Why Video Ads Scare Google and are Great for Small Businesses

Video ads are growing fast, and saw 17% year-on-year from 2012 to 2013.

In fact, according to the 2013 Online Advertising Revenue Report from the IAB and PWC, video ads and mobile are the only two segments in the online advertising space that are actually growing.

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If you’re an ad platform like Google, Yahoo or AOL, 2014 has to be scary. Search ads, display ads and banner ads, your bread and butter, are growing at a slower pace than online advertising as a whole. New, less familiar formats are on the rise, but few ad platforms are doing a good job of monetising digital video and mobile.

If, on the other hand, you’re a small business, this is an opportunity. At Shakr we’ve run several tests in advertising segments with high cost per click (CPC), for search ads. Almost universally, we found video ads to be cheaper. I don’t mean cheaper if you account for the added level of granularity you get from watching a video, rather than reading a 90 characters. I don’t mean cheaper based on higher level of qualification for leads brought in through YouTube’s TrueView video ads.

I mean that per click, pre-roll video ads on YouTube are half the price of search ads.

Let me give you an example from real estate advertising, where CPCs on text ads are typically around $5. With local targeting on a video ad, we were able to reduce that to just $2.39, generating 167 website clicks by spending just $400.

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Why are costs so low for video advertising? The ad platforms have imagined that video ads online should work like ads on TV. They’re mostly for brand building. They go to a diverse audience. They seldom have a strong call to action. They’re charged by the number of impressions.

Because of this, YouTube (actually Google) charges per view. On videos that are more than 15 seconds long, views are counted as watching more than 50% of a video.

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But video ads don’t have to be this way. You can use them to promote a product, rather than a brand. You can give them a strong call to action and make them click through to landing pages. You can make them well targeted. But even if you do these things, Google is still going to only charge you for people who watch more than half of your video.

People who aren’t really interested are going to click skip before the half-way point, and you won’t pay to show them the ad.

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Because of their self-selecting nature and high information density, video ads are not only cheaper than search or display ads, they’re also better.

Imagine two examples, again in the world of real estate, a search ad and a video ad. Both are targeted at people looking for high-end real estate in San Francisco.

Example 1: Text-based search ad

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Example 2: Video pre-roll ad

Which one is going to deliver you more highly qualified leads?

If you haven’t checked us out yet, give Shakr video ads a try. Please also let us know what you think about our video styles, our creation process and also let tell us your own success stories.