including engagement and brand lift to reach those important KPIs.